Washington regulators Friday closed Westsound Bank of Bremerton, Wash., bringing the total number of U.S. bank and thrift failures during 2009 to 33. Westsound was a subsidiary of WSB Financial Group ( WSFG). Please see TheStreet.com's Bank Failure Map for an interactive summary of all previous bank and thrift failures during 2008 and 2009.
The Washington Department of Financial Institutions appointed the Federal Deposit Insurance Corp. as receiver. The FDIC immediately entered into a purchase-and-assumption agreement with Kitsap Bank of Port Orchard, Wash., under which Kitsap Bank will take over all of Westsound's retail deposits and branches. Westsound's nine offices were set to reopen Monday as branches of Kitsap Bank. Kitsap Bank chose not to take over about $9.4 million in brokered deposits. The FDIC will pay the brokers directly and instructed that group of depositors to contact their brokers. Westsound Bank had $334.6 million in total assets and $304.5 million in deposits. In addition to the deposits, Kitsap Bank purchased $49.3 million of assets. The FDIC retained the remaining assets for later disposition, and estimated the cost to its insurance fund would be $108 million. In a press release announcing the closing of Westsound Bank, the Washington Department of Financial Institutions cited "very poor lending practices over the past several years." The institution had been operating under an FDIC cease-and-desist and was fighting further enforcement actions from the agency. TheStreet.com Ratings had assigned Westsound Bank an E-plus (Very Weak) financial strength rating in March, based on Dec. 31 financial information.