Cascade Financial Corp.’s 1Q loss: $32M

EVERETT — Cascade Financial Corp. announced a first-quarter loss of $32.8 million Wednesday, attributing almost all of the decline to loan losses.

The parent company of Everett-based Cascade Bank is blaming the real estate market for the decline, and betting that a recent mass-sale of bank-owned properties will help reverse the trend.

“Despite a difficult environment for community banks, our team has kept its focus on strengthening our operations by taking share from competitors, growing our deposit base and working through our loan portfolio to reduce Cascade’s exposure to real estate construction loans,” Cascade CEO Carol Nelson said.

But real-estate loans continue to be a problem for the bank — though not as big a problem as some other community banks.

“The financial results we experienced in the quarter were almost entirely attributable to the deterioration in local real estate values,” Nelson said.

Cascade remains capitalized at a level above what’s required by federal regulators, according to a statement from the bank.

At the end of March, Cascade’s land acquisition and development portfolio had declined to $108.4 million. That accounted for 46 percent of Cascade’s nonperforming loans.

Cascade’s first-quarter provision for loan losses was $31.3 million.

“Housing and land prices have not yet stabilized in the Pacific Northwest, resulting in lower lot values,” said Rob Disotell, the bank’s chief credit officer.

Earlier in April, Cascade entered agreements to sell nearly 400 residential building lots acquired through foreclosures, a big step toward reducing the bank’s exposure to real-estate woes. The two deals are expected to close later this year.

“While we never welcome declining asset values, we are pleased to have nearly resolved our two largest residential land assets,” Disotell said.

Read Amy Rolph’s small-business blog at www.heraldnet.com/TheStorefront. Contact her at 425-339-3029 or arolph@heraldnet.com.