OLYMPIA – The Washington Department of Financial Institutions (DFI) closed Pierce Commercial Bank in Tacoma, Wash. today, citing inadequate capital and severe loan losses. Immediately following the closure, DFI named the Federal Deposit Insurance Corporation (FDIC) as receiver of Pierce Commercial Bank.
The FDIC immediately entered into a purchase and assumption agreement with Heritage Bank headquartered in Olympia, Wash. Heritage Bank will assume all of the deposits and assets of Pierce Commercial Bank.
“Pierce Commercial Bank has suffered significant losses associated with real estate lending. Like many institutions, Pierce Commercial Bank has experienced large losses associated with construction and land development loans. Unfortunately, the bank also suffered from poor mortgage lending practices that further impacted the bank’s earnings and capital,” Brad Williamson, Director of DFI’s Division of Banks explained. “Despite continuing efforts, bank’s management was not able to raise sufficient capital to remain viable.”
“The extraordinary weakness in the commercial real estate land acquisition and construction lending market simply left some of our Washington banks, like Pierce Commercial, too vulnerable to survive,” DFI Director Scott Jarvis added. “The closure of a Washington State chartered bank is never a welcome event. However, a very positive signal is sent when Heritage, a financially strong state-chartered bank, steps up to acquire a failing institution.”
Pierce Commercial Bank, headquartered in Tacoma, Wash. has one location which will reopen Monday as a branch of Heritage Bank.
Throughout the weekend and transition, Pierce Commercial 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 Sept. 30, 2010, Pierce Commercial Bank had total assets of $221,082,000 and total deposits of $193,473,000.