Where some banks and brokerages facing difficult financial times have decided to reward executives whose decisions led to losses, at least one South Sound bank is holding leadership accountable.
Venture Financial Group – parent of DuPont-based Venture Bank – this week announced a third-quarter net loss of $27.74 million. During the same quarter a year ago, the group reported a profit of $3.197 million.
Along with the loss, the group added approximately $10 million to its provision for losses on loans.
Total deposits rose to $999 million from $854.7 million a year ago.
For the net loss, blame a sour investment in preferred shares of Fannie Mae and Freddie Mac, the home-loan agencies recently subsumed by the federal government. For the additional loan-loss provision, blame an economy that has not been kind to residential developers.
Had loans been better and the shares not been bunk, Venture would likely have reported a profit for the quarter.
Venture President Jim Arneson said Thursday that the problem with the Fannie and Freddie shares “was extremely disappointing and a surprise. What we need to focus on is moving forward.”
And executives are taking responsibility. Board members will no longer be paid a fee to attend meetings. All management bonuses have been eliminated. All executive stock options, which had been scheduled to vest, have been returned.
“Our board of directors consists of community business people,” said Venture Chairman Ken Parsons during an interview Thursday morning. “Their philosophy, our philosophy, is that customers have to come first. Management gets rewards. There are no rewards if our customers and our shareholders didn’t win first. That’s community banking. Getting rich while the company (loses money), that just doesn’t wash in community banking.”
“This bank will return to profitability quickly,” said Arneson.
Earlier this year, Venture cut some 50 employee positions, primarily through attrition, Arneson said. The company currently employs about 250 people.
There are no immediate plans for further layoffs, he said. One change, however, has delayed or stopped plans for an intended new Venture financial center in King County.
One interesting increase in the quarterly results concerned foreclosures. Among its assets, Venture reported having $3.85 million in foreclosed property on its books, while both a year ago and at the beginning of the year, it carried only $68,000.
Net charge-offs (or bad loans taken from the books) for the quarter were $4.5 million, compared to $26,000 a year ago.
Total nonperforming loans increased to $53.8 million from $1.8 million at the end of the third quarter a year ago.
Of the problem loans, Parsons said, “Some are merely a concern. Some are troubled. Some, we’ve taken formal action. We’re certainly working with these borrowers.”
“We’re not used to reporting losses, Arneson said.
“It’s sort of like an empty feeling,” said Parsons. “It causes us to reassess. We have to focus on what’s in the future. We’re not going to let this drag our reputation down.”
“We’re still the bank we’ve always been,” Arneson said.
C.R. Roberts: 253-597-8535
blogs.thenewstribune.com/business
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