Popular Inc. in San Juan, Puerto Rico, said its quarterly profit fell after losing an arbitration dispute with the Federal Deposit Insurance Corp.

The $39 billion-asset company disclosed in a regulatory filing Tuesday that its third-quarter earnings fell 45% from a year earlier to $46.8 million, or $51.85 a common share.

Popular had warned earlier this month that it would take a $55 million hit after it lost an arbitration dispute with the FDIC over a request for reimbursement for certain shared loss claims. As a result, Popular recognized a pretax charge and a related reduction to its FDIC indemnification asset for the quarter. FDIC loss-share expense totaled $62 million.

Net interest income increased by 2% to $354 million. Net loans fell 0.4% to $22.6 billion, and loans covered under the FDIC-related loss-share agreement dipped 12% to $588.2 million. The net interest margin compressed by 27 basis points to 4.12%.

The loan-loss provision fell 35% to $43.3 million.

Noninterest income fell 42% to $76 million, largely reflecting the arbitration setback. The company reported higher fees, including life insurance commission revenue, and increased net gains from loan sales.

 

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.