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Bank In Washington State First To Fail In 2012

The two branches of Westside Community Bank, University Place, Washington, were closed. The Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Sunwest Bank, Irvine, California, to assume all of the deposits. The last FDIC-insured institution closed in the state was Bank of Whitman, Colfax, on August 5, 2011.

Formed March 29, 1995, the bank had 16 full time employees at its office in Puyallup and University Place. In 2007, the bank had 32 full time employees.

According to the, "Westside Community Bank's capital has been depleted by large loan losses associated with land development and construction, as well as commercial real estate lending," said Rick Riccobono, director of DFI's Division of Banks, in a Friday release. "While the board of directors and management have worked diligently to address the bank's problems they were unable to raise sufficient capital to remain viable."

Riccobono said that, in his opinion, Westside will be the only bank to fail in Washington in 2013.

At Westside "the numbers were pretty bad," Riccobono said by phone Friday evening. "There was an unusual circumstance. They had a lot of land, construction development. They needed capital, and the bank president suffered an illness and subsequently died during the fundraising effort. The board hadn't replaced him in hopes that he would be back. The difference between this and the others - they lost the person who was going to be responsible, and he was out of commission. When they brought someone in, it was too late. It was a critical year."

Tier 1 risk-based capital ratio1.19%

It was much more than poor real estate loans, more like making loans for friends and colleagues, no matter the economy.

Note the charge offs were primarily in nonfarm/nonresidential properties, followed often by commercial and industrial charge offices.

(in millions, unless otherwise)

2006 $421,000 ( $421,000 commercial and industrial)
2007 $3,000 ( $51,000 nonfarm/nonr res., -$48,000 commercial/industrial)
2008 $264,000 ($55,000 1-4 family,$103,000 commercial/ind. $75,000 individual, -$50k000 nonfarm/nonres.)
2009 $6.1 ( $2.1 nonfarm/nonres., $1.8 construction/land, $1.4 commercial/ind., $318,000 other,$317,000 1-4 family)
2010 $2.6 ($2.1 nonfarm/nonres.,$292,00 commercial/ind., $93,00 1-4 family home, $31,000 ind.,$23,000 other)
2011 $4.0 ($1.9 nonfarm/nonres.,$784,000 1-4 family, $768,000 commercial/ind.,$41,000 credit cards,$39,000 indiv.)
9/31 $4.4 ($2.3 nonfarm/nonres., $736,000 1-4 family, $698,00 commercial/ind., $553,000 construction/land,$168,000 indiv.,$99,000 other)

Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

Non-Current Loans were also high, coming first in 2009, and for the next few years the FDIC had them on their problem list, with several consent forms, as the net equity diminished as well as the profits.

Non-Current Loans
2006 0
2007 $1.9
2008 $6.2
2009 $13.4
2010 $24.6
2011 $17.7
9/31 $16.7

Net Equity
2006 $12.6
2007 $14.1
2008 $15.4
2009 $12.1
2010 $10.4
2011 $6.4
9/31 $1.0


2006 $1.6
2007 $1.66
2008 $30,000
2009 -$3.4
2010 -$1.9
2011 -$3.9
9/31 -$5.4

As of September 30, 2012, Westside Community Bank had approximately $97.7 million in total assets and $96.5 million in total deposits. In addition to assuming all of the deposits of the failed bank, Sunwest Bank agreed to purchase essentially all of the assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20.3 million.

Bank Failure Map:

List of Bank Failures:

Bank Beat:

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.