Westside Community Bank, a small bank in suburban Tacoma, was closed by state regulators Friday evening, making it the nation’s first bank failure of 2013 and the state’s first one in a year and a half.
Westside’s deposits and the bulk of its assets were acquired by Sunwest Bank, of Irvine, Calif. Its two offices in University Park and Puyallup will reopen Monday as Sunwest branches.
Westside, like many banks that failed after the collapse of the mortgage bubble, was overdependent on real-estate loans that went bad and eroded the bank’s capital.
More than a third of the bank’s $97.7 million in assets consisted of past-due loans, foreclosed real estate and other nonperforming assets. As of Sept. 30, according to regulatory data, real-estate loans comprised 84 percent of Westside’s loan book.
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“While the board of directors and management have worked diligently to address the bank’s problems, they were unable to raise sufficient capital to remain viable,” said Rick Riccobono, director of the state Department of Financial Institutions’ Division of Banks, in a written statement.
Last month, research firm SNL Financial pegged Westside as likely to fail. According to the firm’s calculations, Westside had the nation’s highest “Texas ratio” — a measure of a bank’s ability to absorb loan losses — at 967 percent.
The Federal Deposit Insurance Corp. estimated that Westside’s failure will cost the agency $20.3 million.
The last Washington state bank to fail was the Bank of Whitman, in August 2011.
Drew DeSilver: 206-464-3145