Frontier Bank

When Frontier Bank branches re-open Monday, they’ll have a new name: Union Bank.

Frontier Financial Corp., the parent company of the long-time Everett institution, was closed by state regulators Friday. In nearly seamless succession, the
Federal Deposit Insurance Commission immediately assumed receivership of the bank and sold it to Union Bank of San Francisco.

The sale marks the end of a long fight by Frontier. Under increased scrutiny from regulators for more than a year, the bank has long struggled to break free from bad real estate loans and find investors to stop large losses.

Regulators started pounding the final nails in Frontier’s coffin earlier this year when it labeled the bank “critically undercapitalized” and told officials to turn things around by April 15 or risk being sold to the highest bidder.

Brad Williamson, director of the state Department of Financial Institution’s Division of Banks, said Frontier executives put up an admirable fight to recapitalize the bank. But large loan losses related to construction projects coupled with the state’s economic climate was too high of a mountain to climb.

“I think in all cases, management tries desperately to bring the bank back to a safe condition,” Williamson said. “But (Frontier CEO) Pat Fahey and the management at Frontier — they really made a tremendous effort to recapitalize the institution.”

Effective immediately, all Frontier depositors are customers of Union Bank.

Frontier branches will be closed on Saturday for restructuring. Customers can
still use their accounts by writing checks, using ATMs and debit cards and doing other banking through Frontier’s website.

Branches will reopen Monday morning as Union Bank.

Frontier is the sixth Washington-based bank to close this year, according to FDIC data. City Bank of Lynnwood just two weeks ago landed on the failed-bank list, when regulators sold the foreclosure-plagued institution to Oak Harbor-based Whidbey Island Bank.

In 2009, 140 banks were shuttered across the U.S, the highest number in nearly two decades. FDIC officials predict more banks will close this year than last year.
Williamson is hesitant to say if that prediction will be true of Washington state.

“Nationally, I tend to agree with the FDIC,” he said. “I don’t really like to talk about local closures because we’re starting to see shift in the capital markets.”

Speculation about the bank’s forced sale sent Frontier’s stock soaring during the past week. But stock prices dropped 22 percent in trading Friday, ending the day at $3.57.

In after-hours trading before news of the closure, the stock continued to decline.