--Company seeks approval to repay $935 million bailout
--Profit surged due to sale of Evertec shares
--Company had $1.2 billion in outstanding exposure to Puerto Rico government's financial woes
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By Andrew R. Johnson
Popular Inc. (BPOP), Puerto Rico's largest bank, is seeking regulatory approval to repay the $935 million it received under the U.S. government's crisis-era bailout program.
The bank said Wednesday it filed an application to repay the funds it received through the Troubled Asset Relief Program's capital-purchase fund, which Treasury used to purchase shares in ailing banks to boost their capital levels during the financial crisis.
"While we are hopeful our application will be approved, we cannot speculate on the timing or conditionality, if any, of an approval," Popular Chief Executive Richard Carrion said in a statement included in the bank's third-quarter earnings report.
A spokeswoman for the Federal Reserve didn't immediately respond to a request for comment Wednesday. A spokesman for the Treasury Department declined to comment Wednesday.
Popular's shares were down 0.5% at $26.16 in recent trading. The shares are up more than 25% this year.
The bank is the largest outstanding participant in the capital-purchase program, according to an October report Treasury made to Congress. It is one of the more than 100 small and midsize banks that owe taxpayers bailout money five years after the financial crisis.
Mr. Carrion declined to discuss the details of Popular's application and or how it might fund its TARP repayment during a conference call with analysts on Wednesday. He noted the company has made $325 million in profits through partial sales of its stake in Evertec Inc. (EVTC), a payment processor that went public in April.
Popular, which has operations in mainland U.S., was hammered by the mortgage-market collapse during the economic downturn. Since then, the bank has worked to clean up its balance sheet and boost capital by selling loan portfolios and scaling back in construction lending and other businesses that resulted in high losses.
Executives have also sought to assuage investor concerns over Popular's exposure to the Puerto Rican government's fiscal woes. The commonwealth has been hit by series of debt downgrades amid government budget deficits, high unemployment and economic sluggishness.
Popular had $1.2 billion of outstanding exposure to Puerto Rico's government at the end of the third quarter, Mr. Carrion said. About $951 million of that is in the form of loans to government entities.
The bank's exposure "represents a deliberate and carefully underwritten book of business," Lidio Soriao, chief risk officer of Popular, said during the call.
Popular's profit increased to $228.2 million, or $2.22 a share, in the third quarter, from $46.3 million, or 45 cents a share, a year earlier. The latest period included a $167.8 million gain related to the sale of shares it owns in Evertec.
Analysts polled by Thomson Reuters recently expected per-share earnings of 70 cents.
--Tess Stynes contributed to this story.
Write to Andrew R. Johnson at email@example.com
(END) Dow Jones Newswires
October 23, 2013 13:07 ET (17:07 GMT)