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Bank of Whitman ordered to raise money or merge

The Bank of Whitman has been given 90 days to raise more capital or merge with another bank.

A directive issued Tuesday by the Federal Reserve also forbids the Colfax-based bank from accepting more brokered deposits, which is short-term money that follows the highest available interest rates.

The move by regulators came one month after the resignations of former bank chief executive officer Jim Tribbett and Craig Conklin, chief loan officer, “to pursue other opportunities.”

The Fed first imposed numerous lending and operating conditions on Bank of Whitman in July.

As of Sept. 30, the directive says, the bank was under-capitalized, and had not submitted a plan to raise additional funds.

Bank of Whitman, which is 80 percent employee-owned, reported a fourth-quarter loss of $17.5 million. Assets as of Dec. 31 were $681.8 million.

President Bill Knox said Whitman officials have been aggressively working on strategies for raising more capital for several months. Other Washington banks that were short of capital have been successful raising new money, he noted.

With farmers enjoying high prices and signs of modest improvement in housing markets, Whitman wants to be positioned for more growth, Knox said.

Brokered deposits have been reduced by one-half in the past year and now represent 20 percent of all deposits, he added.

The directive, issued with the consent of the bank’s directors, gives the Fed the right to extend its deadlines.