Cascade Bank to sell land acquired in bad loans

Cascade Financial Corp. announced today it will sell almost 400 parcels of land in King and Snohomish counties in an attempt to reduce its exposure to bad real estate deals.

The land was acquired from two large residential real estate loans, according to officials at Cascade Bank.

With the sale of those lots, Cascade expects to set aside from $25 to $27 million for loan losses in the first quarter of 2010. That increase is the result of charges related to those two loans and updated appraisals on other real estate loans.

The bank as already entered into agreements to sell the lots. With the first sale, Cascade will record a $5.6 million charge on a $13 million loan that was foreclosed on. The second one will bring a $8.2 million charge from selling a $17 million land acquisition and development loan.

“Housing and land prices have not yet stabilized in the Pacific Northwest, resulting in lower lot values,” said Rob Disotell, Chief Credit Officer at Cascade. “Consequently, we also are recording additional impairments of approximately $13 million on other loans to reflect recently updated appraisals on real estate collateral securing loans in our portfolio. While we never welcome declining asset values, we are pleased to have negotiated sales to resolve our two largest land acquisition and development loans.”