Sterne Agee Looks At Popular's Losses, Maintains Buy Rating

Sterne Agee has published a research report on Popular, Inc. BPOP after seeing the company's material losses that have been taking effect since 2008. In the report, Sterne Agee writes "Following the release of the call report data, we have updated our cumulative loss analysis which is broken down by regulatory loan segment for both the Puerto Rico and North America franchise. While the analysis is fraught with assumptions, we believe the analysis is constructive nonetheless and supports our positive stance on the shares. Based on our modeling, we estimate that BPOP has recognized in the range of 80% of its projected losses for the cycle. As shown on the next page, we estimate total cumulative losses of nearly $4B or 15% of total loans of which $3.2B (11.75% of loans) has been realized implying ~$800M of losses remain. This amount compares to our current modeling which includes total NCOs for 2011 and 2012 of $1.1B." Sterne Agee maintains its Buy rating and $5 price target. Popular, Inc. closed yesterday at $3.53.