The nation's 18th-largest bank said it will take a third-quarter charge against profits of $110 million to cover losses in Russia, and take an additional $45 million from earnings to put aside for potential defaults of Russia loans.
"As a result of this action," Republic said in a statement, "Republic anticipates that its earnings for the third quarter will be substantially eliminated."
The announcement sent Republic's shares tumbling $4.62@1/2 to $45.50 in late morning trading on the New York Stock Exchange.
Republic said it wrote down its investments in Russia to 15 cents on the dollar, in keeping with Russia's write-down of its own government bonds to 15 cents on the dollar earlier this week.
"Absolutely, it's material," said Marni Pont, a bank analyst at Keefe Bruyette & Woods. "Republic's perception in the market is that of a very risk-averse institution, and I do believe they have a very strong risk management philosophy. But the market's moved so quickly and so fiercely against them. It is something of a black eye in terms of risk management."
The bank holding company earned $119 million in the second quarter of this year and $112 million in the third quarter of last year.
David Berry, a bank analyst at Keefe, Bruyette, said Republic has about $300 million in loans out to Russia.
Other big U.S. banks have about the same amount of money at risk. But because Russia loans are a much smaller part of their portfolios, they will be less adversely affected, Berry said.
Berry estimates that Citicorp, for example, has about $300 million in loans to Russia. But it earned $1.1 billion last quarter.
Written By Patricia Lamiell