Pinnacle Bank closed, sold by regulators

Pinnacle Bank was shut down late Friday by the OR Division of Finance & Corporate Securities. It was the first time an OR bank was closed since 1991. Located in Beaverton, OR, Pinnacle was sold Friday to Spokane-based WA Trust Bank by the FDIC. The FDIC had taken receivership of Pinnacle. Pinnacle Bank’s single office will reopen on Tuesday next week as a branch of Washington Trust Bank. Anyone who's money deposited at Pinnacle will automatically become a depositor with Washington Trust Bank. Deposits will continue to be insured by the FDIC. Before Tues.,customers of Pinnacle can continue to write checks, use ATMs & their debit cards. Loan customers of Pinnacle should continue to make payments, the FDIC said. Pinnacle had struggled for some time, but its losses increased sharply in the 4th-Q, when the bank lost almost $3M. That compares with the 4th-Q of 2007, when it lost $1.2M, & the immediately prior 3rd-Q of 2008, when the bank lost $874,000. Pinnacle’s ratio of capital to assets was just below 10% at the end of Dec., down from 11.7% a year earlier. Pinnacle’s peer banks had an average capital ratio of 16.5% at the end of Dec. Deposits at Pinnacle totaled $64M at the end of Dec., & assets totaled $73M. Washington Trust Bank, privately owned, assumed deposits & also agreed to purchase about $72M of Pinnacle’s assets at a discount of $7.6M. WA Trust agreed to share in losses on $66M in assets covered by its agreement with the FDIC. The FDIC will retain remaining assets & dispose of them. The agency estimates total cost of the transaction will be $12.1M. The FDIC said WA Trust’s acquisition of assets was the least costly way of resolving the matter. Last month, the FDIC & Washington state Dept. of Financial Institutions took over the Bank of Clark County. Umpqua Holdings Corp., the Portland-based parent of Umpqua Bank, agreed to take over the insured deposits of the bank, as well as its two branch locations. Bank of Clark County had $446.5M in assets & $366.5 M in deposits as of Jan. 13, a week before regulators shut it down because it had inadequate capital & liquidity. The FDIC said Pinnacle is the 13th bank to fail nationwide so far this year.