By Jason Miller
(posted 6.3.11)

May was a bad month for Burlington-based Summit Bank. Citing inadequate capital and severe loan losses, the Washington Department of Financial Institutions (DFI) closed the bank just before 6 p.m. on May 20.

Immediately following the closure, DFI named the Federal Deposit Insurance Corporation (FDIC) as receiver of Summit Bank.

Just as quickly, the FDIC entered into a purchase and assumption agreement with Columbia State Bank, headquartered in Tacoma. Columbia State Bank (doing business as Columbia Bank) will assume all of the deposits, except approximately $2 million in brokered deposits and all assets of Summit Bank.

“Summit Bank has suffered significant losses associated with real estate lending. Like many institutions, Summit Bank has experienced large losses associated with construction and land development loans,” said Gloria McVey, Acting Director of DFI’s Division of Banks. “Despite continuing efforts, bank’s management was not able to raise sufficient capital to remain viable.”

“We are very pleased to warmly welcome former Summit Bank customers into our extended Columbia Bank network,” said Melanie J. Dressel, President and Chief Executive Officer, Columbia Banking System, in a press release. “Branches will open under new ownership; however, customers will be able to bank as usual during regular business hours, and their deposits are safe, available, and remain FDIC insured.”

Columbia State Bank will acquire approximately $140 million in assets and $130 million in deposits located in Summit’s three Skagit County branches. Summit Bank’s loan portfolio of approximately $110 million will be subject to a loss-sharing agreement with the FDIC.

Columbia State Bank participated in a competitive bid process, whereby it agreed to assume substantially all of the assets and all deposits of Summit Bank.

Headquartered in Tacoma, Columbia Banking System, Inc., is the holding company of Columbia State Bank, which was awarded third place in the large employer category by Seattle Business Magazine’s 100 Best Companies to Work For 2010, and was designated one of  Puget Sound Business Journal’s “Washington’s Best Workplaces 2010.”

Familiar faces
The former Summit Bank branch in Concrete Town Center opened with little fanfare the following Monday, with a few FDIC officials milling around as the same employees greeted customers. Whether those employees will keep their jobs remains to be seen, but Dressel was upbeat about their prospects.

“I can’t imagine why we wouldn’t keep the same people,” she said.

AFTER THE FAILURE
Answers to frequently asked questions

Is my money safe?
Your money is safe. No one lost any money as a result of the closure of this bank.

Can I still access my money?
You may continue to use your outstanding checks and they will clear up to the balance in your account. Your ATM/Debit card will continue to work as usual. The total balance in your account(s), including checking, savings, money market, nonbrokered Certificates of Deposit, and retirement accounts, has been transferred to the new bank and will be available for transactions during regular business hours at the former bank branches.

What about autopayments, bill paying, and online banking?
These services will continue as usual. Your routing number and account number will remain the same until you are notified in writing by the new bank.

Will my interest rate(s) change?
Interest on deposits accrued through close of business on May 20, 2011, will be paid at your same rate. Current rates will be reviewed by Columbia Bank and may be lowered.

What about my loan payment?
You should continue to make your payments according to the terms of your written contract. You may continue to make your payments at the branch office or send them to the same payment address, with checks made payable to the old bank.

What about my escrow payment?
All services previously performed and related to your loan will continue. If you receive notification that any portion of your taxes or insurance was not paid, notify your loan officer immediately.

What if someone tries to scam me?
Be watchful for and resistant to any attempts to obtain information from you by individuals or entities stating that they are acting on behalf of Summit Bank, Columbia Bank, or the FDIC. If you are contacted by anyone requesting private information from you related to the closure, contact the FDIC Call Center at 800.894.3219.

What if I have other questions?
Additional information can be found by calling the FDIC Call Center at 800.894.3219 or by going online to www.fdic.gov/bank/individual/failed/banklist.html.

Source: FDIC.