Strata Parent Reports $8M Quarterly Loss On Bad Investments
Service Bancorp Inc., the holding company for Medway-based Strata Bank, reported a third quarter net loss of $8 million compared to a $224,000 net loss for the same period a year ago.
The company said the loss was primarily the result of a non-cash charge related to the bank's Fannie Mae, Freddie Mac and Lehman Brothers Holdings securities. In September, the bank said it would take a $6.6 million charge on the relative worthlessness of its Fannie and Freddie securities holdings. Soon thereafter, it said it would take a $1.9 million charge related to its holdings of commercial bonds issued by Lehman Brothers.
The bank's regulatory capitalization ratio was downgraded in September from "well capitalized" to "adequately capitalized."
Strata's investment securities decreased 20 percent to $46.3 million, primarily due to the Fannie, Freddie and Lehman write downs. Its total assets declined by 3 percent to $402.6 million. Its non-interest expenses increased by 12.6 percent to $3.3 million, its non-interest income swung to an $8.1 million loss from a $569,000 gain in the third quarter of 2007. The bank's provision for loan losses shrank by 44 percent to $290,000.
The bank's total deposits increased by $2.1 million to $262.9 million, its non-performing loans decreased by 20 percent to $4.6 million and its net interest income increased by 14 percent to $2.9 million.
In late September, Pamela Montpelier, former Strata CEO, left the bank and was replaced by interim President and CEO Edward A. Hjerpe III, a former executive with Connecticut-based Webster Bank.
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