It's not the start of a trend, but the loss from the Bank of Queensland (ASX: BOQ) should worry investors.

The bank yesterday revealed a shock first half loss of $91 million (for the six months to January 28), becoming the first local bank to report a loss in a reporting period for years.

The loss was completely unexpected.

The bank is now looking for $450 million, with 74 million shares to be issued, a third of its existing shares on issue, a sign of how desperate the bank is for new capital.

The shares will be issued at $6.05, a 17% discount to the close last Friday of $7.03. BoQ shares went into a trading halt yesterday after the issue and trading update was issued.

But chief executive Stuart Grimshaw said the bank's position was strong enough to announce an unchanged interim dividend of 26c fully franked.

The dividend has been approved by the lead regulator APRA, the bank said yesterday.

"The Queensland economy has softened significantly in patches over recent months, which has impacted property values particularly in the commercial property book," Mr Grimshaw said in yesterday's statement.

"As a result, we've taken a conscious decision to take a cautious and conservative approach."

The bank also revealed a new chief operating officer and chief risk officer, changes that suggest there might have been some changes near the top after the write downs were decided upon.

The move will see a sharp fall in the share price and existing shareholders could be heavily diluted as the bank seeks to raise enough new capital to keep regulators happy and to redeem the remaining $105 million of convertible notes that don't meet the new guidelines for acceptable capital for a bank.

They will probably relist when the $150 million placement to institutional shareholders is finalised.

A further issue of $135 million will be offered to institutional shareholders and another $165 million will be sought from retail shareholders.

Driving the shock loss was a more than doubling of bad debts, thanks in part to the impact of last year's big wet in Queensland, especially in and around Brisbane.

BOQ said its impairment costs on loans will be $328 million for the six months to February, up from $134 million in the same period in the previous year.

That will lead to a $91 million loss for the first half, down from a $48 million profit in the previous corresponding period.

The company said it earned an underlying profit of $222 million in the latest half year ($216 million in the first half of 2010-11).

"BOQ's underlying performance was achieved against a backdrop of continued variability in the strength of the Queensland economy, which has negatively impacted the commercial and residential property market," Mr Grimshaw said in yesterday's statement.

"Queensland has been negatively impacted by the flow-on effects of a downturn in tourism and has endured recent natural disasters such as floods and cyclones."

He said the bank had taken a charge of $160 million on loans due to the economic conditions in Queensland.

''This equity raising will strengthen our balance sheet and provide Bank of Queensland with the capacity for continued growth,'' Mr Grimshaw said.

On February 24 ratings agency Standard and Poor's placed the Bank of Queensland's long-term rating on Credit Watch Positive following an update of its assessment of BOQ's capital and earnings.

S&P said, "We consider that our assessment of Bank of Queensland's future capitalisation and earnings may support a higher rating". And Mr Grimshaw said in a statement that he welcomed S&P's decision so soon after it downgraded the Bank's rating to BBB in November last year.

S&P said at the time it expected to resolve the CreditWatch within the next 90 days.

Well, was that CreditWatch resolved by the bank's surprise news yesterday?

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