Frontier Bank Fails and Closes, Acquired By Union Bank

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Frontier Bank, based in Everett, Washington, was shut down Friday evening by Washington's Department of Financial Institutions (DFI). Almost immediately after, it was promptly bought up by San Francisco-based Union Bank. So ends the more than 30 year run of Washington's second largest commercial bank.

Failing to comply with a 30-day corrective order to raise capital, time ran out for the bank on April 15th. Frontier Bank is just part of a growing line of community bank failures so far this year, being the fifth. Brad Williamson, DFI's Division of Banks Director, explains the bank's downfall in a press release: "Frontier Bank's capital has been depleted by large loan losses and loan loss reserve provisions associated with its real estate construction loan portfolio. Frontier's management team has worked hard to recapitalize the bank throughout the past year. However, the economic climate has made this task very difficult and the continuing loan losses finally brought the bank's capital to an unsustainable level," he says, according to The News Tribune.

Most of Frontier's assets and deposits now belong to Union Bank, with the exception of select brokered deposits, which are to be paid out by the Federal Deposit Insurance Corp. Estimates of this cost to the Deposit Insurance Fund are $1.37 billion.

Despite the closure, it's still business as usual for Frontier Bank's customers. Accounts can be accessed over the weekend via checks or ATMs and debit cards. Loan customers still need to make their payments as usual, and online services are still up and running.

Of Frontier Bank's 50 branches in Washington and Oregon, Union Bank will absorb all of them. What will surely cause double takes from the uninformed, all of these branches will re-open on Monday as Union Bank branches.