EVERETT — Frontier Financial Corp. announced Tuesday a 88.6 percent drop in its second quarter earnings compared with the same three months last year.
“In the 30 year history of the bank, we have had to work through some very tough business cycles,” said John Dickson, president and chief executive officer of Frontier Financial, in a statement. “And I’m sure we’ll look back at this cycle as one of the most daunting.”
Frontier, the parent company for Everett-based Frontier Bank, reported its second quarter net income decreased to $2.1 million, or 4 cents per diluted share, from $18.2 million, or 40 cents per diluted share, in the second quarter of 2007. The Everett-based bank said its net income for the first six months of 2008 was $17.6 million, compared with $35.7 million in the first half of 2007.
The bank attributed the drop in net income to setting aside money to cover for bad loans. Frontier sat aside $78.7 million for loan losses as of June 30, 2008. That’s up from $42.8 million at the end of June 2007.
For the quarter ended June 30, 2008, net loan write-offs were $6.5 million, or 0.16 percent, of average quarterly loans. This compares with net loan write-offs $285,000, or 0.01 percent, of average loans for the quarter ended June 30, 2007.
“With total reserves for loan losses of $81.6 million … we have over $460 million to absorb any losses that may arise due to market uncertainties,” said Rob Robinson, Frontier’s chief credit officer.
Frontier’s net loans of $3.73 billion at June 30, 2008, reflect an increase of 18.3 percent from June 30, 2007. New loan originations were down in the first six months of 2008 to $583.7 million compared with $901 million for the first half of 2007. The ratio of loans past due over 30 days was 3.21 percent of total loans on June 30, 2008, compared with 0.45 percent on June 30, 2007.
At June 30, 2008, Frontier’s total assets were $4.16 billion and deposits totaled $3.30 billion. Frontier noted that it had obtained approval from the Federal Reserve Bank to access additional borrowings after June 30. This brings available liquidity, including borrowings, to more than $1 billion.
Frontier’s board previously declared a third-quarter dividend of 6 cents per share to share owners on record as of July 8, 2008, which was payable July 22. The reduced dividend marked the first time in 34 consecutive quarters that Frontier did not increase its cash dividend. Bank officials said they reduced the dividend as a result of concern over the continuing decline in the housing market and its impact on borrowers.
Frontier’s shares closed up 16 cents at $11.40 on Tuesday but fell nearly 6 percent in after-hours trading Tuesday.
Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.
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