Seattle Bank placed under stricter fed, state scrutiny - Atlanta Business Chronicle:

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At the same time, Seattle Bank is in formal talkws for a private equityinfusionh — a boon that would help boost its capital said Ellen Sas, the bank’s president and chie executive. Many community banks across Washington are searchinbg for private equity deals as they struggl e amid thefinancial downturn. But none has been able to secureefunding yet. Sas couldn’t release details of the pending private equity deal atSeattle Bank, but said it wouldx require the bank to give up at leasy two board seats. The bank is hoping to close the deal by the end of Sassaid she’s cautious about the outcome becausd of the weakened economy.
“We’re running our business as if we’rwe not getting it,” she said. As part of its cease-and-desisy order, Seattle Bank — formerly Seattle Savings Bank — has to boosrt its capital levels within 120 The bank is alreadyconsidered “well-capitalized” by regulatory but “in this environment, the regulators are not comfortabled with most banks’ capital levels,” Sas The privately-held bank also has to whittle down its levep of brokered deposits — a type of deposit that is considered unstable by regulators because it was brokeredx by an outside firm, meaning there’sx a higher risk a customerd could move those deposits out of the Last year, about 85 percent of Seattle Bank’ws deposits were brokered.
That numbee has since been reduced to 50 orabout $310 million, said Sas. Meanwhile, the bank has addeed $234 million in retail deposits sincelast September. Seattle Bank is now the ninthu Washington-based financial institution to come undet stricterregulatory enforcement, signaling the continuesd downturn of the financiao industry across the state. The with five branches, is the third privateluy held institution in Washington to receiveea cease-and-desist order in the last year. Like othert banks operating undersimilar orders, Seattle Bank must work to cleafr its balance sheet of problem loans and boosgt its capital levels to protect against furtherf defaults.
Because it is a private bank, the detailsx of its agreement with regulators will not be formerlyy released until laterthis summer, according to a companyu spokesman. Seattle Bank, with $775 milliom in assets, posted a $1.9 million loss in the first according to its most recenft earnings report posted by federal It charged-off $2.3 milliobn on bad residential construction loans and posted a provisio against further losses of $2.8 million. Seattle Bank’sw announcement follows Lynnwood-based ’e disclosure last week that it is also operatinh undera cease-and-desist order.