Credit quality

The largest bank in Puerto Rico said hundreds of millions of dollars of its mortgages and consumer loans are tied to the parts of the island hit by the recent quake or still recovering from two hurricanes.

Susan Riel succeeded Ronald Paul as CEO of the Maryland bank shortly before questions surfaced about credit quality and lending practices.

Such credits, which reflect borrowers with financial challenges, increased significantly during the third quarter.

Shares in the lender fell after it reported lower third-quarter profits, said nonperforming assets rose and cautioned that it had lost multifamily loan deals to competitors offering easier terms.

Caught in the middle of a credit-subsidy debate, the program would have shut down on Tuesday without congressional action.

The popular program could go idle next month for the second time in less than a year if lawmakers are unable to approve a $99 million credit subsidy.

It’s hard to time the next economic slowdown. But lenders, many with lingering memories of the financial crisis, are taking steps now to limit exposure in commercial real estate, construction and other loan segments.

The decision gives the vast majority of banks and credit unions another year to implement the controversial accounting method for loan losses.

Banks fear that more competition from nonbanks in commercial real estate will drive down pricing and lead to a relaxation of terms.

The Michigan company said the loan — made to a borrower that plans to shut down its reverse mortgage business — has collateral.