Following a $17.8 million third-quarter loss, Frontier Financial of Everett said it will reduce executives' total compensation by about 34 percent this year.
After a $17.8 million third-quarter loss, Frontier Financial of Everett said it will reduce executives’ total compensation by about 34 percent this year.
The bank also will stop paying directors’ meeting fees indefinitely.
Beginning Jan. 1, 2009, CEO John Dickson will take a 10 percent reduction in his base salary, and other officers will take a 5 percent cut. It also will not pay them discretionary bonuses. As a group, their compensation will be down 34 percent from 2007, the company said.
Those and other cost cuts are expected to shave more than $8.5 million in expenses.
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Frontier lost $17.8 million, or 38 cents a share, in the third quarter, compared with a profit of $2.1 million in the third quarter last year. It set aside $42.1 million for loan losses, up from a loan loss provision of $2.1 million a year ago.
The company charged off $24.1 million in bad loans during the quarter, up from $1.3 million a year ago. Construction loans made up the bulk of the charge-offs, at $17.3 million.
Frontier also expanded its “special assets group,” which focuses on reducing nonperforming loans, from five people to 22. All of them were already at the company.
Frontier Financial shares fell 20.5 percent Thursday, dropping $1.91 to $7.41.
$8.8 million loss
Another Washington bank’s profits have taken a hit because of stock it held in Freddie Mac and Fannie Mae, which the federal government has taken over.
Columbia Banking System of Tacoma reported a third-quarter loss of $8.8 million, or 49 cents a share, down from a profit of $9.3 million a year ago.
The loss included a charge of $11.9 million because of the reduction in value of preferred stock it owned in Freddie Mac and Fannie Mae.
“The fundamentals of our business remain sound,” CEO Melanie Dressel said in a news release.
Columbia recorded a $10.5 million provision for loan losses in the third quarter, up from $1.2 million a year ago.
The company charged off $18.7 million in bad loans in the first nine months of this year, up from $192,000 in the first nine months of 2007.
Columbia shares fell 1.6 percent to $13.67.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org