Westsound Bank Shut Down by Regulators

Westsound Bank, Bremerton, Washington, was closed today by regulators. The Washington Dept. of Financial Institution [DFI] issued a statement that said it was seizing the bank due to severe asset problems, significant losses and inadequate capital. Immediately upon taking possession DFI appointed the Federal Deposit Insurance Corporation [FDIC] as receiver.

From FDIC: To protect the depositors, the FDIC entered into a purchase agreement with Kitsap Bank, Port Orchard, Washington, to assume all of the deposits, except those from brokers, of Westsound Bank.

As of March 31, 2009, Westsound Bank had total assets of $334.6 million and total deposits of $304.5 million. Kitsap will not assume the approximately $9.4 million in brokered deposits. The FDIC will pay the brokers directly. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.

In addition to assuming the failed bank’s deposits, Kitsap Bank will purchase $49.3 million of assets comprised of cash, cash equivalents, marketable securities and loans secured by deposits. The FDIC will retain the remaining assets for later disposition.

The transaction is the least costly resolution option, and the FDIC estimates the cost to its Deposit Insurance Fund will be $108 million.

Westsound Bank is the 33rd bank to be closed this year and the second in Washington state.

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