Washington Banking Shows Profit, Plots Expansion

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Washington Banking Shows Profit, Plots Expansion
By Drew DeSilver
Seattle Times business reporter
ddesilver@seattletimes.com
206-464-3145

At a time when many Washington banks are struggling to stay afloat in a sea of red ink, the parent of Whidbey Island Bank is taking its larger rivals to school.

Oak Harbor-based Washington Banking on Thursday said it made $1.7 million in 2009's fourth quarter and $6.2 million for the full year. After subtracting required dividend payments on preferred stock owned by the federal government, that worked out to 11 and 46 cents per common share, respectively.

Both profit figures are down from 2008, but earning any profit last year — much less remaining in the black for the whole year — makes Washington Banking a rarity among the state's troubled community banks.

"We continue to benefit from the flight to quality as customers choose to bank with healthy, full-service, local institutions," chief executive Jack Wagner said in a written statement.

Total deposits grew by $34.7 million in the fourth quarter, to $846.7 million, mainly due to increases in money market accounts. The company's total assets topped $1 billion for the first time in the quarter, rising nearly 9 percent to $1.05 billion.

Nonperforming assets, mainly delinquent loans and foreclosed real estate, totaled $7.9 million at year's end, down 3 percent from the end of the third quarter but almost double the level of a year ago. It charged off a net $1.9 million in loans during the quarter.

However, Washington Banking has $16.2 million set aside to cover anticipated future loan losses, and its regulatory capital levels are far above the minimums needed to be deemed "well-capitalized."

The company's relative strength was underscored in November, when it netted $49 million in new capital from a secondary stock offering. And Washington Banking — which less than two years ago scuttled a deal to be acquired by Everett-based Frontier Financial, itself now straining to survive — sounds like it's ready to go on the prowl itself.

"With this fresh capital, we have been actively reviewing opportunities to expand our franchise and believe there will be a number of appropriate FDIC-assisted transactions to bid on in the coming months," Wagner said.

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