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.