Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of the parent of Puerto Rico's Banco Popular, Popular (Nasdaq: BPOP), were getting slammed today, falling as much as 17% after a disappointing earnings report.

So what: For the September-ended quarter, Popular's earnings of $0.03 per share were short of the $0.06 average estimate of Wall Street analysts. That's bad news in itself, but it's important to look beyond the headline numbers to figure out why the bank missed.

The primary area in which the bank appears to have surprised the market is its provisions for loan losses. Popular set aside $151 million during the quarter to buffer against potential losses from non-covered loans -- that is, loans that aren't covered by loss-sharing agreements with the Federal Deposit Insurance Corp. That provision level is down from last year, but up $55 million from a quarter ago.

Now what: The jump on the provisions line should be particularly concerning to investors since Popular's management chalked it up to "weak economic conditions in Puerto Rico [that] continue to adversely impact [commercial and residential mortgage] portfolios."

Based on price-to-book value -- my favored metric for valuing banks -- Popular is a cheap bank stock. But it's also far from being a healthy bank. Risk-taking investors could take a flier on the bank in hopes that economic conditions in Puerto Rico improve before Popular's portfolio deteriorates too far, but there are higher-quality banks available for more conservative investors.

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