Bank of Clark County to reopen as Umpqua
Portland Business Journal
Monday, January 19, 2009, 2:08pm PST | Modified: Monday, January 19, 2009, 4:59pm
Following state and federal regulators’ takeover of Bank of Clark County on Jan. 16, the Vancouver bank’s two branches will open on Tuesday as new branches of Umpqua Bank.
Umpqua Holdings Corp. (NASDAQ: UMPQ), the Portland-based parent of Umpqua Bank, agreed to take the insured deposits of Bank of Clark County, as well as the locations, at the request of the Federal Deposit Insurance Corp. and the Washington Department of Financial Institutions.
The state agency said regulators decided to close the bank because it had inadequate capital and liquidity. Bank of Clark County had $446.5 million in assets as of Jan. 13.
The bank had $39.3 million in uninsured deposits in approximately 138 accounts, out of total deposits of $366.5 million. An account owner can have up to $250,000 in FDIC-insured deposits at any bank. Anything over that is uninsured.
The uninsured deposits are under the FDIC’s control. The people or businesses that placed the deposits at Bank of Clark County will become creditors of the Bank of Clark County.
Any deposits in excess of $250,000 that were placed by public bodies such as city or state government are protected by Washington’s Public Deposit Protection Act.
Umpqua, which received a $214 million investment from the U.S. Treasury as part of its Troubled Asset Relief Program, is taking over about $185 million in insured deposits. The actual cash the bank receives from the FDIC will be net of the assets the bank gets along with Bank of Clark County’s two branches.
“We don’t know the final amount yet,” said Ray Davis, CEO of Umpqua. “We’ll put the cash to work so we can make money.”
Umpqua’s stock rose slightly on the news, to close at $9.38 on Monday, up from $9.16 on Friday. The bank’s stock has traded between $8.57 and $20.35 over the past 52 weeks.
At the end of September, Bank of Clark County’s capital ratio was just below the level of a well-capitalized bank.
But problems at the bank escalated quickly after September, said Brad Williamson, director of the Division of Banks at Washington’s Department of Financial Institutions.
“They had rapid and severe credit problems that were identified late in the year,” Williamson said. “It was surprising how rapidly the deterioration occurred. It was almost unprecedented.”
Last summer, when analysts were beginning to look askance at many banks, Bank of Clark County attracted attention because its level of delinquent loans to total loans was high. Analysts also wondered whether the bank had sufficient reserves to cover its delinquent loans.
At the end of September, 79 percent of the bank’s loans were in real estate. The decline in house prices has hit Clark County harder than Portland, largely because houses closer to city centers have been selling more quickly and for better prices than equivalent houses that are further from commercial centers.
The liquidity problems mentioned in public statements weren’t as extreme as the runs on deposits that California-based IndyMac or Seattle-based Washington Mutual experienced.
But in the last few days before regulators took it over, Bank of Clark County did have “major issues of that nature,” Williamson said.
“I think somehow word got out that they were having problems over the last day or two.”
One liquidity issue was the high percentage of brokered deposits that Bank of Clark County had.
Out of $366.5 million in total deposits, the bank had $117.8 million in brokered deposits, or deposits from “non-core” customers who don’t have other business with the bank, such as checking accounts or loans.
Banks normally don’t seek brokered deposits, which they attract by offering high interest rates, unless they lack sufficient deposits from “core” customers.
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