Regulators seized DuPont-based Venture Bank on Friday night and turned its assets over to Raleigh, N.C.-based First-Citizens Bank and Trust Co. – ending a 30-year history as a South Sound community bank.
The Washington State Department of Financial Institutions closed Venture Bank at 6 p.m. and immediately named the Federal Deposit Insurance Corp. as receiver. The bank was then sold to First Citizens, which has assumed all deposits and assets – except for some brokered deposits – of Venture Bank.
All branches that were regularly scheduled to open today will do so, and the state DFI assures all customers that their deposits and accounts are safe.
FDIC spokeswoman Linda Beavers, at Venture Bank’s headquarters in DuPont on Friday, said customers will be able to use ATMs, write checks and pay bills.
“They will continue to (operate) as if nothing happened,” she said about Venture’s branches.
On Monday, all of Venture’s bank branches throughout Western Washington will reopen under the control of First Citizens Bank, Beavers said.
The demise of Venture was caused by “large loan and investment losses” that depleted the bank’s capital, according to DFI.
The bank had been under increased regulatory scrutiny for several months. Venture officials have said that failed investments in Fannie Mae and Freddie Mac led in large part to the problems, as had loans gone sour in the recession. Recent attempts to raise capital have been unsuccessful.
A little after 5 p.m. on Friday, Venture Bank employees and some board members began to file into Venture’s main offices in DuPont for a company-wide announcement at 6 p.m. Some employees and board members acknowledged they had been called to a meeting but were given no other information about it, and some employees declined to comment as they entered the building.
About 6 p.m., signs were posted on doors about the actions taken by state and federal regulators and then they were opened to a team of FDIC employees who will work through the weekend to reopen the bank on Monday, Beavers said. About 80 FDIC employees were sent out to all of Venture’s branches, including about 40 people in DuPont. Three off-duty but uniformed Pierce County sheriff’s deputies also were hired by the FDIC to provide security. Also arriving in DuPont on Friday were executives and staff from First Citizens Bank and staff members of the state Department of Financial Institutions.
Venture Bank President and CEO Jim Arneson and Venture Financial Chairman Ken Parsons Sr. could not be reached for comment.
The FDIC employees who showed up to help Friday arrived in stages so as to not overwhelm Venture’s employees, Beavers said. Venture Bank staff also would be asked to stay and help with the transition Friday, but they did not have to, she said. About 30 pizzas were delivered to Venture’s main offices during the evening.
Unlike other takeover transactions in the state that have seen the FDIC bear much of the financial responsibility for losses, the transaction with First Citizens will be a “whole bank transaction,” said DFI’s head of banks Brad Williamson on Friday afternoon.
As of July 28, 2009, Venture Bank had total assets of $970 million and total deposits of approximately $903 million. In addition to assuming all of the deposits of the failed bank, First Citizens agreed to purchase approximately $874 million of the assets. The FDIC will retain the remaining assets for later disposition. The agreement also says that the FDIC and First-Citizens will share in any losses on approximately $715 million of Venture Bank’s assets. The FDIC estimates that the cost to the Deposit Insurance Fund will be $298 million.
Venture was the 92nd bank to fail this year, according to FDIC data.
“Up to now, no acquiring institutions have wanted to take on the problem loans. For the first time, a bank has taken on the loans as well. There is loss-exposure here. I hope that this is a precursor of confidence in the banking community,” Williamson said.
Williamson said two Northwest banks had also made bids for Venture, although he would not name them. Other banks from outside the area may also have bid.
“The fact that it’s a bank that isn’t in the same market area – I think does preserve more jobs. From a local employment perspective, it is good news for the employees of the banks and the communities,” he said.
Clarifying the process of the takeover, Williamson said, “It is not widely understood in most press reporting that the board of directors of the bank has consented, and has basically given us the bank. We have received a bank from the board of directors.”
Venture, he said, “is insolvent. They have recently re-filed regulatory reports, and those reports show them to be insolvent – with negative capital.”
First Citizens Bank is an 111-year-old, publicly traded bank that operates 373 branches in North Carolina, Virginia, West Virginia, Tennessee, Maryland, California and Washington.
First Citizens has a small presence in Washington. Its subsidiary, IronStone Bank, has offices in Seattle and Portland, Ore.
According to the First Citizen Web site, “we continue to expand into new markets.”
Buying Venture Bank gives the company a network of branches on Interstate 5 near its IronStone bank branches in Seattle and Portland. “It’s a terrific complement to our West Coast franchise,” First Citizens spokeswoman Barbara Thompson said Friday. She also said the company has made no decisions about Venture Bank’s staff and declined to comment about possible changes with Venture Bank’s management.
Rolf Boone: 360-754-5403
C.R. Roberts: 253-597-8535