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.