Is there something in the water down in Puerto Rico?

Late on Friday, First Bancorp (NYSE:FBP), which is under investigation for its handling of purchased mortgages, announced that both the CEO and CFO will be leaving their positions with the company. They will be replaced by the senior executive vice president and corporate treasurer, respectively, though the new CFO's position is currently on an interim basis.

Accounting scandals have now nailed three of the island's largest financial institutions -- Doral Financial (NYSE:DRL) and R&G Financial (NYSE:RGF) being the other two. Doral recently booted its CEO and CFO, and R&G removed its CFO.

Any way you slice it, this hasn't been a good year for Puerto Rican banks. Doral is in the dock for questionable accounting on interest-only strips and will likely wipe out more than $600 million in shareholder equity. R&G, meanwhile, is restating its results. The Securities and Exchange Commission is also taking a look at what happened with respect to all three companies' accounting and reporting.

In response, shares of Doral have fallen by more than two-thirds over the past year, with R&G having dropped by a like amount. First Bancorp has dipped less than the others, but a drop over the past 12 months of more than 30% hardly deserves a best-in-class designation. Worse, in what may be a case of companies getting tarred by the same brush, W Holdings (NYSE:WHI) has lost almost a quarter of its share price, while the share value at Oriental Financial Group (NYSE:OFG) has been cut in half.

Of course, it doesn't necessarily take an industrywide scandal to turn off investors. Contrary to what many think, the Puerto Rican market isn't so great. In fact, from a deposit perspective, it's a pretty difficult market with some pretty high costs. And while that's never really great news, it's even worse when the yield curve flattens out the way it has over the past year or so.

Investors who think they just have to be involved in Puerto Rican banks might want to check out Banco Popular (NASDAQ:BPOP), but I'd first suggest they recheck their basic assumption about needing to be invested here. Doral and Oriental Financial could prove to be promising long-term investments, but this sector is not for the weak at heart.

For more Takes to bank on:

Doral Financial is a Motley Fool Inside Value recommendation. Banco Popular is a Motley Fool Income Investor recommendation.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).