Problems with its loan portfolio cut into second-quarter profits at Monterey Bay Bancorp of Watsonville, Calif., the banking company said.
Net income at the $472 million-asset bank fell 38% from the same period a year earlier, to $554,000. Monterey blamed much of the earnings hit on a jump in substandard loans, which forced it to raise its loan-loss reserves 287% from last year, to $775,000.
Loans classified as substandard rose 29.5% from the first quarter, to $10.1 million.
Chief executive officer C. Edward Holden attributed the loan problems to its ongoing transition from a savings and loan to a commercial bank.
