Aug. 7--Redlands-based 1st Centennial Bancorp released its second quarter operating results Thursday, which find the bank in unfamiliar territory.

The bank reported a net loss for the quarter ended June 30 of $2.8 million or 57 cents diluted loss per share, following a net loss of $1.5 million or 29 cents per diluted share for the first quarter of the year.

The two quarters represent the first time the bank has registered two consecutive quarterly losses in 16 years.

"This is a very unusual year for us," said Tom Vessey, president and chief executive officer. "This company has not had a loss history, any losses have been minimal."

Despite the losses, the bank remains "well capitalized," the highest category for a bank as defined by applicable regulatory definitions.

As with many banks, 1st Centennial's struggles are attributed to its construction loans, primarily residential development, said Beth Sanders, chief financial officer.

The bank had a $1.1 million increase in provision for loan losses to $6.2 million for the latest quarter, compared to $5.1 million for the quarter ended March 31.

The bank is completing a review of its entire portfolio with specific emphasis on construction projects with outstanding loans.

"In this economy you're going to have losses," Vessey said. "But we're trying to mitigate it."

The home construction loans were focused primarily in single-family homes or small subdivisions; 1st Centennial had no involvement in larger tract home developments or subprime lending.

The bank has curtailed its construction lending and will be concentrating on commercial lending, according to a release.

Other capital alternatives are being explored as the bank has enlisted investment-banking firm D.A. Davidson & Co. as a financial adviser to evaluate capital and "other strategic alternatives."

By Jahmal Peters and Lou Hirsh.

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