Lynnwood's Prime Pacific Bank aims to rebuild capital
The bank's holding company hopes to meet regulators' demands for higher capital levels by offering $5 million through a private placement, according to a proxy statement provided by a shareholder.
Seattle Times staff reporter
Three years after regulators ordered Prime Pacific Bank of Lynnwood to shape up its balance sheet, the small Snohomish County bank is still struggling.
According to unaudited financials, the bank's holding company, Prime Pacific Financial Services, lost more than $1.1 million in the six months ended June 30, more than double its net loss of $406,000 for all of 2011.
Now the company hopes to meet regulators' demands for higher capital levels by offering $5 million through a private placement, according to a proxy statement provided by a shareholder.
It's asking existing stockholders, who own 2.3 million shares, to approve authorizing as many as 35 million new shares — though CEO Glenn Deutsch says only a small portion of that stock would be sold this year.
Prime Pacific, with about $124 million in assets, has been operating since August 2009 under a regulatory order to shore up its "Tier 1" capital ratio to 9 percent and risk-based capital to 12 percent. As of June 30, its ratios were 4.14 percent and just over 7 percent.
Issuing 5 million shares at $1 per share in the third quarter would help the bank comply with at least one of the capital levels required by regulators, Deutsch said.
The bank's bottom line was hurt by write-downs earlier this year on the values of its nonperforming loans after new appraisals required by regulators, he said. A shopping-center loan that accounts for about 40 percent of its troubled asset portfolio is under contract and could close in a few months, he said.
Raising the limit on authorized shares would give the board the room it needs to negotiate financing deals, form strategic alliances and provide incentives to employees, consultants and directors, the company said.
The shareholder proposal also creates a new class of preferred stock and authorizes up to 5 million shares.
Prime Pacific Financial Services has scheduled an Aug. 6 annual meeting to vote on the stock changes as well as on directors for five of the eight board seats.
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org