The banking world has been turned on its ear of late, with the financial mishaps taking place at Silicon Valley Bank and Signature Bank in New York City. The Federal Deposit Insurance Corporation (FDIC), President Biden and Secretary of the Treasury, Janet Yellen, have all stepped in to ensure the American people that their money is safe in one of our most trusted institutions.
Truth be told, no one wants a repeat of the 2008 crisis that rocked the financial world and took out a number of big banks, including Seattle’s own Washington Mutual, and eventually led to the Great Recession that lasted nearly seven years and crippled the economy, the housing market and the stock market.
You don’t have to look much beyond Winslow Way – Bainbridge Island’s main commercial drag – to see where the smoke settled at the beginning of the Great Recession – more than a decade ago – and where the future of local banking now lies. If you’ve lived on the island for more than a dozen years or so, you probably remember American Marine Bank.
It operated 11 branches in Kitsap, Jefferson, Clallam and King counties, and its main office and headquarters were located in the space now occupied by Columbia Bank on Winslow Way. American Marine was in business for 61 years before state and federal regulators took it over in January of 2010, citing “inadequate capital and severe loan losses.” The Feds then turned around and sold the assets of American Marine – including all its branches offices – to Tacoma-based Columbia Bank.
At the time Brad Williamson, Director of the state’s Department of Financial Institution’s Division of Banks, said of the once iconic local bank: “American Marine’s capital has been depleted by large loan losses and resultant loan loss reserve provisions.” In other words, it made too many risky loans and couldn’t cover the losses when the borrowers couldn’t pay up.
A few years before AMB’s debacle, in 2008, Washington Mutual or WaMu became the largest failed bank in U.S. history. By the end of 2007, WaMu had more than 43,000 employees, 2,200 branch offices in 15 states – including a branch office on Winslow Way – and $188.3 billion in deposits. Among other things, it got caught up in the subprime mortgage game – primarily in California – and its balance sheet began to unravel.
Its biggest customers were individuals and small businesses. Nearly 60% of its business came from retail banking and 21 percent came from credit cards. Only 14% were from home loans, but this was enough to destroy the rest of its business. By the end of 2008, it was bankrupt.
In September of 2008, the FDIC took over the bank and sold it to JPMorgan Chase for $1.9 billion, according to published reports at the time. The next day, Washington Mutual Inc., the bank’s holding company, declared bankruptcy. It was the second-largest bankruptcy in history, after the infamous Lehman Brothers unraveling.
That was yesteryear, but it’s the reason why we have Columbia Bank and Chase operating in adjacent buildings in Downtown Winslow. Now the local banking landscape is about to change again as Columbia Banking System Inc. (“Columbia“) (NASDAQ: COLB), the parent company of Columbia Bank, and Umpqua Holdings Corporation (“Umpqua“) (NASDAQ: UMPQ), the parent company of Umpqua Bank, merge their operations, after the FDIC approved it earlier this month. The real action will begin on March 20th when account fees and non-sufficient fund fees begin to be enforced.
Another local wrinkle to this financial marriage is the former Sterling Bank. Long-time locals, too, might remember that there was a Sterling branch located at the corner of Winslow Way and State Highway 305 for many years in the aptly named Sterling Place Building before Umpqua acquired the Spokane-based bank in 2014. The local Sterling/Umpqua branch stayed open until just a few years back.
Meanwhile, the combined Columbia and Umpqua banks will operate more than 300 branches and ATM locations throughout the West. The bank will assume the name Umpqua Bank – with the familiar Columbia Bank signage on Winslow Way eventually changing out – while its investment services and health care function will be branded Columbia Wealth Management.
“(This) announcement marks the culmination of a tremendous amount of work from associates across both organizations. I couldn’t be more proud of their collective effort as we look ahead to the completion of our merger,” said Clint Stein, President and CEO of Columbia. “We are excited to advance to the last phase of our combination and achieve our vision of creating a leading Western regional bank.”
“Our combination, and all the potential it holds to unlock value for our customers, communities, associates and shareholders, is one step closer to becoming reality,” added Cort O’Haver, President and CEO of Umpqua. “We are thrilled to complete this combination and begin moving forward as one bank.”
The merged bank’s holding company will operate under the Columbia Banking System name and will be headquartered in Tacoma. Other major subsidiaries and divisions will include Columbia Trust Company, Columbia Wealth Advisors and Columbia Private Bank, which will operate under the umbrella of Columbia Wealth Management, as well as Financial Pacific Leasing Inc. The combined company will trade under Columbia’s ticker symbol (COLB) on the Nasdaq Stock Market.
Headquartered in Tacoma, Washington, Columbia Banking System is a Washington state-chartered full-service commercial bank with offices in Washington, Oregon, California, Idaho, Utah, and Arizona. The bank has been named one of Puget Sound Business Journal’s “Washington’s Best Workplaces,” more than 10 times. Columbia was named the #1 bank in the Northwest on the Forbes 2021 list of “America’s Best Banks,” marking nearly 10 consecutive years on the publication’s list of top financial institutions.
More information about Columbia can be found on its website at www.columbiabank.com.
Umpqua Holdings Corporation is the parent company of Umpqua Bank, an Oregon-based bank with operations across Oregon, Washington, California, Idaho, Arizona, Colorado, and Nevada. Umpqua has been recognized for its innovative customer experience and banking strategy by national publications including The Wall Street Journal, The New York Times, BusinessWeek, Fast Company, and CNBC. The company was named #1 in Customer Satisfaction for the Northwest Region in the J.D. Power 2021 U.S. Retail Banking Satisfaction Study, and Forbes consistently ranks Umpqua as one of America’s Best Banks. The Portland Business Journal has also recognized Umpqua as the Most Admired Financial Services Company in Oregon for 18 consecutive years. In addition to its retail and commercial banking presence, Umpqua Bank owns Financial Pacific Leasing, Inc., a nationally recognized commercial finance company that provides equipment leases to businesses. For more information, visit www.umpquabank.com.
The Island Wanderer was unable to ascertain the total number of deposits, customers or employees of the combined Columbia and Umpqua banks on Bainbridge Island. Local representatives of Columbia were instructed not to talk with the media.
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