Despite having negative equity, Albina Community Bancorp in Portland, Ore., managed to turn a profit for a second quarter in a row.
The $136 million-asset community development bank reported Thursday earnings of $101,000 in the second quarter, compared to a loss of $1.1 million a year earlier. It posted earnings of $161,000 in the first quarter.
The company achieved the positive results by not setting aside any money for loan losses in the quarter. A year earlier, its provision for loan losses was $900,000.
Nonperforming assets declined 62% from a year earlier and a 25% from the first quarter to $5.5 million, or 4.07% of total assets. The company added that $3.3 million of the nonperforming assets were actually current, but classified as such because of cash flow deficiencies “which the borrowers are supplementing from other sources.”
Despite the improved credit metrics, the company posted shareholder equity of negative $1.18 million, narrowing the hole by 10% from the first quarter. The company did not provide capital ratios for its Albina Community Bank unit, but at March 31, the bank was significantly undercapitalized with a total risk-based capital ratio of 5.57%.
In November, the bank entered into a supervisory prompt corrective action directive with the Federal Deposit Insurance Corp., where the regulator ordered the bank to sell enough stock to return the bank’s capital ratios to adequately capitalized levels or find a buyer.