Bremerton Bank Woes

The Seattle Times yesterday deviated from its practice of warmly reviewing the  downtown revival and chasing police blotter here to offer a business story about us with some punch.

It’s not new territory to report WestSound Bank’s financial troubles (WSFG’s stock was at $0.40/share Monday and we’ve reported on the company’s problems here), but the Times’ analysis of state banks ranks WestSound as the most troubled. Not exactly what Bremerton courts statewide coverage over, though investors should be pleased when public companies are scrutinized.

Among the paper’s revelations: The bank’s “comprehensive risk ratio,” which indicates weakness based on nonperforming and noncurrent assets like foreclosed real estate, is the highest of 52 Washington banks in the study, at 282 percent. The two other Kitsap banks included, Kitsap Bank and American Marine, had ratios of 30.9 and 65.6, for comparison.

Putting the struggles of community banks in this context helps shed light on the industry here, since we have a number of them in town, and the data used is interesting to go through. Anyone following Westsound’s story knows it’s not just the Citis and WaMus that made dumb bets and loaned far more than was responsible, and problems exists for some of the little guys as well. Westsound has acknowledged mistakes and will not fall under SEC sanctions, and last June new CEO Terry Peterson announced a three-year plan to stability. If the Times’ data is any indication, it’ll be an uphill road.

— David Nelson

12 thoughts on “Bremerton Bank Woes

  1. I thought Kitsap Bank would be too smart to fall into the greed trap…oops, I forgot, new people running it now….still disappointing.
    In my opinion…Sharon O’Hara

  2. Duh! Everybody got greedy when they saw the current losers making money. So they tohought they were missing the game. It is a combination of greedy developers and stupid bankers, (mostly) incompetent banklending management and boards of directors of those troubled banks., reckless and risky lending, weak government supervision, on and on and on and on! THis will take a long time to cull out the weak ones. Regulatory insurance will cover the loser but at the expense of the good quality banks in this country.

  3. I wonder what the “downtown revival’s” “comprehensive risk ratio” is.

    I wonder if any newspaper will report on that.

  4. ‘Just as the bank has been an icon in Kitsap area, board Chairwoman Helen Langer Smith has been an icon in the banking world and the local community. A third-generation Kitsap Bank majority owner, she has served on the board since the early ‘50s.”

    Kitsap Bank has been known as a steady, solid bank… and I think it was the KS who did a wonderful story on Ms. Smith’s mother, Hannah.
    A super story of a family and their bank.

    In my opinion… Sharon O’Hara

  5. Indeed. In that same article:

    “What is just as remarkable is that the bank has remained largely family owned for most of this time, and it has only had eight presidents in its 100 years.”

    Doesn’t quite conjure up the idea of a bank ‘run by new people’.

  6. Well, eight years as President isn’t a very long time, especicially considering the strong economy at the time. Was he hired after Hannah passed on?
    If so and she was a formally strong force in the character of the bank practices, couldn’t that possibly constitute a bank ‘run by new people?” That is how I saw it.

    It was my understanding that she was a conservative force in the running of the family bank. I had thought her loss would be felt. Please correct me if I am mistaken.

    In my opinion…Sharon O’Hara

  7. I’m not sure where you’re getting 8 years. Jim has been there since 1985. That’s 24 years, not 8. Even if you thought I wrote 1995, that would be 14 years.

    Also, the original blog post was making a comparison between WestSound Bank’s “comprehensive risk ratio” and other Washington banks. Theirs was the highest of 52 Washington banks in the study at 282 percent. Kitsap Bank and American Marine had ratios of 30.9% and 65.6%, which are significantly lower.

    The overall point being, Kitsap Bank is running a rather good operation, and can’t really be characterised as a bank which has fallen into the greed trap.

  8. The point I picked up was that Kitsap Bank and American Marine were the only other Kitsap banks mentioned in the ‘comprehensive risk ratio’.

    “The bank’s “comprehensive risk ratio,” which indicates weakness based on nonperforming and noncurrent assets like foreclosed real estate, is the highest of 52 Washington banks in the study, at 282 percent. The two other Kitsap banks included, Kitsap Bank and American Marine, had ratios of 30.9 and 65.6, for comparison.”

    Does that mean KB and AM of all the other banks in Kitsap, were the only ones who fit that description with West Sound or does it mean that KB and AM were picked at random for the study?

    I have held Kitsap Bank in high regard for many years but if they were, of all the different banks in Kitsap, one of only three fitting the label then something went very wrong.

    Otherwise I totally misunderstood the story. Which is it?
    Thank you.
    Sharon O’Hara

  9. A Seattle Times analysis of 52 Washington banks included a short list of those under the most stress, using three measures : 1) comprehensive risk ratio; 2) nonperforming assets ratio; and 3) coverage ratio. Kitsap Bank wasn’t on the list but WestSound was in the top position for the first two, and second for #3.

    To create a fair sample of Washington state’s nearly 100 banks and thrifts, The Seattle Times examined all banks whose parent companies are publicly traded and all banks that have received money through the federal Troubled Asset Relief Program (Kitsap Bank was not one of them), and then added a geographically diverse mix of other significant institutions.

    Since they’re privately held and didn’t receive money from TARP, my guess is they made the list on the final basis.

    They are really a great bank with some truly exceptional people: Jim, Shannon Childs, Chad Gregg, (formerly) Michael Besselievre, Jackie McVay, Dave Gitch…and more.

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