When banks go bust, remote towns get hit hard

A bank fails in Tacoma – or in Seattle, Everett, Vancouver, Spokane – imposing only minor inconvenience on customers. There’s a bank just down the street, over at Safeway, a quick stop on the way home. A bank fails in a small town, it’s different.

This month, some Bank of Whitman customers discovered what it means to lose the only bank in town – when the town stands alone along dusty and dry two-lane roads planted between wheat fields and 40 miles of nowhere.

Take Mattawa, population of maybe 4,500 when the migrant laborers come for the harvest and when the owners of second homes come for the summer. The rest of the year, population falls to less than 3,000.

Down the road, the Columbia river rolls gently between dams, and all around lies the Eastern Washington desert, cut by great green circles of the irrigated crops that give the area its agricultural prosperity.

Little dusts devils swirl beside Government Road, Mattawa’s main street. The breeze that blows carries the same wind that feeds the giant three-blade turbines perched on nearby ridges.

Trucks drive through and people meander by, stopping to buy groceries, get a haircut, meet some friends. But no longer do they stop at the city’s only bank.

There is no bank in Mattawa.

CLOSURE

The state Department of Financial Institutions closed the 20-branch Colfax-based Bank of Whitman one Friday evening earlier this month. The Federal Deposit Insurance Corp. was immediately named as receiver of the banks assets and deposits, and the FDIC immediately named Tacoma’s Columbia Bank as the new owner. Columbia announced that it would reopen eight branches come that Monday morning.

Branches in Clarkston, Colfax, Othello, Pullman, Ritzville, Walla Walla and two in Spokane would carry the expanding Columbia brand. Endicott, Kennewick, LaCrosse, Lind, Pasco, Pomeroy, Rosalia, Royal City, Warden, Washtucna, one branch in Spokane and the branch in Mattawa would close.

Bank of Whitman customers would automatically become clients of Columbia, even if that meant they would have to drive upwards of 60 miles to transact business. Customers in Mattawa were advised to visit the branch in Othello, some 40 miles away.

Mattawa customers were not pleased.

CUSTOMERS

Jong Choi, manager at Mattawa Market, outlines the obvious.

“We cannot get cash right away,” he said last week. “We don’t have a bank next door. When it comes wintertime, this is going to be horrible.”

It’s not just the drive over country roads, not just the time away from work and the expense.

“I’m afraid if I go there regularly, there will be somebody who notices.”

Jong and other merchants say their cash deposits can run into several thousands of dollars.

“I’m going to feel like a sitting duck,” Choi said. “And once it snows, it’s going to be dangerous.”

“We have a lot of check cashing,” he said. “Ninety percent of the workers are temporary or illegal. They get checks. Now, we cannot get the cash right away.”

He is not angry with Columbia.

“First of all, I was disappointed with the Bank of Whitman,” he said. “If we knew, we could have thought of something. Suddenly, we heard they closed. I found out about it online. On Monday, I went to the bank. It was horrible. I didn’t have a chance to prepare. That was not fair. If they’d given us notice, we would have known. That was not nice. There was a rumor for maybe a month, but it was just a rumor. I didn’t think it was serious.”

Regulators do not issue advance notice of closures – mostly to avoid a run on the bank’s deposits. If the news had broken a week before the actual closure of Bank of Whitman, it’s not difficult to assume that depositors would have withdrawn their deposits, thus further weakening the bank and reducing the value for the acquiring bank.

DECISIONS

Inside the industry, there had been advance notice of Bank of Whitman’s troubles. The state Department of Financial Institutions had invited banks to bid on the failing bank. After a second round, Columbia State Bank was the only bidder.

The Tacoma bank “did Washington a service,” said newly appointed DFI Division of Banks director Rick Riccobono.

“It’s a competitive bidding process. Banks have to show good business judgment. I wish Whitman would have had better accounting systems,” he said. “I don’t want Columbia to come out the bad guy. They did the right thing.”

Columbia President and CEO Melanie Dressel said last week, “We tried to figure out how we could best serve the depositors of the Bank of Whitman knowing that we could not support it with 20 branches. You have a limited amount of information, and you try to make the best decisions you can. We just tried to look at the map and where the majority of the deposits were and where the majority of customers were.”

Dressel knows about banks and small towns.

“I’m an Eastern Washington girl,” she said.

Dressel was traveling late last week, making her third trip to the Dry Side since Aug. 5.

“I want a chance to meet with all the employees,” she said. “We really value this acquisition.”

“Now the burden falls to us to ensure that these folks have access to financial services,” Riccobono said.

Soon after Whitman’s failure, a trade group called Community Bankers of Washington hosted a conference call with DFI and several banks with a presence in Eastern Washington.

“Community banks want to take care of those customers,” said John Collins, association director, last week. “If you’re living in a small town and you have to drive 30 miles to go to a bank, it’s inconvenient.”

“DFI was instrumental in locating banks that could be interested,” he said.

Even before the call, Spokane-based Sterling Savings Bank had applied to open a branch in Mattawa. Within the past five days, according to DFI Director Scott Jarvis, a second bank has also given notice of interest.

So far, the people of Endicott, Lind, LaCrosse, Pomeroy, Rosalia, Royal City, Washtucna and Warden are not so lucky.

Of the larger Eastern Washington banks, Banner, of Walla Walla, said it would not be expanding.

AmericanWest, of Spokane, said in a statement, “We serve quite a few small towns and those customers are a very important part of our company so our leadership was happy to participate in the call and learn more about the 12 branches to see if any of them would be a fit for AmericanWest Bank. That call was just a few days ago so we’re still gathering information and discussing it internally. ... It’s too soon for us to make a decision.”

Olympia-based Heritage, which operates Central Valley Bank, said “Our focus is the I-5 corridor.”

Other banks, including larger banks with a national charter, have yet to step forward.

MATTAWA

According to the FDIC, 3.9 percent of Washington residents are “unbanked.” This compares to 7.7 percent of people nationwide.

Where 15.6 percent of unbanked or under-banked Washington adults are white, 28.9 percent claim Hispanic origin.

Those figures predate the closure of Bank of Whitman.

“We’re not what we were 20 years ago,” said Joyce Edie, publisher of the weekly Mattawa Area News. “Now we have lots of people, lots of money. We really have fared well.”

It’s the agriculture.

May sees the peas, and the apples have already started. Wheat, corn, onions and wine grapes ripen in the broad sunshine.

“On Friday, when checks were cashed, you couldn’t get inside the bank,” Edie said. There were too many customers.

And for the migrant workers who did not have bank accounts, who had checks to cash, there were lines at the cashier’s desk up at the Shell station. “We’re big enough, we need a bank,” Edie said.

Judy Esser is serving her 21st year as mayor of Mattawa.

Just as merchants drive an hour to Othello or elsewhere to make deposits, so has the city decided to send a police officer in a squad car to make regular deposits. “We were accustomed to going to the bank every day,” Esser said last week. “Now, we’re making other arrangements.”

She heard the news of the closure from the town clerk/treasurer the day after the FDIC came to town and locked the doors.

“I’m not pleased. I’m really disappointed, disgusted, a little angry that there is nothing for the people. I’m angry at the Bank of Whitman and the FDIC. There was a lot of walk-in traffic at the bank. For us, we’re a collection station for the PUD, and there’s city water, sewer, garbage, building permits – everything a city does. It can be thousands of dollars a week. The city will remain with Columbia until we see what happens.”

She considers what she said.

“The word ‘angry’ is not the right word. It wasn’t anger. It was frustration, knowing what we all have to go through,” she said.

She’s proud.

“We’re the fastest growing city in Grant County.”

C.R. Roberts: 253-597-8535
c.r.roberts@thenewstribune.com