Washington Trust Bank opened its first full-service Oregon branch Tuesday morning, three days after it acquired the deposits and most of the assets of Pinnacle Bank, which was declared insolvent Friday by Oregon’s Department of Consumer and Business Services.
Washington Trust President Jack Heath said the single branch in Beaverton gives the Spokane-based bank a base from which it can expand its Oregon presence.
Conversion of a Portland loan and deposit collection office into a second full-service branch will be a priority, he said, adding, “This is a great opportunity for us.”
Heath said Oregon officials and the Federal Deposit Insurance Corp. opened bidding for Pinnacle and its $73 million in assets last week. The bank had struggled for months with a portfolio of bad loans and a squeeze on operating margins.
In May, Oregon issued a cease-and-desist order against Pinnacle that listed numerous problems, including inadequate capital and loan reserves. Heath said the deteriorating economy made it more difficult for Pinnacle managers to get ahead of the problems.
Pinnacle lost money in 2007 and 2008.
Washington Trust, with $4 billion in assets, has the capital to work through Pinnacle’s problem loans, Heath said, and could have made the relatively small acquisition without the benefit of a $110 million federal investment two weeks ago.
“While we are saddened to see Pinnacle close, we are pleased to see Washington Trust Bank step in and acquire Pinnacle,” Oregon department Director Cory Streisinger said Friday.
“These are challenging times for financial institutions in Oregon and across the nation,” he added. “We may well see continued contraction during this economic downturn.”
Pinnacle was one of four banks taken over Friday by the FDIC.