Republic Federal Bank, which last month agreed to tougher monitoring by federal regulators, lost nearly $6.3 million in the third quarter.

That was more than six times worse than its $910,000 second quarter loss.

The Miami-based bank’s equity capital eroded to $34.1 million after starting the year at $53.4 million. Its capital ratios were still above the minimum for regulators to consider it a well-capitalized bank.

A $3 million provision to increase its loan loss reserves and $2 million in charge-offs due to bad loans were the main factors that cost Republic in the third quarter.

Remo Duquoin, Privee and Republic Federal Bancorp – the bank’s three holding companies – signed a mutual agreement with the Federal Reserve Bank of Atlanta on Oct. 22. The document noted that the goal was to “maintain the financial soundness” of the bank and its holding companies.

Republic was given 60 days to submit a plan to the Federal Reserve, detailing how it would maintain sufficient capital. It pledged not to fall below the capital ratios outlined in that plan.

The agreement stated that Republic must take into account the adequacy of its reserve for loan loss allowance.

Republic ended the third quarter with an $8.4 million reserve for loan losses, which covered 26.4 percent of its nonaccrual loans – those that are more than 90 days past due and not paying interest.

The bank’s nonaccrual loans totaled $31.9 million, or 8 percent of its loan portfolio, as of Sept. 30. Most of those problem loans covered one-to-four-family residential properties.

Ranked as the 19th-largest South Florida-based bank by assets, Republic finds itself shrinking. It had $534 million in assets on Sept. 30, down 9.5 percent from June 30. It lost 10.5 percent of its deposits to close the quarter at $383 million. Republic’s loan portfolio declined 8.5 percent, to $398 million.

Source:http://www.bizjournals.com/southflorida