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FBP - First Bankcorp


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I have no idea how to value banks, but this seems to be a high conviction idea of howard marks. Assets are 12 billion. Income before provisions 500 million and market cap 1 billion. Ill let the bank pro's decide here if they like it :) .


He bought at 3.50 and now its at 5. But he didnt sell when it was at 8$ last year.


What would be a normal return on assets on a company like this?


So basicly they have 5% non performing loans:

2013 10k:

Even though, our level of non-performing loans decreased 43% during 2013, as compared to December 31, 2012, and our third and fourth quarters of 2013 were profitable, we have $550.4 million in non-performing loans, which represents approximately 5% of our $9.7 billion loan portfolio. We may not continue to be profitable given this high level of non-performing loans.


Looking at 2010, they seem to quickly wrap up their non performing loans.


There are some interesting costs here. I think without the non performing loans and the NOLs they do about 100 million in net income.


But there are these costs:

Securities sold under agreements to repurchase for 25 million, this has been decreasing fast over the years.


Professional fees These doubled from 24 to 48 million. Not sure what this is?


Net loss on other real estate owned (OREO) and OREO operations In the latest call they said these will be lower. They were 42 million this year, and 25 in 2012. I guess worth looking into.



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Call me crazy, but I scrolled a few lines down this:




to "ADJUSTED PRE-TAX, PRE-PROVISION INCOME TRENDS". It seems to be suggesting pretty strongly that its $200mm, not $500mm.

I think you need to take net interest income of 514m$ - non interest expenses -415m$ = 100m$ of income. But ofcourse they still have about 500m$ of non performing loans. Im not sure what the standard there is. ALso they might cut up to 100m in costs still in the next few years? And they might grow interest income a bit. So Net income after everything could be 200m$ within the next few years.


So that would make it a potential double.


But I know next to nothing about these small banks, so take it fwiw.

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