Nov. 20, 2008 at 1:15pm

Venture posts $27 million loss

DuPont-based Venture Financial Group, the parent company of Venture Bank, was hit hard by the federalization of Freddie Mac and Fannie Mae earlier this year. The move essentially caused the bank's investment in those preferred stocks to plummet and created the bulk of the banks $27 million loss for the quarter.

The loss compares to a profit of $3.2 million for the same period last year. Had the bank not seen its preferred stock in the government-chartered mortgage firms and had to add to its loan provision, Venture would have seen a $4.8 million profit. Even as the 30-year-old bank's worst quarterly report, bank officials point out that the financial hole could have been even deeper. The bank had projected the loss could have been as high as $40 million in filings just two months ago.

"We are taking this seriously and expect us to return profitability," President and Chief Executive  Officer Jim Arneson said. "This is a big hit for us. This is several years of earnings."

The company has trimmed expenses through attrition and lay offs amounting to about 40 positions and opted to retain earnings rather than issue dividends. Officials have not decided if the bank will participate in the government financing program that is part of the Treasury Department's $700 billion bailout package. Heritage Bank and Columbia Bank have already gone that route in the first tier of banks since they are publicly traded and listed on exchanges. Venture Bank is not listed on any stock exchange, and therefore falls into the second tier of banks eligible for government funds.

"Frankly, we are still evaluating that on how to approach it," Arneson said, noting that the bank had filed to shift to be publicly traded a year ago and has since allowed that filing to lapse considering the current state of Wall Street.

One bit of good news in the quarterly report is that business loan and local mortgage loans are performing well. Mortgage related lines of business have tripled from a year ago to $1 million for the quarter. The bank is doing between $10 million and $15 million worth of mortgage loans each month.

"We are still lending money," Arneson said, noting that it is shying away from many residential land development and construction loans, however, because of the uncertainty in that market. "There aren't many projects out there that make sense right now."

Venture is holding public meetings about the state of community banking and on business banking in the South Sound at 6:30 p.m. Monday at The Inn at Gig Harbor, 3211 56th St N.W.; and at 6:30 p.m. Tuesday at Pellegrino's Tyee Event Center, 5757 Littlerock Road S.W. in Tumwater.

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