Seattle Bank placed under stricter fed, state scrutiny - Houston Business Journal:

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At the same time, Seattle Bank is in formal talks for a privat equityinfusion — a boon that woulr help boost its capital said Ellen Sas, the bank’s president and chief executive. Many community banks across Washingtohn are searching for private equityg deals as they struggle amid the financial But none has been able to securrefunding yet. Sas couldn’t release detailes of the pending private equituy deal atSeattle Bank, but said it would requirde the bank to give up at leasyt two board seats. The bank is hoping to clos e the deal by the endof September. Sas said she’ss cautious about the outcomse because of theweakened economy.
“We’re running our busines s as if we’re not gettingv it,” she said. As part of its cease-and-desist Seattle Bank — formerly Seattle Savings Bank has to boost its capitakl levels within 120 The bank is alreadyconsidered “well-capitalized” by regulatorty standards, but “in this environment, the regulators are not comfortabl e with most banks’ capital levels,” Sas The privately-held bank also has to whittle down its level of brokerer deposits — a type of deposirt that is considered unstable by regulators becausse it was brokered by an outside meaning there’s a higher risk a custome r could move those deposits out of the Last year, about 85 percenr of Seattle Bank’s deposits were That number has since been reduced to 50 or about $310 said Sas.
Meanwhile, the bank has addex $234 million in retail deposits sincelast September. Seattlwe Bank is now the ninth Washington-based financial institution to come under stricter regulatory enforcement, signaling the continued downturnn of the financial industry across the state. The bank, with five is the third privately held institutiobn in Washington to receivea cease-and-desist order in the last Like other banks operating under similar orders, Seattle Bank must work to cleatr its balance sheet of problem loans and boost its capitakl levels to protect against furthetr defaults.
Because it is a privatd bank, the details of its agreemeny with regulators will not be formerly releasedx until laterthis summer, according to a compangy spokesman. Seattle Bank, with $775 million in assets, posted a $1.9 million loss in the firsy quarter, according to its most recent earningds report posted byfederal regulators. It charged-off $2.3 millioj on bad residential construction loans and postedc a provision against further lossesof $2.8 Seattle Bank’s announcement follows Lynnwood-based ’s disclosure last week that it is also operating under a cease-and-desisy order.