EVERETT — After six months of losses this year, Everett-based Cascade Financial Corp. moved into the black, earning $1 million during the third quarter.
“Cascade posted a solid quarter, returning to profitability with record checking-deposit growth, controlled operative costs and a stable net interest margin, in spite of the drag of nonperforming loans,” said Carol Nelson, chief executive and president of the parent firm of Cascade Bank.
The bank’s earnings, equal to 9 cents a share, compare to a loss of $6.6 million, or 55 cents a share, a year ago.
Adding the amount paid to the U.S. Treasury for the $39 million loaned to the bank, Cascade earned $1.6 million during the period.
Nelson said the company continues to deal with bad loans, but it managed to increase its deposits and capital during the third financial quarter.
Rob Disotell, chief credit officer, said the bank saw nonperforming loans increase by $11.2 million during the quarter, mostly in the real-estate sector. But the pace of bad loans has slowed, he said.
The bank owned nearly $1 million less in repossessed real estate this quarter than it did during the previous one, he said.
Nelson said that the bank has received notice from the Federal Deposit Insurance Corp. that the regulatory agency is concerned with the increased levels of nonperforming loans.
The FDIC expects the bank to obtain permission before providing dividends to investors, notify it of management changes and take steps to preserve capital, Nelson said.
A number of banks in Snohomish County have received cease-and-desist orders from the FDIC, listing a number of steps they must take. Nelson said that’s not what Cascade received, describing it as an “internal corrective action.”
She said the FDIC notice was based on its second-quarter results and that the bank has already taken action, cutting dividends and expenses and adding to its financial reserves.
Employee year-over-year compensation at the bank is down 11 percent, Nelson said.
She also noted that the bank’s new Edmonds branch, which opened in May, has been very successful, collecting $15 million in deposits in the first four months.
Deposit growth in general was good news for the bank, which saw deposits rise by $31.4 million, or 3 percent from the previous quarter. From a year ago, they’re up 4 percent. Checking account balances were up 14 percent from the prior quarter.
Nelson said the deposit increases have lowered the bank’s costs.
“It’s a pretty rough environment, and we feel very glad to be profitable,” she said.
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