Compass Point Downgrades Oriental Financial Group (OFG) to Neutral
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Price: $53.52 -0.8%
Rating Summary:
4 Buy, 5 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 20
Rating Summary:
4 Buy, 5 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 20
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Compass Point downgraded Oriental Financial Group (NYSE: OFG) from Buy to Neutral with a price target of $11 (down from $16.50).
The firm notes NIM declined by 27 bps QOQ to 1.76%. The decline in NIM was due to the disposal of a CDO, the sale of MBS to retire a maturing repo, and higher prepayments in the MBS portfolio.
"While the increase in commercial lending is encouraging, it does not offset MBS trends given the size of the portfolio. Furthermore, the bulk of OFG's loan interest income comes from covered loans, which are in runoff, and residential mortgages, which have been experiencing declining balances for 13 quarters."
The firm still sees significant upside if OFG decides to deploy excess capital in an efficient manner. However, "that decision ultimately lies with management," the analyst said.
They cut 2012 EPS estimate to $0.76 from $2.04 and is setting 2013 EPS estimate at $1.14
For an analyst ratings summary and ratings history on Oriental Financial Group click here. For more ratings news on Oriental Financial Group click here.
Shares of Oriental Financial Group closed at $11.75 yesterday.
The firm notes NIM declined by 27 bps QOQ to 1.76%. The decline in NIM was due to the disposal of a CDO, the sale of MBS to retire a maturing repo, and higher prepayments in the MBS portfolio.
"While the increase in commercial lending is encouraging, it does not offset MBS trends given the size of the portfolio. Furthermore, the bulk of OFG's loan interest income comes from covered loans, which are in runoff, and residential mortgages, which have been experiencing declining balances for 13 quarters."
The firm still sees significant upside if OFG decides to deploy excess capital in an efficient manner. However, "that decision ultimately lies with management," the analyst said.
They cut 2012 EPS estimate to $0.76 from $2.04 and is setting 2013 EPS estimate at $1.14
For an analyst ratings summary and ratings history on Oriental Financial Group click here. For more ratings news on Oriental Financial Group click here.
Shares of Oriental Financial Group closed at $11.75 yesterday.
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