$20 million would save Venture Bank

By Rolf Boone | The Olympian • Published April 01, 2009

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TUMWATER – Venture Bank needs to raise about $20 million to reach a point where it is considered well-capitalized and isn't at risk of more action from federal regulators, bank officials told a crowd of nearly 180 people at the Masonic Center on Tuesday night.

The 90-minute meeting was the sixth town-hall-style meeting the bank has held in recent months, but Tuesday's gathering took on a new urgency after the bank's regulator, the Federal Deposit Insurance Corp., issued a "prompt corrective action" notice that it disclosed Friday.

Venture has been ordered to raise money, find a buyer or find a merger partner by April 14, according to the FDIC directive.

Venture Financial chairman Ken Parsons and Venture Bank President and Chief Executive Jim Arneson were on hand Tuesday to discuss banking and economic trends and answer questions.

Parsons said the bank has appealed the FDIC's order and reassured the audience that the bank will continue to operate on and after April 14.

"That date will come and go by, and we will have to see where we are in raising capital," he said.

Although bank officials didn't disclose how much capital the bank has been able to raise, the environment for raising money is much better now than it was in the previous seven months, Parsons said. About seven months ago, the national economy began to slow and Venture Financial Group, which owns Venture Bank, reported a loss of nearly $40 million in the third quarter of the year after the federal government took over mortgage-giants Freddie Mac and Fannie Mae. Venture's investments in those companies fell as a result.

"They should not have destroyed preferred shareholders," Parsons said.

Venture was not alone. About 1,100 community banks throughout the nation invested in preferred shares of Freddie Mac and Fannie Mae, he said.

After taxes, Venture reported a $26.1 million loss related to those investments.

Customers, stockholders and others listened intently for most of the meeting, then got a chance to ask questions. Among the questions asked:

• What are the odds that Venture will be bought by another bank? "If we don't raise capital, we will be sold to another bank at some point," Parsons said.

• What happens to stockholders in a merger or a sale? The value of the stock likely will be diluted, he said.

• What's the chance of growing capital through earnings? Through earnings, the bank could raise enough capital by late 2010 or 2011, Parsons said.

• What is the fear factor among the bank's customers? Are people pulling their money out? Parsons acknowledged there is some fear and some customers have left the bank, but overall deposits have gone up, he said. He also said the bank will be well-capitalized when total risk-based capital reaches 10 percent. The bank is at 8 percent and needs $20 million to reach that next level, Parsons said.

Not everyone was satisfied after the meeting. Jerry's Automotive & Towing owner Jerry Goddard, a bank customer for more than 25 years, said he thinks some issues remain unresolved.

"I'm trying to retire," he said. "It's not a time in my life when I need to have a bank issue."

Venture Bank was formed in Lacey in 1979. It has grown to $1.2 billion in assets and operates 18 branches, mostly in Pierce and Thurston counties. Its corporate headquarters is in DuPont.

Rolf Boone covers business for The Olympian. He can be reached at 360-754-5403 or rboone@theolympian.com.