Officials at Citizens Bank of Northern California have chosen to miss another payment on the federal bailout the institution received, but President and CEO Gary Gall said Thursday the lending institution remains profitable.

In late October, the bank announced a $363,000 profit for the third quarter, which ended Sept. 30.

“We continue to anticipate profitability in this quarter as well,” Gall said.

That is a major turnaround compared to the bank's $12.8 million in losses for all of 2008 and the first six months of 2009.

Citizen's profits began tumbling with the economy in 2008, with $18.8 million in delinquent or foreclosed loans, much of it in development lending. The bank applied for and received $10.4 million in federal bailout loan funds to shore up the losses.

In August, the bank passed on the third-quarter TARP payment of $140,000 to maximize cash flow, Gall said. Officials decided to pass on November's fourth-quarter payment for the same reason.

Banks are allowed to miss five of TARP payments before getting into trouble with the federal government.

“Right now, the bank is adequately capitalized, and by year-end, we will be well-capitalized,” Gall said. “We have the payments in the budget for 2010.”

Money for the payments will be raised from profits and shareholders next spring, Gall said.

To contact Senior Staff Writer Dave Moller, e-mail dmoller@theunion.com or call (530) 477-4237.