Archive for April, 2010
Here’s the article I wrote up, which will be posted on the news site later:
Unable to find a buyer to help get out of financial trouble, Everett-based Frontier Bank was shut down by government regulators, then taken over by Union Bank of San Francisco.
The shutdown took place after the bank closed on Friday, April 30 by the Washington Department of Financial Institutions. The Federal Deposit Insurance Corp. was named the receiver, which then entered into a purchase and assumption agreement with Union Bank.
Frontier, which has 51 branches, including in Bellingham and Lynden, will reopen during normal business hours as branches of Union Bank. Throughout the weekend customers can access their money by writing checks and using the ATM.
Frontier was another bank stung by a deteriorating real estate market. It had received a 30-day corrective order by the FDIC to raise capital in March, with the order expiring on April 15.
“Frontier Bank’s capital has been depleted by large loan losses and loan loss reserve provisions associated with its real estate construction loan portfolio,” said Brad Williamson, director of DFI’s Division of Banks in a press release. “Frontier’s management team has worked hard to recapitalize the bank throughout the past year. However, the economic climate has made this task very difficult and the continuing loan losses finally brought the bank’s capital to an unsustainable level.
At the end of 2009, Frontier Bank had approximately $3.5 billion in total assets and $3.13 billion in total deposits. In addition to assuming all the deposits, Union Bank agreed to purchase essentially all of Frontier’s assets. However, the FDIC estimates the cost to the Deposit Insurance Fund will be $1.37 billion.
In March, Frontier restated its 2009 financial data, which included $295.1 million in losses for the year. Frontier’s Tier 1 leveraged ratio — also known as equity ratio and a closely watched measure of a bank’s health — has fallen from 3.4 percent at the end of September to 1.8 percent at the end of 2009. The company had been ordered to get its Tier 1 ratio up to 10 percent.
Frontier Bank is the 64th FDIC-insured bank to fail this year and the sixth in Washington. Government regulators also closed six other banks in Puerto Rico, Michigan, and Missouri.
Customers who have questions about turning Frontier over to Union Bank can call the FDIC toll free at (800) 823-4939.
Here’s the press release from Washington’s Department of Financial Institutions. Details will be posted online on the news page.
Olympia – The Washington Department of Financial Institutions (DFI) closed Frontier Bank today, citing inadequate capital and severe loan losses. Immediately following the closure, DFI named the Federal Deposit Insurance Corporation (FDIC) as receiver of Frontier Bank.
The FDIC immediately entered into a purchase and assumption agreement with Union Bank, NA headquartered in San Francisco. Union Bank will assume all deposits and certain assets of Frontier Bank, except certain brokered deposits, which will be paid out by the FDIC.
“Frontier Bank’s capital has been depleted by large loan losses and loan loss reserve provisions associated with its real estate construction loan portfolio,” Brad Williamson, Director of DFI’s Division of Banks explained. “Frontier’s management team has worked hard to recapitalize the bank throughout the past year. However, the economic climate has made this task very difficult and the continuing loan losses finally brought the bank’s capital to an unsustainable level.”
“Frontier Bank has been a valued member of our Washington State banking community for more than a third of a century,” DFI Director Scott Jarvis said. “This closure is an unfortunate consequence of these exceptionally challenging economic times for commercial real estate land acquisition and construction lending.”
Frontier Bank, headquartered in Everett, Wash. has more than 50 branches located in Washington and Oregon. All will be assumed by Union Bank. All locations will open Monday as Union Bank branches.
Throughout the weekend and transition, Frontier Bank customers can access their funds by writing checks or using ATM or debit cards. Checks will continue to be processed. Loan customers should continue to make their payments as usual. Online services also will remain available.
As of Dec. 31, 2009, Frontier Bank had total assets of $3,625,611,000 and total deposits of $3,125,495,000.
For more information about deposit insurance for Washington banks and credit unions, visit www.dfi.wa.gov/consumers/deposits.htm. For details about FDIC coverage and requirements, visit www.fdic.gov or call toll-free 1.877.ASK.FDIC.
DFI also offers answers to frequently asked questions for bank business loan customers in turbulent times at http://dfi.wa.gov/banks/business-loan-faqs.htm.
About Division of Banks www.dfi.wa.gov/banks ▪ 360.902.8704 ▪ 877.RINGDFI (746.4334) x 28704
The Washington State Department of Financial Institutions Division of Banks regulates 86 Washington State-chartered commercial banks, stock savings banks, mutual savings banks, foreign banks, savings and loan associations and independent trust companies. We charter new banks, business development corporations, trust companies, foreign banks and savings and loan associations. Also, we authorize new branches and branch closures; and approve mergers and acquisitions. Learn more about the Division of Banks.
About DFI www.dfi.wa.gov ▪ 360.902.8700 ▪ 877.RINGDFI (746.4334)
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: www.twitter.com/FinEd4All n www.twitter.com/DFIConsumers n www.finlit.blogspot.com n www.youtube.com/user/WADFI n www.homeownership.wa.gov
That brings the total to 62 on the year. Here are the details:
No. 61: CF Bancorp of Port Huron, Mich. was shut down, then taken over by First Michigan Bank. CF had 22 branches. Estimated cost to the FDIC: $615.3 million.
No. 62: Champion Bank of Creve Coeur, Mo., was shut down, then taken over by BankLiberty of Liberty, Mo. Champion had one branch. Estimated cost to the FDIC: $52.7 million.
Forbes magazine came out with an article about the next real estate trouble spots, putting Bellingham No.5 on the list of places with the most significant price declines. It estimates Bellingham home prices will drop 9 percent in the coming year. Here’s the (link). (Thanks to several readers for drawing my attention to it).
The survey uses a variety of data to come up with its forecast. The article noted many communities in the Pacific Northwest landed on the list because it has some of the strictest land planning policies in the country, which has curbed sprawl but also propped up prices. So far, the study is on the mark: Bellingham saw an uptick in sales, but declining prices, in the first quarter.
Government regulators where busy in Puerto Rico on Friday afternoon, shutting down three major banks, making it 60 FDIC-insured banks to fail so far in 2010. Details below. I’ll update with new posts if there are other closures.
No. 58: Eurobank of San Juan, P.R. was closed, then taken over by Oriental Bank and Trust of San Juan P.R. Eurobank had 22 branches. Estimated cost to the FDIC: $743.9 million.
No. 59: R-G Premier Bank or Puerto Rico was closed, then taken over by Scotiabank de Puerto Rico. R-G had 29 branches. Estimated cost to the FDIC: $1.23 billion.
No. 60: Westernbank of Puerto Rico was closed, then taken over by Banco Poular de Puerto Rico. Westernbank had 46 branches. Estimated cost to the FDIC: $3.31 billion.
UPDATE ON THE UPDATE: Here’s a (link ) to a very interesting story from our sister paper, the Tacoma News-Tribune, about how the Internet rumors have been impacting Frontier’s stock.
It appears buyout rumors is what has been fueling the changes taking place this week with Everett-based Frontier Bank’s stock. On Monday the stock price, which had been in the $3 range, zoomed to $7.75 a share, before falling a bit.
The stock rise came as a surprise to many people, so much so Frontier Bank CEO Patrick Fahey had to issue a statement. Here it is:
Management of Frontier Financial Corporation (Nasdaq: FTBK) (“Frontier”) recently learned of rumors on the Internet on April 26, 2010, that an investment group called Infinite Freedom Foundation was in the process of making a bid for Frontier. Frontier’s presidentand chief executive officer, Patrick M. Fahey, said that while normally he would not as a matter ofcompany policy comment on rumors, given the recent speculation on the Internet and elsewhere, he advises that to the company’s knowledge there is no basis for the rumor.
On Thursday the stock closed at $4.60 a share. There has been no further updates about the bank trying to find a buyer, or what the FDIC might do since its 30-day corrective action order expired earlier this month.
The Bellingham International Airport set a record for the number of people traveling out of the area.
In March 36,743 people flew out of the Bellingham airport, according to data released by the Port of Bellingham. That beat the record set last August, when 31,794 people used the airport to travel elsewhere. It’s only the third time Bellingham’s monthly total has topped 30,000.
One reason for the overall rise: Allegiant Air increased flights from an average of 37 per week to 44 last month, said Art Choat, aviation director for the Port.
Allegiant had the majority of travelers in March, carrying 26,520 passengers, up from 17,204 in February. Horizon (8,790 passengers) had the second highest total, followed by Alaska (1,433 passengers).
We’ll have something posted on The Bellingham Herald’s business section later today, but here are a few details:
One of Bellingham’s oldest businesses has made the move just north of town.
On April 23-24 Mills Electric Co., which is celebrating its 100th anniversary this year, moved to 4430 Pacific Highway, near Interstate 5 just north of the Bakerview Road exit. The company had been at 1017 Iowa St. for 40 years and its large sign is a Bellingham landmark.
Mills Electric made the move to Pacific Highway to take advantage of a much larger warehouse and parking availability, said Pat Foley, CEO of the company.
“We were scheduled to move on May 1, but the tenant improvements were done ahead of schedule and it was good timing to get it done (last week),” said Foley. “The bigger property allows us to consolidate all our equipment and people into one place.”
The 50-employee company started in 1911 as an appliance repair company. Foley said they plan on having some sort of event marking the anniversary later this year.
“The move was first on our list; now we can start thinking about a celebration,” Foley said.
Something I’ve been busy with is trying to figure out what changes, if any, have been taking place at Bellingham-based Haggen. The grocery chain currently has 33 stores in Washington and Oregon.
There have been plenty of rumors floating about and they’ve been intensifying in the past week, based on the e-mail and phone messages I’ve been receiving. The rumors I’ve most commonly heard include significant job layoffs, selling the company and/or closing some stores.
Spokespeople at Haggen have chosen not to comment, saying they don’t respond to rumors. Since Haggen is a privately held company, they are not obligated to talk about company matters, unlike a publicly-held company (with shareholders) or a government entity.
One thing a large company like Haggen is obligated to do is file a Worker Adjustment and Retraining Notification (WARN) document with the state of Washington if they have a large (more than 50 people) number of layoffs at one location. To date, they haven’t filed a WARN document. It’s my understanding that a WARN document doesn’t need to be filed if there are layoffs at a variety of locations within the company. Also, the selling of stores to another company would usually provoke an annoucement, either from the buyer or the seller, and that hasn’t happened.
So that’s where things stand at the moment. If you have some information you want to pass along, comment here or send me an e-mail at email@example.com. Or you can call my direct line at 715-2269. Thanks!
Here’s some stuff I found while going through Bellingham’s building permit filings:
– New signs are going up at Schuck’s Auto Supply at 4056 Meridian and 4375 Meridian. The new signs will bear the name O’Reilly Auto Parts, according to the permit. O’Reilly Auto Parts and the parent company of Schuck’s (SSK Auto) merged in July 2008.
– Remodeling work continues at Bakerview Square for one of its newest tenants, Chinese Martial Arts.
– Sign permits have been accepted for Vision Plus, which is going into the former Horizon Bank branch at 801 Alabama Street, near Trader Joe’s.