Whispers that Whidbey Island Bank was on the verge of buying its second failing bank this year were validated Friday with the announcement that it had purchased North County Bank.
Washington Banking Company, parent company of Whidbey Island Bank, purchased the Arlington-based financial institution Sept. 24, following its closure by the Washington Department of Financial Institutions for reasons of inadequate capital and severe loan losses.
Friday’s purchase of North County Bank included about $265 million in assets, about $195 million in loans, and about $296 million in deposits, cash and equivalents, and short term high quality securities.
The acquisition increases Whidbey Island Bank’s total asset value from about $1.6 billion to $1.9 billion, brings its total number of branches up to 30 across six counties, and adds about 40 employees to its existing roster of about 400.
“It’s a fine little community bank,” said Jack Wagner, bank CEO and president of the board. “It will make a good addition to our family of branches in Snohomish County.”
In April, Whidbey Island Bank grew by eight branches when it purchased a large portion of City Bank of Lynnwood. It also had just failed. Its branches, combined with the four owned by North County Bank – located in Arlington, Lake Stevens, Marysville, and Everett – have not only helped Whidbey Island Bank to increase its footprint in Snohomish County, but to establish itself as a true regional presence.
In June, Whidbey Island Bank was announced as the top performing locally based bank in the Northwest. The bank’s quarterly statement in June revealed profits of $4.6 million, which is a 130 percent increase over the $2 million earned in the previous quarter. That’s a 272 percent increase over the $1.2 million earned in the second quarter of 2009.
According to Wagner, the bank’s recent acquisitions are the result of its healthy financial condition and a rare time in the banking industry. Many financial firms are still trying to recover from the poor lending practices they engaged in before the collapse of the housing market and the recession.
“That kind of pressure creates a lot of opportunity for strong banks,” Wagner said.
The growth has forced the firm to make some adjustments in its structure, however. Along with plans to relocate its bank services department to offices in Burlington, the bank has unofficially changed its name to “Whidbey Bank” for branches located in Snohomish and King counties.
And while there is always a danger of growing too fast, Wagner said he is not concerned. Purchases have to meet the test of whether they will be accretive to shareholders and whether the bank can realistically take them on from a logistical and operational standpoint.
In fact, he confirmed that the bank is not done shopping. If a failing firm in the Puget Sound area meets the test, there’s a strong possibility it could end up with a Whidbey Bank sign hanging over the door.
“Will we continue to look? We will,” Wagner said. “It’s a very unique time.”
