City Bank announced a net loss of USD22.76 million for the quarter ended 30 June 2009, or USD1.44 per diluted share compared to a reported net income of USD5.32 million, or USD.34 per diluted share for the same quarter in the prior year.
The Bank also announced a net loss of USD30.78 million or USD1.95 per share for the six months ended 30 June 2009 compared to a net income of USD15.00 million or USD.95 per share for the same period in 2008. The primary causes for the net loss were a non-cash provision for loan losses of USD11.25 million and non-cash valuation adjustment for foreclosed real estate of USD5.94 million for the three months ended 30 June 2009. These non-cash charges, totaling USD17.19 million, represent the Banks estimate of changes in the appraised value of loan collateral and foreclosed real estate due to the ongoing disruptions to the normal level of market activity in residential construction sales.
As a lender focused on residential construction, the amount of distressed selling of real estate has significantly reduced the appraised value of residential building lots. The Banks strategy is an orderly sale of loan collateral by building houses and selling completed homes rather than bulk sales of building lots that currently have very low appraised values. The net loss was also impacted by a deferred tax valuation allowance of USD7.49 million, which limited the effective tax benefit rate to 4.83% instead of the statutory rate of 35%.
The Bank is executing on our plan to reduce non-performing assets and build liquidity as we reduce the total asset size of our balance sheet. We are prudently financing the construction of homes in housing developments where sales are actively occurring. We are not planning on selling building lots where the appraised value is significantly below the value of the land with a completed house, says Conrad Hanson, president and CEO.
L.D.