The Washington Department of Financial Institutions (DFI) announced Friday it closed Tacoma-based Rainier Pacific Bank, citing inadequate capital and severe loan losses, and named the Federal Deposit Insurance Corporation (FDIC) as receiver of Rainier Pacific Bank.
The FDIC immediately entered into a purchase and assumption agreement with Umpqua Bank, headquartered in Roseburg, Ore. Umpqua Bank will assume all deposits and certain assets of Rainier Pacific Bank, except certain brokered deposits, which will be paid out by the FDIC.
“Rainier Pacific Bank’s capital has been depleted by significant securities write-downs and loan losses,” Brad Williamson, Director of DFI’s Division of Banks, explained. “Rainier’s largest losses resulted from write-downs on collateralized debt obligations that lost tremendous value as the financial markets became illiquid and underlying asset values declined. Construction loan losses further eroded the bank’s capital position.”
Rainier Pacific Bank has branches located in Pierce and King counties. All will be assumed by Umpqua Bank. Rainer Pacific’s 14 branches, including the main office, opened today as Umpqua Bank.
As of Dec. 31, 2009, Rainier Pacific Bank had $718 million in assets and $446 million in deposits, including approximately $327 million of core deposits. Rainier Pacific Bank’s $564 million in loans are subject to a loss-sharing agreement with the FDIC. Umpqua Bank expects the acquisition to be immediately accretive to operating earnings per share. The transaction will increase Umpqua’s assets to approximately $10.5 billion and deposits to approximately $8.2 billion, based on Umpquas Dec. 31, 2009 balances.
“Umpqua is well positioned to assume the deposits and loans of Rainier Pacific Bank and we will work quickly to make this transition as smooth as possible for customers and employees,” Umpqua Holdings Corporation president and CEO Ray Davis said.
“In these challenging economic times we are always disappointed when a bank is unable to continue safe and sound financial operations,” DFI Director Scott Jarvis said. “We are very pleased however to see the bank acquired as a whole bank purchase by a northwest bank with a growing presence in our state.”