Troubled loan creates Q2 loss for Greater Sacramento Bancorp

A single development loan that stopped paying in the third quarter of last year cost Greater Sacramento Bancorp its earnings in the just-completed quarter.

The holding company for Bank of Sacramento reserved another $1 million in the second quarter for a $6 million loan to a homebuilder that ran into problems in the fall of last year.

As a result, the bank on Monday reported a second-quarter loss of $197,000, down from a $752,000 profit for the same period a year ago.

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For the first half of the year, the bank earned $586,000, down 61 percent from earnings of $1.5 million at the half last year.

Based on current conditions, the bank took aggressive action with its problem loans and updated valuations of collateral underlying the loans, according to a news release.

The bank’s management moved $9.9 million in loans from the past-due loan column to “other real estate owned,” and the bank added $1.6 million to its provision for loan losses during the second quarter.

“Our capital position is excellent, and because of our strong capital position, we have been able to assertively address our loan quality issues — and to provide for them in one swift action,” bank president Bill Martin said in a news release.

Greater Sacramento Bancorp (OTCBB: GSCB) ended the second quarter with assets of $328.7 million, up 3 percent from $318.9 million the year earlier period.