Is BPOP flying under the radar?

I wanted exposure in my country, Puerto Rico. US shifting away from China, our geographical position, tax code and our relationship with the US put us in what I believe is an interesting position.

With a third world country infrastructure and largely underdeveloped region, Puerto Rico could see a nice growth spur in the coming years.

Recent meltdown in the banking industry lead me to stumble upon Banco Popular (ticker BPOP), which is one of the main banks in the island. And should be at the forefront of the progression I expect.

Part of my thesis is admittedly subject to some speculation but I believe it’s well within reality.

Now onto the factual data regarding BPOP:

Market cap: $4.25 billion 52 week high: $83.64 52 week low: $48.83 Dividend yield: 3.73%

PE: 7.40 BVPS: 56.66 EPS: 3.55 ROE: 6.62% ROA: 0.37%

Balance sheet takeaways:

Positive metrics:

• Net interest income increasing steadily over the past four quarters, from $394.6 million in Q4 FY 2020 to $412.5 million in Q4 FY 2021, indicating a positive trend in the bank's core business.

• Non-interest income has increased significantly, from $55.9 million in Q4 FY 2021 to $117.4 million in Q4 FY 2022. Possible growth in fee-based services and diversification of revenue streams.

• Return on average assets has been improving over the past four quarters, from -1.60% in Q1 FY 2021 to 0.81% in Q4 FY 2021. Profitability appears to be slowly improving.

• Net interest margin has also been increasing, from 2.82% in Q1 FY 2021 to 3.15% in Q4 FY 2022, indicating higher profitability on interest-earning assets.

Negative metrics:

• Provision for credit losses has been volatile over the past four quarters, ranging from a release of $113.7 million in Q1 FY 2022 to an expense of $74.7 million in Q4 FY 2022. Uncertainty in credit quality?

• Total loans held-in-portfolio have been declining over the past four quarters, from $37.2 billion in Q1 FY 2022 to $36.2 billion in Q4 FY 2022. Weaker loan demand due to higher interest rates. More competition in the lending market could be another reason but not exactly feasible with current conditions.

• Net charge-offs as a percentage of average loans have also been volatile over the past four quarters, ranging from 0.63% in Q2 FY 2022 to 1.58% in Q1 FY 2022 which may indicate variability in asset quality.

One possible reason for the increase in liabilities could be a higher deposit base. The total deposits increased from $42.8 billion in Q1 FY 2022 to $44.1 billion in Q4 FY 2022, an increase of $1.3 billion or 3%. A higher deposit base indicates that the bank is attracting more deposits, which is a positive sign for liquidity and ability to fund lending activities.

Balance sheet can be found here https://investor.popular.com/eng/financial-highlights/default.aspx.

All in all, balance sheet appears to be efficiently managed, although concerns regarding economic conditions remain. Dividend yield is great and appears to be sustainable, making it an even more attractive investment proposition.

This pretty much sums up my argument as to why Banco Popular may be a worthwhile opportunity below $60.

Am I missing something?

First post here. Any feedback is welcomed and appreciated.

For those that made it his far, thank you.