Executives at troubled Boulevard Bancorp announced Wednesday plans to sell a large portion of their portfolio of foreclosed property as they reported an anemic $339,000 profit for the second quarter.
The $1.6 billion bank has set a goal of selling $50 million of its $100.8 million in non-performing assets in the next six to nine months, said executives. All the assets on sale are collateral from problem commercial real estate loans that have been foreclosed or are about to be foreclosed. A large part of it is vacant residential land in the Chicago area, they said.
”We`re really in a difficult profitability environment, and we are not going to see much higher profits until we reduce our non-performing assets,” said Richard Schroeder, president and chief executive, in a press conference.
Boulevard is moving to sell its problem real estate to bring the bank back to higher profits in 1992. The company probably will take further charges because of the sales and ”we may or may not show a profit in the second half,” Schroeder said.
”We want to spend some money to remove this impairment,” he said.
Timothy Towle, president of the group`s flagship Boulevard Bank, said the full cost of carrying the banking company`s non-performing assets is running at $1 million a month.
The second-quarter earnings, which amount to 5 cents per share, marked the second quarter in a row that the bank group has eked out a small profit after losing $24.1 million in 1990. The second-quarter performance compares to a loss of $3.83 million, or 57 cents per share, a year earlier.
The bank group`s losses mounted last year as it was dogged by a growing portfolio of bad loans.
Non-performing assets were down slightly in the quarter from $101.3 million on March 31. But because the loan portfolio shrunk in the period, they rose as a portion of loans, to 9.37 percent from 9.16 percent.
Boulevard identified $21.3 million in new non-performing loans in the quarter, said a spokeswoman. The level of non-performing assets fell because of a combination of $12.4 million in net chargeoffs and the sale of property in the quarter.
The amount of new problem loans identified in the second quarter was the lowest in a year, said the spokeswoman. She noted half the amount was due to a single commercial loan secured by assets valued at twice the amount of the loan.
John E. Snow, an analyst for the Chicago Corp., said he is ”not looking for (Boulevard) to get up to anything like peer performance next year.
”They have had a somewhat spotty record of saying we have it all under control, and we`ll take care of it now,” he said, ”but I don`t have any problem with their logic. It seems sensible.”
Boulevard chief financial officer George Cook Jr. said deposits rose 1 percent in the quarter because of a certificate-of-deposit advertising campaign that increased time deposits by 13 percent. However, deposits of more than $100,000, which are not fully covered by federal insurance, declined 5 percent in the quarter.
