Taking shelter from what many are now calling the “Great Recession”, Issaquah’s only locally-run bank, Issaquah Community Bank, is scheduled to merge with three other Puget Sound community banks on Feb. 22.

Bank president and CEO Robert M. Ittes confirmed the merger and date had been approved by federal regulators and the majority stakeholder, Capitol Bankcorp Limited, would rename the company the Bank of the Northwest.

“We can achieve some greater operating efficiencies and strengthen the balance sheets,” he said. “Based on what the financial markets have given us, we can position ourselves for opportunities to grow.”

Issaquah Community Bank originally opened in July 2007, and is located at 1375 Northwest Mall Street, Suite #1. The merger will join the local bank to the Bank of Everett, the Bank of Bellevue and the Bank of Tacoma. One of the banks, The Bank of Tacoma, is currently operating under a Federal Deposit Insurance Corporation consent order after a high ratio of creditors were unable to make payments on their loans. The bank also reported a loss of nearly $4 million last quarter. Ittes said the merger would help alleviate those concerns by pooling all of their resources to absorb any future losses. The new bank will reportedly have up to $170 million in total assets.

“We’re excited about the opportunity,” he said. “It’s an opportunity that most banks don’t have, given the market that has become very tumultuous.”

The local bank merger comes at a time when community banks across the nation have run into a wave of troubled loans not seen since the Great Depression. According to Tim Ellis, editor of local Real Estate blog SeattleBubble.com, Washington state’s banks are among the most troubled in the nation, with the highest ratio of non-performing assets in the country. Using graphics tools by local software developers Tableau, Inc., Ellis created an interactive map illustrating the community banking crisis currently affecting the state.

On Feb. 3, U.S. Senator Patty Murray (D-WA) and 18 other Senators called on U.S. Treasury Secretary Timothy Geithner to take immediate steps to utilize the Troubled Asset Relief Program (TARP) funding to stabilize community banks and improve credit availability for small businesses.

“Community banks play a significant role in providing credit to businesses in communities throughout the country,” the letter states. “Despite the return to profitability for most of the large, Wall Street banks that received the lion’s share of public assistance under Troubled Asset Relief Program (TARP), the survival of hundreds of small, community banks remains in question. With considerable exposure to future losses on loans tied to real estate markets – both residential and commercial – we call on you to take immediate steps to dedicate more attention and resources from TARP to stabilize this critically important segment of the banking industry.”