Frontier Financial has another large loss

There was plenty of bad news in Frontier Financial's earnings report Friday: losses of $33.9 million for the quarter and $258.8 million for the year, $341.5 million in charged-off loans, and shrinking capital ratios that have left the Everett-based parent of Frontier Bank significantly undercapitalized.

But there also were indications that Frontier, one of the local banks hardest hit by the recession and housing bust, may be past the worst.

Delinquent loans fell for the first time in more than a year, though at $705.2 million they're still at exceptionally high levels. Nonperforming assets, which includes foreclosed real estate as well as busted loans, also fell, to $878.4 million. That means nearly a quarter of Frontier's $3.6 billion in assets aren't bringing in any revenue.

And loans past due by 30 to 89 days fell as a percentage of total loans. While Frontier, like other banks, doesn't count such loans as nonperforming, they can be a warning sign of more trouble — or improvement — down the road.

Patrick Fahey, Frontier's chief executive, was cautiously optimistic.

"It is gratifying to see improving trends due to the tremendous efforts and sacrifices of our staff during these very difficult times," Fahey said in a written statement.

He said the bank would "closely monitor and manage" its liquidity, or ability to fund ongoing operations, and continue reducing its concentration in construction and land-development loans.

Nearly four months after the collapse of Frontier's planned buyout by a private-equity firm, which would have injected hundreds of millions of dollars in new capital into the bank, the company said it's still actively seeking new investors, though no new deal has yet emerged.

The per-share loss figures — $7.19 for the quarter and $54.91 for the full year — reflect a 1-for-10 reverse stock split in November, which left Frontier with 4.7 million shares outstanding. The reverse split was intended to push Frontier's shares back above $1 and avoid being delisted from the Nasdaq.

Last week, Frontier's shareholders approved the issuance of up to 200 million shares, which could help the company put together a new recapitalization deal.

In midday Nasdaq trading, Frontier's shares were down 49 cents or 9.9 percent, to $4.46.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com