Citing trouble with its construction loans, Cascade Financial Corp. in Everett, Wash., said Thursday that it expects to report a second-quarter loss of $19 million to $21 million.
The $1.7 billion-asset company estimated that it would take a provision for loan losses of $15 million for the quarter, along with a noncash goodwill impairment charge of $12 million on a prior acquisition.
"The continued decline in the residential real estate market has resulted in an increase in nonperforming loans and chargeoffs, primarily in the residential land development and construction portfolios," said Carol K. Nelson, Cascade's president and chief executive.
Because of the deteriorating credit quality, Cascade suspended its quarterly dividend on common shares to preserve capital. In previous quarters it had reduced the dividend and most recently paid a penny on each share.
The company stressed that it would remain well capitalized. It projected that the total risk-based capital ratio would be above 12% at June 30, down from 13% at March 31.
Cascade said it expects to report its second-quarter results after the market closes July 27.
The company lost $5.3 million in the first quarter. Nonperforming loans made up 4% of its total loans at March 31.
Cascade received $39 million from the Treasury Department's Troubled Asset Relief Program in November.
