Everett-based Cascade Financial Corp., which is the parent company for Cascade Bank, was purchased by Opus Bank of Irvine, Calif. for about $21.75 million, the companies reported Friday.
Opus is a privately owned bank that just added $460 million in new capital and hopes to create a "regional super bank" in the West, said Carol Nelson, president and chief executive of Cascade, which was founded in 1916.
Nelson will become president of the Washington region for Opus.
The sale was approved by the directors of both banks, but still needs regulatory approval. It prevents Cascade from being the subject of a forced sale by regulators, which happened last year to three other county-based banks hammered by the recession.
"The economic recession severely impacted the Snohomish County area and Cascade Bank," said Nelson. "After carefully considering all options, the board of directors and management determined Cascade Bank needed to substantially increase its capital base to meet regulatory requirements and remain competitive, and a merger with Opus Bank was the best option for our shareholders, customers and employees."
The Federal Deposit Insurance Corp. had been watching Cascade closely since last July and had ordered it to find $68 million is new assets to continue operations.
"We did talk to a variety of folks -- anyone with money," Nelson said. "This represents the best possible outcome for our shareholders."
Opus will pay $16.15 million needed to pay off money provided to Cascade by the federal government as part of its Troubled Asset Relief Program. It will also pay 45 cents per share for the outstanding shares, or about $5.5 million in cash.
Cascade closed at 53 cents a share on Friday, down nearly 4 percent.
Last year, the FDIC forced the sale of three other local banks that it deemed had too little money to be considered safe for depositors. Union Bank of California bought Frontier Financial Corp. of Everett, and Washington Banking Corp., the parent company of Whidbey Island Bank, bought City Bank of Lynnwood and North County Bank of Arlington.
Nelson acknowledged that regulators were applying pressure for a sale.
She said the company had made great improvement in its balance sheet, but couldn't bring in enough new money to meet federal requirements.
"We are a bank with a long history in this community, and we lent to developers right here in our own back yard," Nelson said. "When they had pain, we had pain. The housing market here still is not fixed."
Cascade, which was the county's largest local bank with 22 branches, will be merged into Opus, which has only five in Irvine, Calif.
Opus founding chairman, Stephen Gordon, said in a statement that the acquisition was "an extension of our vision to create a strong super-regional bank in the Western region."
Nelson said Cascade will continue to function as a local bank and will work to expand its presence in the community.
"All of Cascade's employees will keep their jobs," she said. "The name will change, but the people will be the same, and I don't think it will feel much different."
She said Opus will pump capital into Cascade and can also be expected to buy other banks between Everett and southern California.
In his statement, Gordon said other bank deals in the region have been more like consolidations "rather than renewed and increased investment in the community."
He promised to help local economies "by providing capital funding to small and mid-sized businesses, entrepreneurs and real estate investors who share out vision to build and expand."