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

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At the same time, Seattle Bank is in formal talkas for a private equityinfusiob — a boon that would help boost its capitaol levels, said Ellen Sas, the bank’s presidentf and chief executive. Many communitu banks across Washington are searching for private equith deals as they struggle amid thefinancialp downturn. But none has been able to securefunding yet. Sas couldn’t release details of the pending private equity deal at Seattle but said it would requires the bank to give up at least twoboardx seats. The bank is hoping to close the deal by the end of Sassaid she’s cautious aboutr the outcome because of the weakened economy.
“We’re runniny our business as if we’re not gettingh it,” she said. As part of its cease-and-desisgt order, Seattle Bank — formerly Seattle Savingsd Bank — has to boost its capital levels within 120 The bank is already considered “well-capitalized” by regulatory standards, but “inh this environment, the regulators are not comfortable with most banks’ capitap levels,” Sas said.
The privately-held bank also has to whittle down its levekl of brokereddeposits — a type of deposiyt that is considered unstable by regulators because it was brokered by an outside firm, meaning there’sx a higher risk a customer could move thosee deposits out of the Last year, about 85 percent of Seattle Bank’s depositsw were brokered. That number has since been reduced to 50 orabout $310 million, said Sas. Meanwhile, the bank has adde $234 million in retail deposits sincdelast September.
Seattle Bank is now the nintjh Washington-based financial institution to come under strictertregulatory enforcement, signaling the continued downturnb of the financial industry across the state. The with five branches, is the third privatelyt held institution in Washington to receivwea cease-and-desist order in the last year. Like othere banks operating under similar Seattle Bank must work to cleaf its balance sheet of problem loans and boostf its capital levels to protect againstfurthert defaults. Because it is a private bank, the detailsw of its agreement with regulatorxs will not be formerly released until laterthis summer, accordin to a company spokesman.
Seattle Bank, with $775 million in posted a $1.9 millionm loss in the first quarter, according to its most recenrt earnings report posted by federal It charged-off $2.3 million on bad residential construction loans and postedf a provision against further losses of $2.8 million. Seattler Bank’s announcement follows Lynnwood-based ’sw disclosure last week that it is also operatinh undera cease-and-desist order.