EVERETT — Cascade Financial Corp. announced a quarterly loss of $24.8 million July 21, saying it’s reduced its bad loans and made improvements in its bottom line.
But the improvements didn’t come quickly enough.
Cascade CEO Carol Nelson announced that day that state and federal regulators had placed the bank under a consent order that puts it under closer scrutiny until things do improve.
The order prompted the resignations of bank directors Dwayne Lane and Craig Skotdal, who both said in letters that they expected regulators to “impose unreasonable and untenable conditions.”
“I am not willing to serve as a director under these circumstances,” Lane and Skotdal both said in resignation letters included in the bank’s filing July 21 with the Securities and Exchange Commission.
“It’s sad to see people who are part of the institution and part of our decision-making process depart at this point,” Nelson said.
The consent order requires the bank’s directors to become more involved in day-to-day operations, improve the quality of its assets, raise the bank’s profitability and increase its capital.
Nelson said Cascade’s capital ratio is at 10.7 percent, down from 11 percent the previous quarter but still labeled “well capitalized” by regulators, their highest rating.
Nelson noted that other banks in Snohomish County are operating under a similar consent order.
“We were the last one (to receive the order) because our numbers have been the best,” she said.
In its quarterly earnings report, Cascade noted that its loss included a noncash charge of $12.9 million for a loss in value of Issaquah Bank, which it purchased in 2004. It also included $11.7 million that the bank had to set aside in a fund to cover expected loan losses.
Nelson said that’s a 63 percent decrease from the previous quarter and a 36 percent drop from a year ago.
She said the bank’s nonperforming loans have dropped to 6.3 percent of its total loans from 8.4 percent previously. Nonperforming assets also fell.
Nelson said the bank’s balance sheet is improving and that further improvement will hinge in part on the recovery of the real estate market. Cascade has taken ownership of many of the properties used to secure its loans and hopes to sell them.
It owned $26 million in real estate at the beginning of the quarter and $40 million at the end.
“Now we can try to sell it and get our money back,” Nelson said. “It’s a migration and it’s going in the right direction. It depends on the continued success of the real estate market.”
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