The company reported a net loss of $59.3 million in the fourth quarter, compared to net income of $3.3 million a year earlier. During the fourth quarter, Southwest took a $101 million pretax loss after it sold $301.6 million in problem loans.
The sale also set back Southwest's 2011 earnings; it lost $72.5 million in 2011 compared to net income of $12.8 million in 2010.
Rick Green, Southwest's president and chief executive, said in the company's press release that the quick-hit sale was preferable to waiting on loan work outs "for some unknown period and with uncertain earnings impact."
Southwest reduced nonperforming loans by 90% from a quarter earlier, to $13.5 million, or 0.8% of the total portfolio. Absent the bulk loan sale, nonperforming loans would have declined just 5% from the third quarter. Potential problem loans were also cut in half from a quarter earlier, to $133 million at Dec. 31.
"Although the result was a loss for 2011, we start 2012 with significantly improved credit quality and regulatory capital ratios that exceed 'well capitalized' standards," Green said.
The $2.4 billion-asset company posted a total risk-based capital ratio of 20.8%.
Green also indicated that the sale would help Southwest payments on interest and dividends toward its trust preferred securities holders as well as its Troubled Asset Relief Program funds. Southwest began deferring those payments in July 2011.
Be the first to comment on this post using the section below.