CCR World Magazine

USA - Since getting a $50 million capital infusion of federal TARP funds in August, US Century Bank has gone through 88 percent of that amount.

The Doral-based bank lost $30 million in the fourth quarter, following its $14.2 million loss in the third quarter, according to a filing with the Federal Financial Institution Examination Council. Charges from problem loans caused much of the damage, as noncurrent loans shot up 63 percent during the fourth quarter.

The bank will stop adding new branches and look to manage its current loans, rather than grow in 2010, U.S. Century Bank CEO Octavio Hernández said. While it will make new loans, it will be “very selective” this year, he said.

It will also look to shift depositors into accounts that pay less interest. No staff reductions are planned, he added.

“We went through our whole portfolio, we ordered new appraisals and we charged off what we had to charge off,” Hernández said. “We think we are poised now to start back on the road to profitability.”

The bank ended the year with a total risk-based capital ratio of 10.27 percent – not far above the 10 percent requirement for a “well-capitalized” bank under regulatory guidelines. U.S. Century Bank had a much more comfortable 13.27 percent total risk-based capital ratio on Sept. 30.

U.S. Century Bank aided its capital ratio during the quarter by raising $1.2 million by selling shares.

Although the bank took the purpose of the Troubled Asset Relief Program to heart by growing its total loans to $1.58 billion on Dec. 31 from $1.54 billion before it accepted TARP funds on June 30, that growth increased its asset size. That requires holding onto more capital to make the regulatory ratios.

U.S. Century was the 10th-largest bank chartered in South Florida on Sept. 30, with $1.95 billion in assets. By year-end, it reached $2.02 billion in assets. Its deposits grew from $1.64 billion to $1.74 billion during the same period.

The bank is likely to turn a profit in January, and should be profitable for the year, barring another big dip in the economy, Hernández said.

U.S. Century Bank’s loan problems caused it to lose a large part of its capital cushion during the fourth quarter. It took a $51 million expense to reserve for future loan losses and charged off $39.9 million in bad loans in the quarter. That’s up from $24.8 million and $9.4 million, respectively, in the third quarter.

Bill Garzozi, the credit manager at U.S. Century Bank, said most of the loan-related losses came from lower appraised values for land loans and construction loans.

The bank’s net interest income slipped to $12.5 million in the fourth quarter from $13.9 million in the previous quarter. That was a reflection of more loans falling into noncurrent status, Hernández said.

U.S. Century Bank had $171.2 million in noncurrent loans, representing 10.51 percent of its total loans, on Dec. 31. That’s up from $105 million in noncurrent loans, or 6.46 percent, on Sept. 30.

The bank’s $47.7 million reserve for future loan losses covered 28 percent of its noncurrent loans at year-end. That’s down from a 35 percent coverage ratio to end the third quarter.

It also had $19.7 million in repossessed property on Dec. 31.

Recent foreclosure actions filed by U.S. Century Bank include:

• A $3.9 million foreclosure lawsuit against Grove Developers over 19 unsold units at South Two Seven Lofts in Coconut Grove.
• A $3 million foreclosure lawsuit against Ola Tamiami Office Center over an uncompleted office project in southwest Miami-Dade County.
• A foreclosure lawsuit against Valencia Investors based on a $4.6 million mortgage covering an apartment building in Coral Gables.