In a change from recent weeks, the FDIC took over only one bank this Friday. The Washington State Department of Financial Institutions issued a press release last night announcing that it was formally shuttering Westsound Bank of Bremerton, Washington and turning the keys over to the FDIC. Then Kitsap Bank of Port Orchard, Washington, acquired the banks non-insured deposits and $49.3 million in assets.
Westsound seems to have emulated a pattern afflicting small banks across the nation. In recent years it gorged on commercial real estate loans, concentrating its lending in the potentially risky area of construction and development. When the economy went south so did its loan portfolio.
From a story in the Seattle Times:
As of March 31, 46 percent of Westsound's loan portfolio was in construction and development loans, which has been hammered by the real-estate slump. That's actually an improvement over a year earlier, when 61.4 percent of Westsound's loans were in construction and development.
Westsound was the 33rd bank to fail this year. The FDIC estimates that the bank's failure will cost its insurance fund $108 million.