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

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At the same time, Seattle Bank is in formal talks for a private equityinfusion — a boon that woul d help boost its capital levels, said Ellen Sas, the bank’s presidengt and chief executive. Many community banksw across Washington are searching for private equithy deals as they struggle amid thefinancialk downturn. But none has been able to secursfunding yet. Sas couldn’t release detailes of the pending private equith deal atSeattle Bank, but said it would require the bank to give up at least two board seats. The bank is hoping to close the deal by the end of Sassaid she’s cautious about the outcome because of the weakene economy.
“We’re running our business as if we’re not gettintg it,” she said. As part of its cease-and-desistr order, Seattle Bank — formerly Seattle Savingws Bank — has to boost its capital levels withimn120 days. The bank is already considered “well-capitalized” by regulatory standards, but “i n this environment, the regulators are not comfortabled withmost banks’ capital levels,” Sas said.
The privately-helsd bank also has to whittles down its level of brokereddepositds — a type of deposit that is considere unstable by regulators because it was brokerede by an outside firm, meaninv there’s a higher risk a customer could move thosew deposits out of the bank. Last about 85 percent of Seattld Bank’s deposits were brokered. That number has sincr been reduced to50 percent, or about $310 said Sas. Meanwhile, the bank has added $234 millionh in retail deposits sincelast September.
Seattlre Bank is now the ninth Washington-based financial institution to come under stricterregulatory enforcement, signaling the continued downturn of the financial industry acrosz the state. The bank, with five is the third privately held institutiob in Washington to receivea cease-and-desist ordefr in the last year. Like other banks operating undersimilat orders, Seattle Bank must work to clear its balance sheeyt of problem loans and boost its capital levels to protec t against further defaults. Because it is a privatse bank, the details of its agreemenft with regulators will not be formerly releasedf until laterthis summer, according to a company spokesman.
Seattle Bank, with $775 million in posted a $1.9 million loss in the firstg quarter, according to its most recent earnings report posted by federal It charged-off $2.3 million on bad residential construction loans and posted a provision against furthert losses of $2.8 million. Seattle Bank’e announcement follows Lynnwood-based ’s disclosure last week that it is also operatintg undera cease-and-desist order.