California bank taking over failed Syringa

The Boise institution never recovered from its real estate losses, which were a result of the Great Recession.

broberts@idahostatesman.comFebruary 1, 2014 

Signs outside the failed bank at North Orchard Street and West Irving Street on Saturday still bear the name of Syringa Bank. The six-branch bank was closed down Friday night. On Monday, the branches will reopen as part of Sunwest Bank, a community bank based in Irvine, Calif.

JOHN SOWELL — jsowell@idahostatesman.com

At 6 p.m. Friday, Idaho’s chief banking regulator walked into Syringa and informed the CEO that he was ordering the community bank closed.

It wasn’t a surprise.

Bank officials consented a month ago to the closure and sale of the bank after attempts to improve its financial condition didn’t yield results, said Gavin Gee, director of Idaho’s Department of Finance.

The bank will reopen Monday as Sunwest Bank, a branch of an Irvine, Calif.- based community bank that since 2009 has stretched its market into Washington and Arizona by buying five failing banks.

Syringa Bank customers may keep using Syringa checks and ATMs and will be customers of Sunwest when the bank opens Monday morning, said Federal Deposit Insurance Corp. officials. Loans and online services continue unchanged. (Call the FDIC with questions at 800-238-8209 or find its Syringa info at IdahoStatesman.com.)

Closing troubled banks after business hours on a Friday is a typical practice when regulators step in to take action.

CHALLENGE WAS TOO STEEP

Syringa, chartered in 1997, is the third bank to be closed nationally in 2014. It is the second state-chartered Idaho bank to close since 1986. First Bank of Idaho, a federally regulated savings bank in Ketchum, was closed in 2009.

Syringa Bank officials made a strong effort to keep their bank going, Gee said. At one point, it had more than $10 million in escrow to help solve its financial problems. But bank officials needed to match that amount to be able to use it, and they couldn’t, Gee said. They came within $5 million to $6 million, he said.

“Ultimately, despite their best efforts, the bank was not able to overcome the consequences of the steep declines in real estate values in Idaho that began in 2007,” Gee said.

Syringa was put under a regulatory order to improve its finances in 2010. A second order telling the bank to show improvement or face putting itself up for sale was issued in 2012.

But the bank continued to deteriorate, Gee said. It sustained losses and its core capital was less than 2 percent, so it was considered critically undercapitalized, he said. Regulators wanted its core capital at 10 percent.

As of Sept. 30, Syringa had $153.4 million in total assets and $145.1 million in total deposits.

Sunwest Bank takes over all the deposits and essentially all the loans, along with taking over Syringa’s six branches — two in Boise and one each in Eagle, Meridian, Middleton and Lewiston.

WELCOME TO IDAHO

Chris Walsh, Sunwest president and CEO, said taking over Syringa gives his 45-year-old bank an opportunity to expand into a new state.

“It’s a really good way if you want to enter the market,” he told the Statesman on Friday night.

He said he is attracted to the Treasure Valley because it is rebounding from the recession more quickly than other places in the West. He pointed to healthy construction along Eagle Road as an example.

Sunwest specializes in business banking and doesn’t make loans for single-family residences. It has 150 employees and reported $11.8 million in net income in 2013, nearly double the previous year.

Syringa’s closure leaves Idaho Banking Co. as the only Treasure Valley bank still under regulatory orders. But the bank is showing progress; its capital level is improving and the bank reported a profit in 2013.

“They are ... out of the danger zone,” Gee said.

Bill Roberts: 377-6408, Twitter: @IDS_BillRoberts

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