Oct. 30--Frontier Financial, one of the more troubled local banking companies, said Thursday it lost $141.1 million, or $2.99 a share, in the third quarter, due almost entirely to another hefty provision for future loan losses.

Everett-based Frontier, whose proposed acquisition by a "blank check" investment company fell apart this month, also said more than a quarter of its loans -- $810.5 million worth -- were past due or otherwise nonperforming.

More than two-thirds of those "nonaccrual" loans were for construction or land development, a sector that continues to bedevil many regional banks long after last year's real-estate crash.

Also reporting Thursday was Columbia Banking System of Tacoma, which had a loss of $2.6 million (11 cents per common share), an improvement from the $8.8 million quarterly loss it recorded a year earlier.

The parent of Columbia Bank raised $120 million in an August stock sale -- evidence that investors will put money into community banks considered in fairly good health.

Frontier is counting on that renewed appetite for risk, even though its pile of troubled loans continues to grow. So far this year, the company has charged off $249.3 million in soured loans, 10 times the level of charge-offs through the first nine months of 2008. It set aside $140 million in the third quarter to cover expected future losses.

"While we were disappointed our merger with (SP Acquisition Holdings) was terminated, the number of banks able to raise capital since we entered into the agreement with SPAH has increased dramatically," Patrick Fahey, Frontier's chairman and chief executive, said in a statement.

"Based on the numerous discussions with investors we have had since the termination of the merger, we are optimistic we will be successful in raising additional capital."

Strengthening the bank's capital base is one of many conditions contained in a "cease and desist" order imposed on Frontier in March by the Federal Deposit Insurance Corp.

A sizable capital raise, though, likely would come at a heavy cost to Frontier's existing shareholders.

The stock lost 4.5 cents Thursday to close at 52.5 cents. At that price, the market values the entire company at just $24.7 million.

Columbia's shares, by contrast, gained 49 cents Thursday to close at $14.82.

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

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