Peninsula Daily News news sources
Kitsap Bank employees will be stretched today.
They will be staffing Kitsap’s 24 offices and branches — and overseeing nine new ones acquired after Westsound Bank was seized by government regulators.
Kitsap Bank’s new branches include the former Westsound banks in Port Angeles — only a block away from the Kitsap’s branch bank there — and those in Sequim and Port Townsend.
“It will challenge us because this is the biggest transaction we have done, and with nine new offices we’ll need people in all of those places,” Kitsap Bank President Jim Carmichael said during a Saturday news conference.
For Westsound’s former customers, he said, it will be business as usual.
• All deposits are safe and sound, including those over the Federal Deposit Insurance Co.’s $250,000 insurance limit.
• Customers can withdraw money from ATMs and make debit-card purchases.
• Checks drawn on Westsound accounts will continue to be honored.
• Loan customers should continue to make their payments as usual.
• Westsound’s Internet banking services, down over the weekend, should be available as of 9 a.m. today.
It will take three or four months before computers are converted to allow former Westsound customers to bank at Kitsap Bank branches and vice versa.
Seized on Friday
Westsound, based in Bremerton, was taken over Friday by the state Department of Financial Institutions and turned over to the FDIC. Agents were in each branch at closing time.
In a prearranged move, the FDIC assigned most of the bank’s deposits and $49.3 million in assets to Kitsap Bank, a community banking operation based in Port Orchard.
Except for Internet functions, there was no disruption of Westsound’s banking services.
The state DFI said Westsound had “severe asset problems, significant losses and inadequate capital,” mostly as a result of soured real estate loans.
The former Westsound branches in Port Angeles, Sequim and Port Townsend and in six other cities — Bremerton, Gig Harbor, Federal Way, Poulsbo, Silverdale and Port Orchard — will continue to be staffed for the immediate future by Westsound employees.
They will work with Kitsap Bank staffers at each branch.
Kitsap will decide over the coming weeks which Westsound staffers it wants to hire permanently, Carmichael said.
“Ultimately, we’ll have significant openings on our staff for those people,” Carmichael said.
Westsound has 19 employees in Clallam and Jefferson counties. Kitsap Bank has 31 staffers.
Kitsap may also acquire some of Westsound’s branch bank buildings, including the one in Sequim, “which is bigger than our branch in Sequim and better situated,” Carmichael told the Peninsula Daily News in a telephone interview.
Since Kitsap and Westsound’s Port Angeles branches are within a block of each other on Front Street — “we won’t be keeping that one [Westsound’s branch]” said Carmichael.
Deposits in Westsound were guaranteed by the FDIC up to $250,000.
But as part of its agreement with the FDIC, Kitsap assumed all of the failed bank’s “non-brokered” deposits of all amounts, even those of more than $250,000.
“If we didn’t do this, depositors were in jeopardy of losing money, and we certainly didn’t want that — no one will lose a dime,” Carmichael told the PDN.
Now second largest
More than 100 years old, Kitsap Bank’s 24 offices and branches cover the greater Puget Sound region.
The takeover of Westsound deposits and operation of its branches gives Kitsap Bank total deposits exceeding $1.1 billion.
“That means we are stronger here in our home than either Bank of America or WaMu/Chase, and on the [North] Olympic Peninsula we’ll be the second largest banking operation [after First Federal],” said Carmichael.
He said Westsound’s North Olympic Peninsula branch bank deposits total about $130 million — in Port Angeles ($65 million), Sequim ($55 million) and Port Townsend ($10 million).
In addition to its banks in Port Angeles, Sequim and Port Townsend, Kitsap also has branches in Port Hadlock and Port Ludlow.
Those branches have deposits of about $104 million, Carmichael said — about $30 million in Port Angeles, $14 million in Sequim and $60 million in Port Townsend/Jefferson County.
“We’re going to be doubling in size — Westsound had a particularly strong operation on the Peninsula,” said Carmichael.
Westsound is the second Washington-based bank and 33rd U.S. bank to fail this year.
The FDIC and state DFI closed the Bank of Clark County on Jan. 16.
By contrast, 25 U.S. banks failed in all of 2008, including Seattle-based Washington Mutual, the biggest bank to fail in U.S. history.
In addition to assuming the deposits, Kitsap will buy the $49.3 million of Westsound’s assets it was assigned by the FDIC.
This includes cash, cash equivalents, marketable securities and loans secured by deposits.
The FDIC will hold about $285 million in remaining assets “for later disposition,” the agency said.
FDIC officials estimated that the failure of Westsound Bank will cost its deposit-insurance fund $108 million.
The FDIC will pay off $9.4 million in brokered deposits not being assumed by Kitsap Bank.
Brokered deposits are funneled into a bank, usually via the Internet, by customers of brokerage firms chasing the highest yields.
