5 state banks' profits plunge on bad loans

Five Washington financial institutions reported sharply lower results Thursday due to growing piles of bad loans.

Washington Federal's quarterly profit plunged to $2.5 million, down 92 percent from the year-earlier quarter, as it added $52.2 million to its provision for loan losses, compared with $13.2 million in the year-ago quarter.

The Seattle-based parent of Washington Federal Savings repurchased during the quarter $200 million of preferred stock held by the U.S. Treasury under the Troubled Asset Relief Program, resulting in a charge of $2 million.

Sterling Financial of Spokane reported a quarterly net loss of $33.9 million for common shareholders, compared with a profit of $11.7 million in last year's comparable period. The parent of Sterling Savings and Golf Savings cited an elevated loan-loss provision of $79.7 million, higher expenses for resolving real-estate loans gone bad, and increased Federal Deposit Insurance Corporation insurance premiums.

Columbia Banking System of Tacoma said it had a net loss of $6.6 million applicable to common shareholders, compared with net income of $1.9 million for the same quarter of 2008. The loss reflected a provision for loan losses of $21 million "due to the continued decline in real estate values, principally relating to residential land, lots and lot development loans," the bank said.

Washington Banking, the holding company for Whidbey Island Bank, said its profit available to common shareholders was $818,000 in the quarter ended June 30, compared with $2.4 million in the same quarter a year ago.

Rainier Pacific Financial Group of Tacoma reported a net loss of $3.7 million, compared with net income of $1.0 million for the same period in 2008.