Popular (BPOP 3.55%), the largest bank in Puerto Rico, reported earnings for its third quarter this morning and, even though it missed on earnings expectations, the market has not reacted too harshly. With analysts expecting $0.49 in earnings per share, the bank checked in at $0.45, with the bank reiterating its earnings expectations for between $210 and $225 million for the year..
What I was watching
In addition to the standard metrics referenced above, I was also watching continued improvement in the quality of its assets, particularly the nonperforming type. These assets, which are usually loans that are late and heading to foreclosure, represented 6.7% of total assets at the end of the quarter. Fortunately, the number is trending down ever so slightly, with nonperforming assets now tallying 6.6%, which doesn't look like much, but was, nevertheless, a reduction of $58.2 million during the quarter. While this number isn't super great, it's at least trending in the right direction.
What to expect going forward
It's only a matter of time before Popular returns to paying a dividend, something that it hasn't done since March 2009. The bank is trying hard to prevent another disastrous year like 2011, and the only way to do that is to continue to return value to shareholders. The bank seems to be on the right track, but it might be further away than I previously thought. It bears watching over the next quarter or so to see if management can execute its "number one priority" of improving returns.
