By Mike Benbow
Herald Writer
SNOHOMISH — Tacoma-based Columbia Bank took over First Heritage of Snohomish on May 31, saying the acquisition plays a significant role in its plans to become a major regional bank in the Pacific Northwest.
Melanie Dressel, president and CEO of Columbia, said she spent that day at First Heritage branches, where she saw a “caring group of people.”
“One of the first decisions will be which positions we need to retain,” she said. “I don’t see any reason why there should be a lot of changes in the branch staff.”
Dressel said the bank has been looking to expand for some time and had hired some bankers in Bellingham to look at potential acquisitions north of Seattle.
“We think Snohomish County is going to see a lot of growth in the next several years,” Dressel said.
First Heritage has branches in Snohomish, Everett, Monroe, Arlington and Woodinville. Columbia stepped in to buy it from the Federal Deposit Insurance Corp. May 27 after the federal agency seized it, saying it was undercapitalized.
On May 20, Columbia did the same thing with Summit Bank of Burlington, which had two other branches in Skagit County — Concrete and Mount Vernon.
Columbia now has 93 banking offices, 68 in Washington and 25 in Oregon. It has room to grow, Dressel said.
“The new markets we acquired the last two Friday nights (May 20 and 27) have been on our radar for quite some time,” she said. “And we’re still in a position to continue to expand.”
She said the bank’s risk-based capital ratio is 24 percent. Regulators require 10 percent or greater to label a bank well capitalized.
“We still have a lot of room to grow,” she said. “We’ve been very judicious and we still want to buy.”
First Heritage had been ordered in February by the FDIC to immediately raise more capital from new investors or to find a buyer. It was label “significantly undercapitalized” and given until March 24 to fix the problem.
Regulators didn’t actually seize the bank until May 27.
Columbia said it has no immediate plans to change interest rates or its banking relationships with customers.
Shareholders will likely lose their investments in First Heritage Bank, although they will be able to declare it as a loss on their income tax, state officials said.
Columbia Bank agreed to a loss-sharing agreement with the FDIC on $142.2 million of First Heritage’s loans. The acquisition is expected to cost the deposit insurance fund $34.9 million.
The sale announcement is the latest in a long string of financial problems at Snohomish County’s local banks stemming mostly from the crash in the real estate market. Most local banks had loaned heavily to builders or to land developers before the financial crash that ultimately led to the severe recession.
Earlier this year, Cascade Financial Corp., parent company for Cascade Bank of Everett, announced that it was being purchased by Opus Bank of California while under a regulatory order to raise cash or find a buyer. Cascade shareholders approved the sale May 31.
Last year, the FDIC and state banking regulators forced the sale of City Bank of Lynnwood, Frontier Bank of Everett and North County Bank of Arlington.
Mike Benbow is business editor for The Herald; 425-339-3459, benbow@ heraldnet.com.
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