More Washington banks put under tighter scrutiny

Four more Washington banks have been placed under stricter regulatory oversight as the financial crisis continues to ripple through the ranks of regional banks.

The Federal Deposit Insurance Corp. and the state Department of Financial Institutions teamed up to issue "cease and desist orders" — essentially to-do lists for restoring troubled banks to financial health — to Anchor Mutual Savings Bank of Aberdeen; North County Bank of Arlington; Twin City Bank of Longview and the Bank of Tacoma.

The orders, which were issued last month but are published with a one-month lag, vary in some of their specifics. In general they require the banks to strengthen their management, boost capital levels, tighten lending standards, and charge off bad loans or otherwise remove them from their balance sheets.

The banks also have to submit improvement plans for regulators' approval, and in most cases cannot pay cash dividends or accept new brokered deposits.

The FDIC also disclosed that it terminated a cease-and-desist order last month covering 1st Security Bank of Washington. The Mountlake Terrace-based bank had been operating under the order for nearly two years.

All told, federal and state banking regulators have tightened the leash on 15 Washington banks since last summer, when the burst real-estate bubble grew into a credit crisis that for a time threatened the stability of the entire U.S. financial system.

Three Washington banks have been seized by regulators so far this year — most recently Venture Bank of Lacey, taken over earlier this month.

In other troubled-bank news, Frontier Bank of Everett disclosed Monday that it expects to charge off $100 million in soured loans in the third quarter, which ends Wednesday, and set aside another $140 million to cover loans expected to go bad in the future.

Parent company Frontier Financial, which agreed last month to be acquired by a "blank check" investment company for $24.4 million, said in a regulatory filing that the two moves will slice $201.3 million off the fair value of its loan portfolio, which was $3.4 billion as of June 30.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com