Pacific West Bank Announces Formal Regulatory Agreement
April 09 2010 - 11:27AM
Business Wire
Pacific West Bank (OTCBB:PWBO) announces that it has signed a
formal agreement with the Federal Deposit Insurance Corporation and
the Oregon Division of Finance and Corporate Securities, its
primary banking regulators. The Consent Order, issued March 31,
2010, is a result of a regulatory examination based on financial
information as of June 30, 2009. The agreement requires, among
other things, that the Bank strengthen capital, address
deterioration of asset quality, and formalize written plans related
to credit concentrations, liquidity, and brokered deposit
levels.
Steve Gray, the Bank’s President and CEO, added, “It’s important
to note that the agreement is based on an examination of our
financial position as of June 30, 2009. As detailed below, we’ve
made considerable progress since June 30, 2009, particularly with
regard to growing our customer deposits, reducing our usage of
brokered deposits, increasing our liquidity, reducing credit
concentration risk and strengthening our management team.”
- During 2009, customer deposit
balances nearly doubled, growing 97% for the year, while the number
of customer deposit accounts increased 73%. Gray commented, “We are
very pleased with the progress we have made in building these
strong customer deposit relationships. We view this as a validation
of our full-service, relationship-based banking model, as well as
our continued support of school programs and civic organizations in
the communities we serve and the dedication of our outstanding
staff and management group.”
- Customer deposit growth has
allowed the Bank to significantly reduce its usage of brokered
deposits which is an area identified in the agreement as needing
improvement. Brokered deposits, which totaled $13.7 million as of
the June 30, 2009 examination date, have been reduced to $3.3
million as of March 31, 2010. Gray commented, “With significant
asset liquidity and strong customer deposit momentum, we are paying
off all brokered deposits as they mature.”
- The Bank has strengthened its
liquidity position substantially, with asset-based liquidity ending
2009 at 19.6% of assets, up from 3.8% as of December 31, 2008. In
addition, the Bank maintains lines of credit with the Federal Home
Loan Bank of Seattle, the Federal Reserve Bank of San Francisco,
and correspondent banks which as of December 31, 2009 had
approximately $12.8 million in available credit, subject to
collateralization.
- As was true of many Northwest
banks, Pacific West Bank entered the current economic downturn with
an unhealthy balance of construction loans in its portfolio. A
primary goal of the Bank since late 2008 has been to reduce this
concentration risk. Gray commented, “In late 2008 we made the
strategic decision to reduce our concentration in acquisition,
development and construction loans by allowing the existing loans
to pay off over time while focusing new loan development in other
areas. By the examination date of June 2009, improvement was
evident but not yet satisfactory either to us or to the regulators.
We’ve continued our efforts, and have successfully reduced this
concentration from 302% of Tier 1 and Tier 2 Capital as of December
2008 to 134% as of December 2009. No bank in Oregon decreased this
concentration more over the year.” New loan originations totaled
$12.5 million in 2009 and were predominantly in the residential
real estate, commercial and industrial, and multi-family loan
segments. These new loan originations, combined with significant
reductions in the acquisition, development and construction loan
segment, rebalanced the Bank’s loan portfolio. Said Gray, “We’ve
done a great job diversifying the portfolio to neutralize the risk
associated with excess credit concentrations, while continuing to
meet the needs in our community.”
- To address asset quality
deterioration, the Bank strengthened the management team in January
2010, adding Greg Froman as Executive Vice President & Chief
Credit Officer. Froman now manages all facets of the Bank’s credit
administration and loan production functions, including credit
approval, underwriting, loan servicing, special assets and loan
portfolio management. Froman has over 35 years of lending
experience in the banking industry. “I am pleased to be part of
such a vibrant community bank as Pacific West. The commitment to
excellence found in the management and staff here brings me great
confidence that we’ll be able to successfully navigate these tough
economic times,” Froman said. Gray commented “Greg has provided an
immediate impact, showing us how very fortunate we are to have his
experience on our team. We feel confident that with his expertise
we will be able to make significant strides in helping distressed
borrowers and reducing our nonperforming assets.”
The agreement does contain a requirement that the Bank increase
and maintain heightened capital ratios. As of December 30, 2009,
the Bank’s leverage, Tier 1 risk-based capital and total risk-based
capital ratios were 8.13%, 10.22% and 11.48%, respectively, well
above the minimum regulatory benchmarks for “well-capitalized”
institutions of 5%, 6% and 10% for leverage, Tier 1 risk-based
capital and total risk-based capital ratios, respectively. However,
the agreement requires the Bank to maintain heightened capital
ratios to cushion against potential losses in the portfolio. A
capital raise has been planned since prior to the agreement and
will be initiated soon. “The additional capital will not only meet
the terms of the agreement, it will position the Bank for
profitable growth after the problem loan issues are resolved,” said
Gray.
Ed Kawasaki, Chairman of the Board of Directors of Pacific West
Bank, commented, “As the agreement essentially provides a roadmap
and formalization of steps that we were already taking to improve
the condition of the Bank, we don’t consider compliance with the
agreement to be particularly onerous. While we would of course
prefer not to operate under a Consent Order, we are aware of the
current regulatory and political environment, and approach the
agreement with the understanding that in complying with its terms
we are bringing the Bank to a healthier condition.”
Kawasaki added, “The agreement will have no real impact on daily
operations or our customers. We continue to be dedicated to
providing outstanding service and contributing to the enrichment of
the communities in which we serve. Our customer deposits remain
fully FDIC insured, we continue to make loans in the community, and
we remain a viable local banking option to businesses, families and
individuals in West Linn, Lake Oswego and surrounding
communities.”
About Pacific West Bank:
Pacific West Bank, a community bank, commenced operations in
November 2004. The Bank, headquartered in West Linn, Oregon, opened
its second branch in Lake Oswego, Oregon in 2008. Pacific West Bank
provides not only highly personalized deposit and loan services to
individuals and small-to-medium sized businesses but also financial
and volunteer support to a variety of community, civic and
charitable organizations. For more information about Pacific West
Bank, please call 503-905-2222 or visit www.bankpacificwest.com.
Information about the Bank's stock may be obtained through the Over
the Counter Bulletin Board at www.otcbb.com. Pacific West Bank's
stock symbol is PWBO.
Forward-looking Statements:
This press release, as well as other written communications made
from time to time by the Bank and oral communications made from
time to time by authorized officers of the Bank, may contain
statements relating to the future results of the Bank (including
certain projections and business trends) that are considered
“forward-looking statements” as defined in the Private Securities
Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking
statements may be identified by the use of such words as “believe,”
“expect,” “anticipate,” “should,” “planned,” “estimated,” “intend”
and “potential.” For these statements, the Bank claims the
protection of the safe harbor for forward-looking statements
contained in the PSLRA.
The Bank cautions that a number of important factors could cause
actual results to differ materially from those currently
anticipated in any forward-looking statement. Such factors include,
but are not limited to: prevailing economic and geopolitical
conditions; changes in interest rates, loan demand and real estate
values; changes in accounting principles, policies and guidelines;
changes in any applicable law, rule, regulation or practice with
respect to tax or legal issues; the results of regulatory
examinations and directives; and other economic, competitive,
governmental, regulatory and technological factors affecting the
Bank’s operations, pricing, products and services. The
forward-looking statements are made as of the date of this release,
and, except as may be required by applicable law or regulation, the
Bank assumes no obligation to update the forward-looking statements
or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
Pacific West Bank (PK) (USOTC:PWBO)
Historical Stock Chart
From Apr 2024 to May 2024
Pacific West Bank (PK) (USOTC:PWBO)
Historical Stock Chart
From May 2023 to May 2024