DuPont based Venture Financial Group released its first-quarter earnings report earlier today with results comparable to other Washington banks – as net income fell a bit and bank officials have decided to increase the provision for loan losses.
“We had a pretty darn good quarter, just about even with last year,” said Jim Arneson, Venture president.

• Net income came in at $3.1 million, compared to $3.2 million in the same period last year.

• The provision for loan losses rose over the first quarter of 2007, from $375,000 to a current $1,525,000.

• Total deposits decreased $10.2 million, or 1.2 percent, from $837.1 million last year to $826.9 million at the end of March. Deposits were $39.5 million – or 5 percent – higher than at the end of the first quarter of 2007.

• Nonperforming assets – troubled loans – as a percentage of total assets were 1.72 percent at the end of the quarter, compared to 0.27 percent at the end of 2007.

• Arneson explained that four delinquent loans – three to land developers and one to builder – caused much the increase in the loss provision. “It doesn’t necessarily mean we’ll have a loss," he said.

• Concernign the increase in the provision, he said, "Based on the best information we have, it’s setting aside money to make sure we have enough in case things get worse. It makes sense in this environment to have those numbers increasing. In certain geographies we’re seeing the price of lots and real estate decrease more than others.”

On a brighter side, Arneson said, commercial loans are increasing, as are loan originations.
“This may sound counterintuitive,” he said. “Our originations are about three times what they were last year. There are mortgage originators who aren’t in the market any more, and we are taking advantage of that opportunity. There’s not a lot of homes being built – we’re seeing less of that – but we’re seeing a lot of commercial.”

Whether longshore workers will show up Thursday at the Port of Tacoma’s cargo terminals to unload and load ships remains up in the air on the eve of this year’s May Day.

The International Longshore & Warehouse Union began planning in February for a coast-wide protest Thursday against the war in Iraq. May 1 is traditionally a day that celebrates labor and workers’ rights.

Such an event could have an impact beyond the port, including companies that depend on importing and exporting goods.

A majority of delegates from each local voted in favor of a protest and notified its employers – the Pacific Maritime Association – that the union members wanted to stop work on Thursday’s day shift to express their opposition to the war.

The union contract allows for what are called “stop work” meetings to discuss union affairs as long as they notify the PMA, the organization that represents cargo carriers, terminal operators and stevedores operating on the West coast. But such meetings are usually held during evening work shifts. The PMA denied the union’s request for the day time meeting and in March the ILWU officially withdrew its request.

But that hasn’t stopped talk of a May Day rally up and down the West Coast.

Craig Merrilees, ILWU spokesman, didn’t make promises either way, but he did say there are strong feelings among rank-and-file union members that the war is wrong and needs to stop.

“The most important thing is that the union made an extra effort to let employers know that May 1 is a special day and that they may want to do some extra planning,” he said earlier this week.

Seattle’s ILWU Local 19 said its union hall will be open for dispatch Thursday.

The president of ILWU Local 23 didn’t return phone messages on Tuesday and Wednesday from The News Tribune.

The PMA reports that its members up and down the coast plan on working Thursday and it expects a work force will be available.

That’s true in Tacoma, where container terminal managers say they are planning for a regular work day – though a few anticipate it may not be business as usual.

“If you are a stevedore, you always plan to work,” said Steve Bassett, manager of the port’s Husky Terminal.

SEATTLE (AP) — Starbucks Corp. said today its fiscal second-quarter profit fell 28 percent as U.S. consumers responded to rising food and gas prices by making fewer latte runs.

For the quarter ended March 30, Starbucks’ net income sank to $108.7 million, or 15 cents per share, from $150.8 million, or 19 cents a share in the same period last year.

Revenue rose 12 percent to $2.53 billion from $2.26 billion in the year-ago quarter, the company said today.

Starbucks warned last week that results would fall short of Wall Street’s expectations. Analysts, on average, had forecast a profit of 21 cents per share on $2.63 billion in sales, according to a Thomson Financial survey.

Charges for closing stores or not moving forward with planned openings, as well as costs associated with Starbucks’ plan to reinvigorate U.S. sales, cut earnings by about 3 cents per share.

U.S. same-store sales, a key measure of retail health, fell in the mid-single digits as traffic declined. Starbucks’ past guidance called for 3 percent to 5 percent growth in same-store sales, or sales at locations open at least a year.

At the risk of sounding like Pollyanna spinning on a broken record, let me reiterate: We have not lately been in a recession. We are likely not in a recession. This is not what a recession looks like.

I say this thanks to a pair of contradictory notes that waited in my inbox this morning.

From the American Institute of Certified Public Accountants I read: “Sixty-eight percent of America’s adults believe the United States is heading toward a recession, and more than half (53 percent) are cutting their spending and paying down debt as a result.”

I also heard from Ken Mayland, principal with Clear View Economics. I’ve spoken to and written about Dr. Mayland before. He’s the kind of economist who spends his time with data the way other people spend time with family and food: To him, they are fundamental.

Mayland wrote: “Can you have a recession if GDP does not decline? I don’t think so. It would be unprecedented.”

So I called Mayland for a reality check. We talked about the CPA survey and other such doomsaying, fire-fanning, public-opinion outpourings.

“For goodness sakes,” he said. “We’ve taken to asking the man on the street technical questions? Are we in a recession? What is this world coming to?”

He took me back to 1982, back when a recession was actually a recession.

The unemployment rate was 9 percent. (Now it’s 5.1 percent.) The mortgage rate that March touched 17.16 percent. (Now it’s about 6 percent.) Inflation then
came in at 6.7 percent, down from 11 percent. (Now it’s about 4 percent.) Industrial production then, year-over-year, was down 3 percent. (Now it’s up 1.5 percent.)

“What the hell is the matter with people?” Mayland asked. “Are they going daft? Is it the media that may not be reporting the facts? Could politicians be pandering to the public’s fears?”

Or is it the collective breath of economists who seem to be tripping over themselves (at least on TV) to proclaim a falling sky?

Mayland said, “Economists have been faulted in the past for not making recession calls, for not anticipating recessions. A question in my mind - in order to overcompensate, are they rushing to judgement?”

Let's go back to 1980, to the George W.S. Trow essay in The New Yorker called "Within the Context of No Context." Trow talked about the TV show "Family Feud."

The logic goes like this: Say that out of 100 people asked if asparagus was animal, vegetable or mineral, 65 said mineral. That's what the survey said. That's the best answer.

But in the real world, asparagus is a vegetable. It doesn't matter what the survey said.

And this is not a recession - not yet, and maybe not at all.

I seem to recall a controversy several decades back concerning hidden images being introduced to advertising – Vance Packard wrote about it his “Hidden Persuaders” – and I recall looking, for instance, into images of shiny ice cubes in whiskey ads and finding, well, interesting things.

But now it’s OK, and in fact, KFC is taking such advertising to its logical and profitable extreme.

See the images of the Snackers? There is something hidden in each of the advertisements. It’s an image, and the image depicts either Colonel Sanders, an outline of a map of Kentucky, a KFC bucket, a dollar bill or four quarters. Find the image, go to www.kfc.com, answer the question correctly and you’ll get a chance to win a certificate good for a sandwich.

One thousand people will win daily over the next several days.

And I’d tell you the answer (I had to call the PR agency in Chicago to find out for myself, and then zoom in to see what I was looking for), but it just wouldn’t be right. But here's a hint: Begin with the headline.

The Federal Reserve Board announced yesterday that it had executed an agreement between WSB Financial Group Inc., the holding company that controls Bremerton’s Westsound Bank, and the Federal Reserve Bank of San Francisco.

The agreement, signed by WSB President and CEO Terry Peterson, places controls on the company’s debts, stock, dividends and various business practices

The state Department of Financial Institutions will later today post a Cease and Desist Order against Westsound Bank.

The order, first issued last month, refers to charges issued last October by DFI and the Federal Deposit Insurance Corp., and demands that the bank follow several strict instructions and “cease and desist from following unsafe and unsound banking practices” which include, among others:

• Operating with management whose policies and practices are detrimental to the bank and jeopardize the safety of its deposits;
• Operating with a board of directors which has failed to provide adequate supervision;
• Operating with less than satisfactory capital;
• Engaging in unsatisfactory lending and collection practices;
• Operating with a large volume of poor quality loans;
• Operating in contravention of various rules, regulations and accepted practices.

Bank officials have agreed to abide with the ruling. Bloomberg News reported in March that the company “neither admitted nor denied any allegations of unsafe or unsound banking practices.”

The recent order states that the bank must, among other things, retain qualified management; empower the board; maintain a stable leverage ratio; increase its loan and lease allowance; improve loan quality and loan practices; and notify shareholders of the substance of the order to cease and desist.

According to its Web site, the bank operates branches in Bremerton, Federal Way, Gig Harbor, Port Angeles, Port Orchard, Port Townsend, Poulsbo, Sequim and Silverdale.

WSB Financial Corp. stock, trading as WSFG, closed Tuesday at $5.69 per share. The stock traded as high as $17.11 last May, and has fallen 63.87 percent in the past 12 months.