On Friday, January 29, 2010, the Washington Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) closed American Marine Bank of Bainbridge Island, WA. This was following December 2009 attempts by American Marine Bank to improve its lending and management policies, and failed hopes that an investor would rescue the 61-year-old Washington state institution.
American Marine Bank, much like other banks in the region, has experienced defaults in real estate and participation loans since the economy’s real estate-fueled downturn began. With homebuilders and developers unable to provide debt service, American Marine Bank began to buckle as FDIC insurance premiums and costs increased. From the close of Q3 2008 to Q3 2009, the bank’s loan losses ballooned ten-fold from $1.8 million to over $18 million.
The 11 branches of American Marine Bank are in the process of being transitioned to Columbia State Bank.
The Federal Deposit Insure Corporation and Columbia State Bank entered into a loss-share transaction on $255.1 million of American Marine Bank’s assets. Columbia State Bank will share in the losses on the asset pools covered under the loss-share agreement. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be approximately $59 million. Columbia State Bank’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to all alternatives. American Marine Bank is now the15th FDIC-insured banking institution to fail during 2010.
From the latest (Q3 2009) call reports, BankProspector reports American Marine Bank with leverage ratio of 4%, nonaccrual real estate loans over $25 million, and OREO balances over $7 million. American Marine Bank fell mainly due to their Construction and Multifamily portfolio, 35% and 16% of which was noncurrent.