Lynnwood-based City Bank slows losses in first quarter
Published 11:36 pm Monday, May 11, 2009
LYNNWOOD — City Bank managed to bleed a little less in the first quarter of 2009, slowing its losses to $8.02 million.
That’s just a fraction of the $64.88 million City Bank lost in the last quarter of 2008, when the ailing housing market rendered the bank’s loan portfolio, largely comprised of residential construction lending, a big nonperformer.
Overall, the first quarter brought a loss of $0.51 per diluted share during the quarter that ended March 31. From October through December of 2008, the bank saw a loss of $4.12 per diluted share.
Like many other small banks across the country, City Bank is plagued by a stagnant housing market, officials said Monday when the bank’s quarterly earnings were released. Home builders haven’t been able to sell new construction because of a slump in the real estate market, and City Bank officials said they’ve seen a significant uptick in loans that are past due or otherwise nonperforming.
Interest-related income for the first quarter of 2009 was down 55.13 percent over the same quarter last year. Nonperforming assets, meaning outstanding loans and foreclosed properties, reached $607.17 million on March 31.
But though City Bank continues to suffer from a lack of interest- related revenue, bank officials said they’re moving aggressively to unload properties securing the bank’s $1.03 billion loan portfolio.
During the first four months of this year, the bank sold roughly 400 foreclosed or otherwise bank-owned homes, and about 170 more homes are slated to be sold in May and June. The bank reported the total transaction amount of those sales is estimated at nearly $170 million.
“We are encouraged by sales of homes, both unit and dollar volumes, during the first four months of 2009,” City Bank CEO Conrad Hanson said.
City Bank announced in March that 2008 losses were $25 million higher than originally thought after reappraising loan losses, accounting for some of the bank’s fourth-quarter losses last year. Last month, the bank was anticipating federal regulators would require adjustments to lending and operating practices.
At the start of 2009, the bank froze employee salaries to in an attempt to curb spending.
“In this environment, you’re constantly looking at all aspects of running a business,” Hanson said.
City Bank’s stock price increased $0.10 Monday, or 2.9 percent.
