Washington State Department of Financial Institutions

News Release

Friday, May 08, 2009


Lyn Peters, Director of Communications
PH (360) 349-8501 lpeters@dfi.wa.gov

Jeremy Lushene, Communications
PH (360) 902-0506 jlushene@dfi.wa.gov

Brad Williamson, DFI Director, DFI Division of Banks
PH (360) 902-8704 banks@dfi.wa.gov

David Barr, FDIC Office of Public Affairs
PH (202) 898-6992 dbarr@fdic.gov


WA Department Of Financial Institutions Takes Possession Of Westsound Bank — Kitsap Bank Will Be New Owner

Bremerton’s Westsound Bank will reopen Monday — with minimal disruption of service throughout the weekend — under new ownership with Kitsap Bank of Port Orchard

OLYMPIA – The Washington Department of Financial Institutions (DFI) took possession of Bremerton’s Westsound Bank today, citing severe asset problems, significant losses and inadequate capital. Immediately upon taking possession, DFI appointed the Federal Deposit Insurance Corporation (FDIC) receiver. Then the FDIC immediately entered into a purchase and assumption agreement with Kitsap Bank of Port Orchard, Wash.

The corporate office and the eight branches of Westsound Bank will reopen on Monday, May 11 with minimal disruption in services. Online services may not be available until Monday.

“It is regrettable to have to take such actions, but DFI did so to ensure the soundness and stability of banking in Washington State,” said DFI's Director of Banks Brad Williamson. “This unfortunate event is the result of very poor lending practices during the past several years. While the current management team worked diligently to overcome problems with the bank’s loan portfolio — a combination of the downturn in the local real estate market and the overall economic situation combined to make it impossible for the institution to continue.”

Williamson reminds depositors that most deposits in Washington state chartered banks are insured by the FDIC up to $250,000.

Kitsap Bank will assume all deposits of Westsound bank except brokered deposits, which the FDIC will pay. It is anticipated there will be no loss exposure to Westsound Bank depositors.

Throughout the weekend, depositors of Westsound Bank can access their funds by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of March 31, 2009, Westsound Bank’s financial statements listed total assets of $335 million and total deposits of $304 million.

The closure of Westsound Bank is the second in Washington State this year. DFI closed Bank of Clark County January 16. Prior to 2009, the most recent bank closure in Washington State was the 1993 closure of Emerald City Bank of Seattle.

Westsound Bank customers looking for more information about the possession should visit www.dfi.wa.gov/banks/westsound.htm or www.fdic.gov.

The FDIC recently published a borrower’s guide to an FDIC insured bank failure at www.fdic.gov/bank/individual/failed/borrowers/index.html.

For more information about deposit insurance for Washington banks and credit unions, visit www.dfi.wa.gov/consumers/deposits.htm. For details about FDIC coverage limits and requirements, visit www.fdic.gov or call toll-free 1.877.ASK.FDIC.

About Division of Banks
www.dfi.wa.gov/banks ▪ 360.902.8704
The Washington State Department of Financial Institutions Division of Banks regulates more than 90 Washington State-chartered commercial banks, stock savings banks, mutual savings banks, foreign banks, savings and loan associations and independent trust companies. We charter new banks, business development corporations, trust companies, foreign banks and savings & loan associations. Also, we authorize new branches and branch closures; and approve mergers & acquisitions. Learn more about the Division of Banks.

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud. In addition to posting information about licensees and administrative actions, the DFI’s Web site features consumer tips on a variety of financial fraud-related topics. DFI also hosts a financial education blog http://finlit.blogspot.com, a financial education Twitter page http://twitter.com/fined4all, a financial education YouTube page (where we've compiled a host of financial education videos from a variety of reliable resources) http://www.youtube.com/wadfi, a consumers Twitter page http://twitter.com/dficonsumers and a financial education calendar for Washington State http://dfi.wa.gov/financial-education/calendar.htm.