Franklin Bank in Houston said it lost $246 million in the third quarter and that it intends to amend its second-quarter call report to show that it has been "significantly undercapitalized" since at least June 30.

Its parent company, the $5.3 billion-asset Franklin Bank Corp., said Sunday that it was in talks with several parties about recapitalizing the thrift subsidiary and that it was keeping regulators informed of its progress.

"The challenges in the financial services industry we are facing today are without precedent," Alan Master, the parent company's president and chief executive, said in a press release.

"Our announcement today is intended to inform stakeholders in Franklin that the board continues to seek the best opportunity for the bank to meet and solve these challenges."

Franklin Bank Corp. has yet to file quarterly reports this year. However, a call report filed Sunday with the Federal Deposit Insurance Corp. said the thrift unit lost $246 million in the third quarter, compared with a loss of $753,000 a year earlier.

The thrift had a $28 million impairment charge for goodwill, $63 million in chargeoffs — mostly real estate construction loans — and a loan-loss provision of $147 million.

Its total risk-based capital ratio declined to 5.11% at the end of the third quarter, from the reported 10.16% at the end of the second quarter.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.