Bank of Whitman customers were assured Monday their money was safe after regulators closed the Colfax-based bank Friday.
It marked the first bank closure in Eastern Washington since the financial crisis began three years ago and came amid renewed panic selling on Wall Street and the prospect of a double-dip recession.
Agents with the Federal Deposit Insurance Corp. seized Bank of Whitman assets Friday night and immediately transferred ownership of deposits, some loans and eight of its 20 branch offices to Columbia Banking Systems Inc. of Tacoma.
A demand of Bank of Whitman executives to either merge with another financial institution or raise money from new investors failed.
Columbia Bank, which overnight inserted itself into the heart of Eastern Washington’s banking competition by taking over two Whitman branches in Spokane, along with offices in Pullman, Colfax, Ritzville, Clarkston, Othello and Walla Walla, will be a stabilizing influence, said spokeswoman JoAnne Coy.
Employees of the eight branches should expect to have lasting jobs with Columbia that include benefits standard at larger businesses, including insurance and a 401(k) retirement plan.
The company also offers a stock purchase plan for its 1,200 employees. Columbia Bank is traded on the Nasdaq exchange and is one of the largest Washington state chartered banks. It now has 101 branch locations, including 76 in Washington and 25 in Oregon.
That may be welcome news to former Bank of Whitman employees who lost their retirement savings when their shares in the employee stock ownership plan were rendered worthless.
Coy did not yet know how many employees from Bank of Whitman would be hired by Columbia. And she was uncertain if any job offers would be made to those who worked in Bank of Whitman’s 12 branches that were closed by the FDIC – including some in small towns such as Lacrosse, Endicott, Washtucna, Lind, Pomeroy, Mattawa, Rosalia, Royal City and Warden.
In some of those communities the Bank of Whitman had been the only bank in town. Those branches, along with two in Pasco and Kennewick, are now under the ownership of the FDIC along with a heavy dose of delinquent and worrisome loans.
Despite an orderly transition at the Spokane branches Monday morning, some customers remained nervous about the changes.
Chris Bolinger had been with Whitman Bank for 15 years and arrived at the Highway 2 branch west of Spokane at 9 a.m. to withdraw his money. But the branch, a new brick and glass structure built in the regal colonial architectural style, was closed.
“I’m upset by this,” he said. “When a bank goes under it’s not good. I just want my money out of there.”
FDIC officials were inside the branch putting files in boxes and securing computer systems. The action is expected to cost the FDIC $134.8 million.
They were trying to assure such skittish customers with information designed to avoid rushed withdrawals.
In downtown Spokane, Columbia Bank had already hung a new sign and employees were meeting with concerned customers to introduce the new bank. There were a few signs of the defunct Bank of Whitman, including its name scrolling across an ATM machine in the lobby.
Customers may notice some changes to their existing accounts. Columbia said if interest rates change on accounts and CDs, customers will be notified and given options. It is the same scenario with loans. Customers have been instructed to continue making payments.