33rd Bank Failure Costs $108 Million; FDIC Named Receiver

The Washington Department of Financial Institutions on Friday shut down Westsound Bank and named the Federal Deposit Insurance Corp. (FDIC) as receiver. The failure puts $334.6m in assets on the line for sale or disposition. It marks the 33rd failure of the year, compared with the three bank closures seen by the same time in 2008, indicating the fallout from recession is continuing to unwind. Another Washington bank, Kitsap Bank, entered a purchase and assumption agreement on all of Westbound’s deposits except for brokered deposits. The failed bank’s nine offices will reopen today as Kitsap branches. Westsound as of March 31 held $334.6m in total assets, with $304.5m in deposits. Kitsap assumes all but the approximately $9.4m in brokered deposits, for which the FDIC will pay the brokers directly. Kitsap also purchased $49.3m of Westsound’s assets, including cash, cash equivalents, marketable securities and loans secured by deposits. The FDIC retains all the remaining assets for later disposition and estimates the cost to its Deposit Insurance Fund will be $108m. Read the FDIC’s statement on Westsound Bank. Write to Diana Golobay at [email protected].