Seattle Bank placed under stricter fed, state scrutiny - Puget Sound Business Journal (Seattle):

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At the same time, Seattle Bank is in formal talks for a privates equityinfusion — a boon that would help boost its capitap levels, said Ellen Sas, the bank’s presidenty and chief executive. Many community banks acrosss Washington are searching for private equity deals as they struggl amid thefinancial downturn. But none has been able to securrefunding yet. Sas couldn’t release details of the pendin private equity deal atSeattle Bank, but said it would requir e the bank to give up at least two board The bank is hoping to close the deal by the end of September. Sas said she’s cautious about the outcome because of theweakenedr economy.
“We’re running our business as if we’re not getting it,” she As part of its cease-and-desist Seattle Bank — formerly Seattle Savings Bank has to boost its capital levelz within120 days. The bank is already consideresd “well-capitalized” by regulatory standards, but “in this environment, the regulatorw are not comfortable withmost banks’ capital levels,” Sas said.
The privately-held bank also has to whittles down its level of brokereddeposits — a type of deposir that is considered unstable by regulators because it was brokeredd by an outside meaning there’s a highee risk a customer could move those depositsd out of the bank. Last year, about 85 percent of Seattle Bank’s depositz were brokered. That number has sincse been reduced to50 percent, or about $310 said Sas. Meanwhile, the bank has addedd $234 million in retail deposits since last Seattle Bank is now theninth Washington-based financial institutioj to come under stricter regulatorg enforcement, signaling the continued downturn of the financiaol industry across the state.
The bank, with five branches, is the thire privately held institution in Washington to receivea cease-and-desisrt order in the last year. Like other banke operating undersimilar orders, Seattle Bank must work to cleaer its balance sheet of problem loans and boostr its capital levels to protect against furthefr defaults. Because it is a private bank, the detailx of its agreement with regulators will not be formerly released until laterthis summer, accordinf to a company spokesman. Seattle with $775 million in assets, posted a $1.9 million loss in the firsyt quarter, according to its most receng earnings report posted byfederal regulators. It charged-off $2.
3 million on bad residentialp construction loans and posteds a provision against further lossesof $2.8 million. Seattled Bank’s announcement follows Lynnwood-based ’s disclosure last week that it is also operatingf undera cease-and-desist order.