City Bank in Lynnwood reports annual loss

Published 9:59 pm Monday, February 2, 2009

LYNNWOOD — City Bank in Lynnwood lost $39.9 million for the last quarter of 2008 mainly due to mounting loan losses in the troubled housing market, the company reported this morning.

The bank also reported a net annual loss of $35.8 million for 2008, down from an annual income of $41.5 million in 2007. That’s the first annual loss ever reported in the bank’s 34-year history.

“The fourth quarter of 2008 was the worst housing slump and most adverse economic climate in my 45 years of banking,” said Conrad Hanson, the bank’s president and chief executive officer.

The fourth quarter loss compares to an income of $10.2 million a year ago. The bank’s earnings have declined for six consecutive quarters. City Bank has fallen into the red for the last two quarters.

The bank suffered a $10.96 million loss in the third quarter, as it set aside money to deal with loan losses in the sagging real estate market. The bank focuses on real estate lending.

The bank’s problems got worse when its nonperforming assets climbed to about $680 million at the end of 2008. That represents 50.3 percent of the bank’s total assets.

City Bank officials are taking aggressive actions to deal with nonperforming assets and to reduce the bank’s concentration in residential construction lending to weather the national economic downturn, Hanson said.

“These steps are showing promise, but they will take time to work through and the current environment is highly uncertain,” Hanson said.

The bank’s stock this morning plunged on its earnings report. It was being traded at $1.90 per share as of 10:45 a.m., down $1.25 or 39.7 percent.

Reporter Yoshiaki Nohara: 425-339-3029 or ynohara@heraldnet.com.