Last fall, Provident Bank’s real estate investments were valued at more than $106 million. Now, those same holdings are worth just over $15 million, the bank said Monday.
Provident reported a $5.4 million loss for the third quarter, stemming from $24.6 million in write-offs in real estate holdings and other mortgage-backed securities.
The loss follows a $16 million profit in the same quarter last year and a $10.2 million profit in the second quarter.
That second-quarter profit was reduced from a previously announced figure after the company took a separate $16.7 million write-down to the real estate and mortgage investments.
Provident also said it had received preliminary approval Friday to participate in a $250 billion U.S. Treasury program that would buy shares in thousands of firms across the country.
Chairman and Chief Executive Officer Gary Geisel said Provident was still reviewing the program, and had not determined whether it would participate or how much funding it might seek.
Despite the losses, Geisel said the bank’s core operations, including deposits and loans, remain strong, and that Provident exceeded the government’s definition of a “well-capitalized” bank.
“We feel like we’ve taken steps to see Provident through the storm and come out the other side as a stronger financial institution,” Geisel added.
Those steps include capital raised by the bank earlier this year in anticipation of the hit to those securities, he said.
Analysts said many banks of Provident’s size were hit with heavy real estate write-downs last quarter.
“It’s not surprising, and it seems to be par for the course for their peers this quarter,” said Jim Sinegal of Chicago-based research firm Morningstar.
Provident’s percentage of non-performing loans increase to 0.95 percent last quarter from 0.59 percent in part due to two residential construction loans totaling $15.8 million placed on non-performing status, the bank said.
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