Cascade Bank posts $22 million loss

Published 8:32 pm Monday, July 27, 2009

EVERETT — Everett-based Cascade Financial Corp. posted a nearly $22 million quarterly loss Monday, largely to cover expected bad loans.

“Like many other Northwest banks, the prolonged downturn in the residential real estate market has adversely impacted our loan portfolio and caused us to add to our reserve for loan losses,” said Carol Nelson, president and chief executive.

Nelson had warned investors of the expected losses about 10 days ago, noting that in addition to bad loans, the company also had to write off nearly $12 million in goodwill. The goodwill write-off is an accounting requirement that represents the loss in value of Issaquah Bank, which Cascade purchased in 2004. It does not affect the amount of money Cascade has for operations, Nelson said.

Cascade Financial, the holding company for Cascade Bank, has suspended its cash dividend for shareholders to conserve cash.

Nelson said that during the last three months, Cascade increased its provision for loan losses by $18.3 million. Its loss to shareholders totaled $21.9 million, or $1.81 per diluted share. That compares to a profit of $3.6 million, or 30 cents a share, during the same period last year.

Nelson said continued declines in the real estate market have increased losses, especially in loans for land development and construction. She said nonperforming loans represented 9.3 percent of its loan portfolio, or $114.4 million. That compares with 4 percent during the first three months of the year and 2.7 percent a year ago.

Nelson said the bank has now reduced its real estate construction loans by 24 percent. She also noted that the bank has increased its checking account balances by 72 percent.

Shares of Cascade stock rose in value by 1 cent to $2.17 on Monday.