Nonperforming assets at City Bank in Lynwood, Wash., have ballooned to 44.3% of its total, but the company said Monday that it is encouraged by its success in securing home sales.
The $1.4 billion-asset City Bank, weighed down by bad residential construction loans, swung to a loss of $8 million in the first quarter, from a profit of $9.7 million a year earlier.
It cited the nonperforming assets, which generated $5 million of expenses, required a $5.6 million provision for credit losses and reduced interest income.
The loss was the third in as many quarters for the company, whose auditors have warned it might be unable to survive.
But Conrad Hanson, City Bank's president and chief executive officer, has said a turnaround plan that calls for selling nonperformers should enable the company to recover.
In a press release reporting the first-quarter results Monday, Conrad said City Bank sold 399 homes for more than $116 million from January through April. It also has pending sales on 171 properties totaling $53.31 million.
City Bank remained well capitalized at the end of the quarter, with all three of its regulatory capital ratios above 10%.
