* Q2 loss/shr $0.29 vs $ $0.74 yr-back
* Deemed div on preferred hurts Q2
* Analysts laud credit quality
* Stock see-saws on Nasdaq (Adds details, analysts' comments; updates stock activity)
BANGALORE, July 23 (Reuters) - Popular Inc (BPOP.O) posted its eighth straight quarterly loss, trailing Wall Street's estimates, as it took a big hit from deemed dividends on preferred stock, but analysts lauded the improvement in credit quality.
Shares of the largest Puerto Rican bank see-sawed on Nasdaq, falling 4 percent in early trade, and recovering to trade up 4 percent.
"I was encouraged by the direction of credit quality. There was very little growth in non-performing assets in the second quarter and net loan charge-offs declined noticeably from the first quarter," B. Riley & Co analyst Joe Gladue said.
Popular said provision for loan losses totaled $202.3 million, equivalent to net charge-offs for the second quarter, compared with $349.4 million a year back.
"Provision matching net charge-offs is a very good sign because it is an indication that the company feels it may have enough reserves stashed away to weather the storm," Raymond James analyst Amanda Larsen told Reuters.
She attributed the early stock fall to the headline EPS number, which came below analysts estimates.
"However, EPS is not as important and included a large noise item... The real, underlying, important story here is credit quality and the outlook for revenue from the FDIC deal," Larsen said by phone.
For the second quarter, the company lost $247.5 million, or 29 cents a share, compared with a loss of $207.8 million, or 74 cents a share, a year ago.
The company has 853 million shares outstanding, compared with 281.9 million shares a year ago. It converted some preferred shares to 383 million common shares during the second quarter.
Analysts were looking for a loss of 6 cents a share, excluding items, according to Thomson Reuters I/B/E/S.
Popular, which has operations in Puerto Rico, the United States, the Caribbean and Latin America, said in a regulatory filing that it remains cautious for the rest of 2010 and 2011 due to economic environment in Puerto Rico and a possible slowdown in the United States.
The island of Puerto Rico, a manufacturing hub for petrochemical, pharmaceutical and technology companies, as well as a tourism destination, faced the financial meltdown much before the rest of the world went into recession.
Shares of the parent of Banco Popular were up 4 percent at $2.75. They have gained significantly since hitting a 52-week low of $1 exactly a year back. (Reporting by Anurag Kotoky in Bangalore; Editing by Don Sebastian)