Columbia River Bank closed by regulators

YAKIMA, Wash. -- Oregon state banking regulators shuttered Columbia River Bank late Friday as bad real estate construction loans doomed the 21-office bank in Oregon and Washington that includes branches in Yakima and Sunnyside

The Yakima branch at 10 N. Fifth Ave. and the Sunnyside outlet at 2640 Yakima Valley Highway will reopen Monday under the banner of Columbia State Bank, a Tacoma-based banking concern with 50 offices in Washington and Oregon.

Customers of Columbia River Bank, based in The Dalles, Ore., will continue to have access to their accounts through ATMs, checks and debit transactions and will see no interruption in service, Columbia State Bank said in a news release issued late Friday.

Customers with outstanding loans were advised to continue making their payments.

Columbia State Bank acquired essentially all of Columbia River Bank's assets and liabilities from the Federal Deposit Insurance Corp., which Oregon authorities appointed as receiver.

Bank customers will not lose their deposits as a result of the closure, state regulators said.

FDIC insures all deposits up to $250,000. Since Columbia State Bank acquired the failed bank's assets, customers with deposits exceeding the FDIC limit shouldn't suffer any losses, Oregon state officials said.

The Columbia River Bank branch in Yakima was closed Saturday afternoon.

The branch, which has been open less than two years, received an award from the Greater Yakima Area Chamber of Commerce in December 2008. The award recognized the bank for construction of the branch helping to improve the overall quality of life.

The bank also was in line to receive $1.4 million in tax credits in late 2008 from a federal program designed to spur renewal. The credit allowed the bank to more rapidly depreciate the investment in construction.

Friday's closure was prompted primarily because the bank was short on capital funding and being dragged down by poor residential construction loans, according to a news release by the Oregon Department of Consumer and Business Services, which ordered the closure.

FDIC and Oregon banking officials had put Columbia River Bank on notice last February that its banking practices were "unsafe and unsound."

Oregon state officials said the bank management team "worked hard to resolve the issues" cited in a cease-and-desist order to restore the bank to financial health but that the bank's capital funds had fallen well below the minimum standard for solvency, and that Oregon had no choice but to order the bank's closure.

As of September 2009, Columbia River Bank had approximately $1.1 billion in total assets and $1 billion in total deposits.

Columbia River Bank is the ninth FDIC-insured bank to fail in the nation this year and the first in Oregon.

In addition, federal regulators also shut down Seattle's Evergreen Bank on Friday and handed its operations to Oregon's Umpqua Bank.

Depositors and creditors can obtain additional information by calling FDIC at 1-800-523-0640 today from noon to 6 p.m. PST and from 8 a.m. to 8 p.m. during the week.

* On the Net:

fdic.gov/bank/individual/failed/columbiariver.html