Local Bank Faces Embezzlement Loss United Security Bancorporation Will Take $525,000 Hit

Suspected embezzlement by an official of Home Security Bank will force its Spokane-based parent to take a $525,000 charge against 1996 earnings.

United Security Bancorporation officials were notified of possible improprieties at its Sunnyside subsidiary late last summer, said Chief Executive Officer William “Bud” Dashiell.

An internal investigation began immediately, he said, and the Federal Bureau of Investigation was summoned.

Investigators have spent months reconstructing accounts that may have been affected by a scheme possibly reaching back several years, Dashiell said.

“We immediately reimbursed our customers’ accounts for all principal plus accrued interest when we became aware of this problem,” he said.

Dashiell said United Security’s insurer, Reliance Insurance, is expected to pay on losses of principal stemming from the embezzlement - about 83 percent of the total - but the bank may have to cover the accrued interest.

Any insurance payment will be credited to earnings during the period when it is received, he said.

“This is an extremely frustrating situation,” Dashiell said. “We have prided ourselves on our tight internal controls and strict policy guidelines.”

But those safeguards are no match for a senior officer determined to bypass the system, he said.

Dashiell said problems were discovered shortly after the operations officer allegedly responsible for the embezzlement left the bank and was no longer able to cover her tracks.

The individual, whom he declined to identify, reported to only one supervisor, said Dashiell, who added that he does not know if the woman remains in the area.

No one has yet been charged in the case as the investigation continues.

United Security Bancorporation announced Monday it was notifying the Securities and Exchange Commission of the $525,000 charge, which will reduce 1996 earnings to $3.2 million.

The holding company is the parent of United Security Bank, with seven offices in Spokane, Stevens and Pend Oreille counties, as well as Home Security, which has offices in Yakima and Prosser in addition to Sunnyside.

, DataTimes