OLYMPIA – The Washington Department of Financial Institutions (DFI) closed The Cowlitz Bank of Longview, Washington today, citing inadequate capital and severe loan losses. Immediately following the closure, DFI named the Federal Deposit Insurance Corporation (FDIC) as receiver of Cowlitz Bank.
The FDIC immediately entered into a purchase and assumption agreement with Heritage Bank headquartered in Olympia, Wash. Heritage Bank will assume all deposits and certain assets of Cowlitz Bank, except certain brokered deposits, which will be paid out by the FDIC.
“Cowlitz Bank’s capital has been eroded by large loan losses associated with land development and construction lending,” Brad Williamson, Director of DFI’s Division of Banks explained. “The bank’s management was not able to raise capital to offset the significant loan losses. The bank is critically undercapitalized which requires today’s closure.”
“The failure of Cowlitz Bank is an unfortunate example of the severe consequences these exceptionally challenging economic times bring for our financial institutions that have been heavily committed to commercial real estate land acquisition and construction lending,” DFI Director Scott Jarvis said. “While it is difficult to close a bank with such strong commitment to its community, we are pleased that Heritage Bank, a Washington State-chartered bank with a strong balance sheet and an 80-year history of serving its communities, has acquired Cowlitz Bank.”
The Cowlitz Bank, headquartered in Longview, Wash. has nine branches located throughout Washington and Oregon. Five of the organization’s nine branches operate under the name of Bay Bank. Bay Bank Washington branches are located in Bellevue, Seattle and Vancouver. Bay Bank Oregon branches are located in Portland and Wilsonville. Cowlitz Bank branches are located in Longview, Castle Rock, Kalama and Kelso, Wash. Heritage Bank will acquire all Cowlitz and Bay Bank branches. All locations will reopen Monday as branches of Heritage Bank. The Longview Cowlitz Bank drive-up facility will reopen on Saturday with normal business hours.
Throughout the weekend and transition, Cowlitz and Bay 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, 2010, Cowlitz Bank had total assets of $529,332,000 and total deposits of $513,953,000.