City Bank of Lynnwood on Monday reported the first yearly loss in its 34-year history, as the ongoing housing crisis pushed more than half the bank's assets into the nonperforming category.
City Bank of Lynnwood on Monday reported the first yearly loss in its 34-year history, as the housing crisis pushed more than half the bank’s assets into the nonperforming category and forced it to set aside tens of millions of dollars for bad loans.
City Bank lost nearly $40 million, or $2.53 a share, in the fourth quarter of 2008. For the full year, it lost $35.9 million, or $2.27 a share. In 2007, the bank made $41.5 million in profit.
Nonperforming assets — primarily past-due loans and foreclosed properties — soared to $679.8 million at the end of 2008, from $16.7 million a year earlier. That’s just over half City Bank’s total assets of $1.35 billion, an extraordinarily high level of problem debt.
City Bank’s shares fell $1.37 to close at $1.78, a 43.5 percent plunge, after Monday’s premarket earnings news.
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The nonperforming assets “will present a drag on earnings in 2009,” Chief Executive Conrad Hanson said in a statement. “However, we hold a cautiously positive outlook for the mid-term and long-term (local) economy. We believe that real estate in the Puget Sound area … is cyclical and has inherent value independent of the currently depressed market prices.”
The company, which has eight branches in North King and Snohomish counties, set aside $91.1 million last year to cover loans that go bad in the future. That was up from the less than $2 million it set aside in 2007.
Elsewhere, First Financial Northwest of Renton reported a loss of nearly $3 million, or 14 cents a share, for the fourth quarter. But for the full year, the parent company of First Savings Bank Northwest said it earned $4.7 million, or 22 cents a share, versus 2007’s nearly $4 million loss.
Year-to-year comparisons are somewhat skewed because First Financial contributed $16.9 million to its foundation last year as part of its conversion from a mutual company to a stock company. The hefty donation artificially depressed last year’s results at the company, which has one banking office in Renton.
The company’s nonperforming assets, most of them tied to construction and land development, totaled $58.6 million at the end of 2008. First Financial last year set aside $9.4 million for future loan losses, up from $6 million it set aside in 2007.
WSB Financial Group, parent of Westsound Bank in Bremerton, lost $11.6 million ($2.08 a share) in the fourth quarter and $32.7 million ($5.86 a share) for the year. The company’s $131.9 million in nonperforming assets accounted for more than a third of its total assets at year’s end.
Westsound Bank has nine branches in Kitsap, Clallam, Jefferson, Pierce and King counties.
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org