SANTA ROSA, Calif--Redwood Empire Bancorp reported a net loss for the third quarter of $965,000 or 40 cents a share.

It has also announced a restructuring.

"To address the slowdown of mortgage banking activities, brough about by the rising interest rate environment, the company initiated a restructuring plan in the third quarter which should result in quarterly cost savings of $400,000 and a more efficient mortgate operation going forword," said Hohn J. Downey, chairman.

"Eighty-five positions were eliminated; less profitable wholesale morgage offices in Fresno, San Ramon, and San Diego, Calif., were closed; and mangerial responsibilities within the mortgage lending area were realigned."

The company had previously announced a one-time charge totaling $815,000 pretax for the restructuring.

The loss in the quarter is in contrast to net income of $1,425,000, or 44 cents a share, for the third quarter of 1993.

"Mortgage lending remains a very important business for our institution," Mr. Downey said. "We opened new mortgage offices this year in Portland, Ore., and Seattle, where the economies are strenghtening and the outlook for the mortgage business is good."

Because of the restructuring, he added, the company is better able to weather the current morgage lending environment.

"In contrast to the morgage business, our commercial banking activities are strengthening."

He also noted that net interest income was down largely because of the relatively low rates on adjustable-rate mortgages.

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