The 1 Reason First Bancorp Is Down 98% in the Past 10 Years

What goes up must come down, right? But what happens when those things do come down? Do they stay down forever, or is there a chance they, too, will go back up?

Contrarian investors bet that sometimes there's a bounce. Maybe even a big bounce.

First Bancorp (NYSE: FBP  ) , a $12.8 billion bank headquartered in Santurce, Puerto Rico, is one of those stocks that went up, but then went down. Really, really far down, in fact. During the past 10 years, the company's stock is down 98%. During the past 12 months, it's down more than 35%.

Is this bank's abysmal run coming to an end? To find out, Motley Fool contributor Jay Jenkins is embarking on a three-part series analyzing the bank. In part one below, Jay uncovers the single and solitary reason that First Bancorp's stock has performed so poorly... its asset qualtiy.

Banking is a very unique business. When a typical company sells its product, that's the end of the transaction. For bank's like First Bancorp though, that's just the start. Management at First Bancorp must then get their product back -- that is to say, when the bank makes a loan, that loan must be repaid. If the loans don't get repaid, the bank will at best struggle. 

This is the essence of asset quality and the fundamental challenge facing First Bancorp. Loans have been made, and many are not being repaid. The key to this bank's turnaround is correcting this trend, and doing it fast.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3033312, ~/Articles/ArticleHandler.aspx, 12/20/2014 4:02:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement