DOW JONES NEWSWIRES
For the second time in as many weeks, U.S. regulators Friday announced the failure of a Washington state bank and arranged for Columbia Banking System Inc.'s (COLB) operating subsidiary to take it over.
The Federal Deposit Insurance Corp. said First Heritage Bank of Snohomish, Wash., failed Friday. Like Summit Bank a week earlier, First Heritage will be absorbed by Columbia State Bank in Tacoma, Wash. Columbia Banking System is the holding company of Columbia Bank. Summit and First Heritage are the only Washington banks to fail so far in 2011.
But First Heritage brings the total number of failures in the U.S. to 44 this year. The number of banks that failed last year, 157, was the highest since the savings-and-loan crisis ended in 1992, although the total assets at 2010's fallen banks were much smaller than the total in 2009.
First Heritage Bank's five branches will reopen Tuesday under the banner of Columbia State Bank following the Memorial Day holiday. It had about $173.5 million in total assets and $163.3 million in total deposit as of the end of March. Columbia State Bank agreed to pay the FDIC a premium of 0.75% to assume all of the deposits and entered a loss-share transaction on $142.2 million of the assets.
The FDIC estimated that the cost of the failure to the Deposit Insurance Fund will be $34.9 million.
Depositors of the failed banks will automatically become depositors of the new banks and deposits will continue to be insured by the FDIC. The FDIC insures deposits for up to $250,000 per depositor.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; firstname.lastname@example.org