Columbia River Bank, based in The Dalles and with six branches in Central Oregon, was ordered closed late Friday by the Oregon Department of Consumer and Business Services.

The state named the Federal Deposit Insurance Corp. as receiver, which immediately sold the bank to Columbia State Bank of Tacoma, Wash., also known as Columbia Bank.

Customers with deposits at Columbia River Bank are now depositors of Columbia State Bank, and deposits will be available immediately, according to the FDIC. All 14 Columbia River Bank branches in Oregon and seven in Washington will reopen either today or Monday, depending on normal operating hours, as Columbia State Bank branches.

According to the announcement from the state, Columbia State Bank essentially purchased all of Columbia River Bank’s deposits, loans and the majority of its assets, meaning there will be no losses for Columbia River Bank depositors who had deposits exceeding the FDIC’s $250,000 insurance amount.

Attempts to reach Columbia River Bank officials late Friday were unsuccessful.

“Columbia River Bank management worked hard to restore the bank to financial health,” Cory Streisinger, director of the Department of Consumer and Business Services, said in the announcement.

“We and the FDIC engaged in some intense discussions to ensure the bank had been given every opportunity to turn the corner,” Streisinger said in the statement. “However, a review of the bank’s loan portfolio in early January showed that a key measure of the bank’s solvency — called Tier One capital — had sunk well below the minimum level needed for the bank to remain in operation.”

The bank had a Tier One capital ratio of 2.78 percent as of Sept. 30, 2009, according to recent SEC filings for the bank’s parent company, The Dalles-based Columbia Bancorp.

A bank must have a ratio of 6 percent or better to be considered “well-capitalized” by banking regulators.

Melanie J. Dressel, president and CEO of Tacoma-based Columbia Banking System Inc., Columbia State Bank’s parent company, said in a statement: “We are very pleased to warmly welcome former Columbia River Bank customers into our extended Columbia State Bank network.

“Branches will open under new ownership; however, customers will be able to bank as usual during regular business hours, and their deposits are safe, available and remain FDIC insured. We look forward to working with the Columbia River team during this transition and are committed to serving the communities that Columbia River Bank has long embraced.”

In closing Columbia River Bank, the Oregon Department of Consumer and Business Services said Columbia River Bank had “critically” low levels of capital and “ultimately, became insolvent.”

It also said Columbia River Bank suffered from problems primarily centered on nonperforming residential construction loans.

According to Columbia Bancorp’s most recent quarterly report, the bank was trying to raise capital “but the current economic environment is not conducive to capital raising for troubled institutions such as ourselves and, as a result, the bank has not obtained a well-capitalized regulatory capital classification.”

Nearly a year ago, the bank entered into a cease-and-desist order with the FDIC. The order, dated Feb. 3, 2009, required the bank to, among other things, increase capital as well as its reserves for bad loans. The order also required the bank to reduce its commercial real estate loans and improve earnings.

The bank’s parent company reported a loss of $21.7 million in its third quarter that ended Sept. 30, 2009. Additionally, the company had reported loses in the five preceding quarters, according to SEC filings.

In the company’s 2008 year-end report filed in March 2009, it said that in mid-2007 the company was “directly affected by the fallout from the series of events labeled the ‘subprime lending crisis.’”

Columbia had substantial concentrations of residential land acquisition and development loans to builders and developers in Central Oregon and the Willamette Valley, according to the year-end report.

The report added that the elimination of “liberal lending products” from the mortgage industry resulted in a dramatic reduction for residential home lots and home construction, and that the slowdown in residential demand also caused the underlying collateral values of those properties to decline.

The combination of reduced cash flows and lower collateral values led to the need for Columbia River Bank to take increased provisions for loan losses as well as higher charge-offs and write-downs, the report said.

Columbia River Bank had total assets of roughly $1.1 billion and total deposits of $1 billion as of Sept. 30, 2009. It had three branches in Bend, including the Columbia River Building downtown, at 1133 N.W. Wall St., as well as two in Redmond and one in Madras.

Columbia State Bank has 50 branches and offices spread between western Washington, Vancouver, Wash., Portland and the Oregon Coast. It has total assets of roughly $3.2 billion and total deposits of $2.5 billion, according to the state.

According to a statement from Columbia Banking System, it acquired roughly $1 billion in assets and $980 million in deposits from Columbia River Bank, and that Columbia River Bank’s loan portfolio of roughly $700 million will be subject to a loss-sharing agreement with the FDIC.

The company said it participated in a competitive bid process for Columbia River Bank, and agreed to assume all of the deposits and nearly all of the assets of Columbia River Bank.

The accepted bid included a 1 percent deposit premium on non-brokered deposits and a negative bid of $43.9 million on net assets acquired, according to the company’s statement.

It’s the third bank failure to affect Central Oregon in the last two years.

Seattle-based thrift Washington Mutual was closed in September 2008 and sold to New York City-based JPMorgan Chase Co., and last August, Prineville-based Community First Bank was closed and sold to Home Federal Bank of Nampa, Idaho.

State and federal authorities closed five banks across the nation Friday, including Columbia River Bank. The FDIC was named the receiver in each instance.

There have been nine bank closures this year, on top of the 140 closed last year, the most since 1992, when 181 banks failed.

Shares of Columbia Bancorp closed Friday at $1.17, down 36 cents, or 23.5 percent, but jumped in after-hours trading, closing at $1.25, for a gain of 8 cents, or 6.8 percent.

Shares of Columbia Banking System closed Friday at $18.15, down 37 cents, or 2 percent.

The status of banking in Central Oregon

Closures

The following banks doing business in the area have been shut down and sold to healthier banks to continue operations:

Washington Mutual, based in Seattle, closed Sept. 25, 2008, and was acquired by New York City-based JPMorgan Chase & Co.

Community First Bank, based in Prineville, closed Aug. 7, 2009, and was acquired by Nampa, Idaho-based Home Federal Bank.

Columbia River Bank, based in The Dalles, closed Friday, and its branches will reopen either today or Monday as Columbia State Bank, based in Tacoma, Wash.