Published: Wednesday, October 22, 2008
Cascade Bank hurt by bailout of mortgage giants
EVERETT -- Everett-based Cascade Bank reported a major earnings loss Tuesday caused by the government bailout of Fannie Mae and Freddie Mac.
Cascade, which held a significant amount of preferred shares of stock in the mortgage giants, reported a charge of $11.3 million after the government's conservatorship left the shares with little value.
The charge left the bank with a third-quarter loss of $6.6 million, or 55 cents per share. That compares with earnings of $3.8 million, or 31 cents a share, during the same period a year ago.
Without the investment loss in Fannie Mae and Freddie Mac, which before the bailout had been considered a safe move with strong dividends, the company would have reported quarterly earnings of $4.7 million, or 38 cents a share.
"Although our quarterly and year-to-date results were hampered by the (bailout loss) from our Fannie and Freddie securities, our operating results during the third quarter were strong," said Carol Nelson, president and chief executive.
She cited an increase of net income of 19 percent from a year ago and a 20 percent increase in noninterest income.
"Additionally, loan and deposit totals again hit record levels," she said.
After the bailout loss, at least one analyst suggested a "high likelihood" that Cascade would need to raise additional funds to be considered sufficiently capitalized under government banking regulations.
Nelson said in her third-quarter report that Cascade "remains well capitalized for regulatory purposes." She said shareholder equity was $119 million, the same as it was a year ago and that book value of the bank's shares stood at $9.87 now, in comparison with $9.89 a year ago.
Nelson said the bank has had strong growth in new checking accounts, resulting in a 32 percent increase in checking fees. She also noted a 9 percent increase in deposits and a 13 percent increase in total loans, raising the loan amount to $1.21 billion.
Nelson also said that another positive development was an improvement in its credit numbers. She said the bank's nonperforming loans total was cut in half and that its charge-offs were modest.
During the third quarter, the bank continued to increase the amount of money set aside for loan losses, adding $1.3 million, to bring the total to $4.8 million, she said, adding that that number compares with $850,000 set aside in 2007.
Cascade, which held a significant amount of preferred shares of stock in the mortgage giants, reported a charge of $11.3 million after the government's conservatorship left the shares with little value.
The charge left the bank with a third-quarter loss of $6.6 million, or 55 cents per share. That compares with earnings of $3.8 million, or 31 cents a share, during the same period a year ago.
Without the investment loss in Fannie Mae and Freddie Mac, which before the bailout had been considered a safe move with strong dividends, the company would have reported quarterly earnings of $4.7 million, or 38 cents a share.
"Although our quarterly and year-to-date results were hampered by the (bailout loss) from our Fannie and Freddie securities, our operating results during the third quarter were strong," said Carol Nelson, president and chief executive.
She cited an increase of net income of 19 percent from a year ago and a 20 percent increase in noninterest income.
"Additionally, loan and deposit totals again hit record levels," she said.
After the bailout loss, at least one analyst suggested a "high likelihood" that Cascade would need to raise additional funds to be considered sufficiently capitalized under government banking regulations.
Nelson said in her third-quarter report that Cascade "remains well capitalized for regulatory purposes." She said shareholder equity was $119 million, the same as it was a year ago and that book value of the bank's shares stood at $9.87 now, in comparison with $9.89 a year ago.
Nelson said the bank has had strong growth in new checking accounts, resulting in a 32 percent increase in checking fees. She also noted a 9 percent increase in deposits and a 13 percent increase in total loans, raising the loan amount to $1.21 billion.
Nelson also said that another positive development was an improvement in its credit numbers. She said the bank's nonperforming loans total was cut in half and that its charge-offs were modest.
During the third quarter, the bank continued to increase the amount of money set aside for loan losses, adding $1.3 million, to bring the total to $4.8 million, she said, adding that that number compares with $850,000 set aside in 2007.
Comments
(
