Tacoma bank acquires First Heritage Bank's assets
First Heritage Bank Chief Executive Officer Cathy Reines had been working for months to find another bank to buy First Heritage after the the Federal Deposit Insurance Corp. told First Heritage it would be closed unless it could raise more capital to bolster its balance sheets or find a merger partner.
Immediately following the closure, DFI named the FDIC as receiver and immediately entered into a purchase and assumption agreement with Columbia State Bank headquartered in Tacoma. Columbia State Bank (doing business as Columbia Bank) will assume all of the deposits and assets of First Heritage Bank.
“First Heritage Bank's capital has been depleted by large loan losses associated with land development and construction lending,” Gloria McVey, acting director of DFI's Division of Banks, said in a news release. “Bank management was unable to raise sufficient capital to remain viable.”
The FDIC and Columbia State Bank have agreed to share losses on $142.2 million of First Heritage Bank's loans and other assets.
The failure of First Heritage Bank is expected to cost the deposit insurance fund $34.9 million.
“The closure of a Washington State chartered bank is never a welcome event,” DFI Director Scott Jarvis added. “However, a very positive signal is sent when Columbia, a financially strong state-chartered bank with an excellent reputation, steps up to acquire a failing institution and continues service to the affected communities.”
First Heritage Bank has five locations that will reopen Tuesday as branches of Columbia Bank.
Throughout the weekend and transition, First Heritage 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 March 31, First Heritage Bank had total assets of $173,478,000 and total deposits of $163,303,000.
First Heritage Bank customers seeking more information about the closure can go to www.dfi.wa.gov/banks/firstheritagebank, www.fdic.gov, www.firstheritage.com or www.columbiabank.com.
"We sincerely welcome former First Heritage Bank customers into our extended Columbia Bank network of 88 branches in Washington and Oregon," Melanie Dressel, president and chief executive officer of Columbia Banking System, said in a press release. "We are also looking forward to working with the First Heritage team, who have served their communities in Snohomish and King counties so well. Branches will open under new ownership; however, customers will be able to bank as usual during regular business hours, and their deposits are safe, available and remain FDIC insured."
The acquisition of First Heritage Bank's five branches in Snohomish, Everett, Monroe, Arlington and Woodinville enhances Columbia Bank's presence in Snohomish and King counties and complements their acquisition last week of Skagit County-based Summit Bank, Dressel said.
"These markets are important to the vitality of our state, and we welcome the opportunity to be a part of these communities," Dressel said.
Approximately $142 million of First Heritage Bank's total assets will be subject to a loss-sharing agreement with the FDIC. Columbia State Bank participated in a competitive bid process, whereby it agreed to assume substantially all of the assets and all deposits of First Heritage Bank.
Prior to the acquisition of First Heritage Bank, Columbia Banking System had 63 branches in Washington and 25 branches in Oregon.
Kurt Batdorf is editor of the Snohomish County Business Journal; email@example.com, 425-339-3102.
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