WALLA WALLA - State regulators shut down Colfax-based Bank of Whitman on Friday and sold the assets in a transaction that will enable the Walla Walla branch and seven others to open Monday under new ownership, officials announced.
All deposits and some assets of Bank of Whitman have been purchased by Tacoma-based Columbia State Bank, doing business as Columbia Bank. That company will reopen eight of the 20 Bank of Whitman branches, including Walla Walla's but not the one in Pomeroy, officials said.
Bank of Whitman, started in 1977, is the 63rd Federal Deposit Insurance Corp.-insured institution to fail in the nation this year, and the third in Washington, the FDIC reported.
The Washington state Department of Financial Institutions, which shuttered the operation, said critically insufficient capital was the reason for the closure.
"Large loan losses made it impossible for Bank of Whitman to continue," said Richard Riccobono, the Department of Financial Institutions' Division of Banks director in a statement. "Bank management was unable to raise sufficient capital to remain viable. It hurts to lose an institution like the Bank of Whitman because they extended services to our state's smaller communities."
Immediately after the closure Friday evening, the FDIC was named the receiver of the bank. That organization then entered into a purchase and assumption agreement with Columbia State Bank.
Columbia Bank will retain branches in Clarkston, Colfax, Othello, Pullman Ritzville and two in Spokane, as well as Walla Walla's.
Branches slated for closure are in Lind, Washtucna, Kennewick, Pasco, Mattawa, Royal City, Warden, Endicott, LaCrosse, Rosalia and a branch on State Route 2 in Spokane, as well as the Pomeroy location.
Bank of Whitman had total assets of about $549 million as of June 30 and deposits of about $516 million.
In February the bank received an order from the U.S. Federal Reserve Bank giving the operation 90 days to raise capital or sell itself. The decision by regulators came a month after resignations of Jim Tribbett, the bank's chief executive officer, and Craig Conklin, its chief loan officer,
The company couldn't meet the requirement. The cost to the Deposit Insurance Fund is estimated at $134.8 million. The FDIC said Columbia State Bank's acquisition was the least costly resolution compared to other alternatives.
Columbia Bank has 68 branches in Washington, 25 branches in Oregon, assets of about $5.4 billion and deposits of about $3.6 billion.
Columbia Bank's purchase includes all of the deposits of the failed bank, plus about $314.4 million of its assets. The FDIC will retain the remaining assets for later disposition, according to the announcement.
The 34-year-old Bank of Whitman was started by a group of Whitman County farmers. As the company flourished, it expanded through rural communities as well as larger regional ones. The company opened in Walla Walla in 2005 with a temporary location in the Drumheller Building while construction of its branch took place.
Construction of the nearly 10,000-square-foot branch at 500 W. Main St. was estimated at more than $870,000. It opened in June 2006.
Bank of Whitman customers will automatically become customers of Columbia State Bank, and deposits will continue to be insured by the FDIC.
Customers of the 12 branches not reopening are encouraged to use the ones that are. The exceptions to that are in Pasco and Kennewick. Otherwise, banking services continue to be available online. Customers can also continue to write checks on their accounts and use their ATM cards. Actual ATMs at the branches not reopening will be operational only though the weekend. FDIC representatives will be at all the closed branches through the middle of next week.
Vicki Hillhouse can be reached at email@example.com or 526-8321.