The Bank of Clark County became the first locally based bank to fail in recent memory, following a ruling by state regulators on Friday that the Vancouver financial institution did not have adequate cash to stay in business. Its two branches will open Tuesday under the control of Umpqua Bank, which has assumed all of its roughly $209 million in insured deposits.
Roseburg, Ore.-based Umpqua will also purchase $30.4 million of additional Bank of Clark County assets.
But Umpqua will not take over $39.3 million in uninsured deposits held in 138 accounts that contain more than $250,000. Those account holders may not get all of their money back, and should call the Federal Deposit Insurance Corp. for more information.
The bank’s shareholders now become creditors, along with anyone else owed money by the bank. Bank of Clark County was launched in 1998 and opened its doors in 1999 with $8.6 million from more than 400 investors. “The shareholders are last in line,” said Roberta Valdez, ombudsman with the FDIC. “Uninsured depositors have to be made whole before creditors or anybody else will get any money.”
Local governments with funds not covered by deposit insurance will not lose their public money, officials with the Washington state Public Deposit Protection Commission said in a statement on Friday.
Umpqua will not take over $117.8 million in brokered deposits, which are certificates of deposit and other accounts opened by brokers on behalf of their customers. These accounts are generally fully insured, and will continue to be managed by the same brokers.
Over the three-day weekend starting today, customers of the Bank of Clark County will be able to access their accounts using debit and ATM cards and by writing checks, according to FDIC officials. Banks are closed on Monday because of the federal Martin Luther King holiday.
Umpqua Bank in charge
On Tuesday when customers show up, they will be going to Umpqua Bank, not a financial institution by any other name.
“It may take a little longer than Tuesday, but temporary signs will go up very quickly,” said Dan Sullivan, executive vice president of strategic initiatives at Umpqua.
Several top Bank of Clark County executives, including President Mike Worthy, were relieved of their positions on Friday.
The rest of the bank’s 91 employees, based at two branches, will continue to work for Umpqua Bank, which still plans to open a branch next to Esther Short Park this summer.
“Employees heard the news that their bank has inadequate capital and their bank was declared closed, and we walked in the room five minutes later to tell them were taking over,” said Sullivan.
He entered with a phalanx of bankers and regulators in suits and ties that converged on 1400 Washington St. just after the 6 p.m. close of business on Friday.
They arrived to close the doors on a locally owned financial institution that first opened those doors in February 1999.
The bank grew quickly as it aggressively courted business borrowers and developers during Clark County’s building boom. But when the housing market soured, so did its finances, as did the finances of most other banks in the region.
Until recently, it was clear that the Bank of Clark County had lost money on construction and development loans, but not how bad things had become.
“The last number of months they saw tremendous decreases in some of the values in their loan portfolio,” said Brad Williamson, director of the state Department of Financial Institutions banking division. “That requires a bank to make tremendous loan loss provisions. If the bank does not have enough in earnings, it comes out of its capital.”
The Bank of Clark County reported zero earnings in the three months ending Sept. 30, the most recent quarter that is publicly available.
The details of the bank’s later loan losses are not yet public, but since Sept. 30 the bank’s assets dropped by $18 million, to $446.5 on Jan. 13, according to the FDIC.
Text of FDIC press release
OLYMPIA – The Washington Department of Financial Institutions (DFI) closed Bank of Clark County today, citing inadequate capital and liquidity. Immediately following the closure, the Federal Deposit Insurance Corporation (FDIC) took receivership. The FDIC entered into a purchase and assumption agreement with Umpqua Bank of Roseburg, Ore.
Both the main and single additional branch of Bank of Clark County will reopen on Tuesday, Jan. 20 after the Martin Luther King, Jr. holiday with no disruption in service. Online services may not be available until Monday.
“It is regrettable to have to take such actions, but DFI did so to ensure the soundness and stability of banking in Washington State,” DFI Director of Banks Brad Williamson said. “This unfortunate event is the result of a combination of significant deterioration in loan portfolios and the overall economic instability we are experiencing today in our country.”
Williamson assures depositors that most deposits in Washington state chartered banks are insured by the FDIC up to $250,000.
All insured deposit accounts at Bank of Clark County are being transferred to Umpqua Bank. Throughout this holiday weekend, insured depositors of Bank of Clark County can access their funds by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
Consumers with more than $250,000 in interest-bearing accounts, or total related interest-bearing accounts exceeding $250,000 should note these accounts may require review by an FDIC claim agent. Call 1.800.822.9247 to schedule a telephone appointment with an FDIC claim agent.
As of Jan.13, 2009, Bank of Clark County had total assets of $446.5 million and total deposits of $366.5 million. At the time of closing, there were approximately $39.3 million in uninsured deposits held in approximately 138 accounts that potentially exceeded the insurance limits. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers.
Umpqua will not assume the approximately $117.8 million in brokered deposits. The FDIC will pay the brokers directly for the amount of their insured funds.
The Bank of Clark County closure is the first in Washington State since Emerald City Bank of Seattle was closed in 1993.
