FDIC lawsuit seeks $46 million from executives of failed Frontier Bank
- Staff Puget Sound Business Journal
Attorneys for the Federal Deposit Insurance Corp. on Friday filed a lawsuit seeking $46 million in damages against 12 former officers and directors of Frontier Bank of Everett, which failed in 2010.
The lawsuit, filed in U.S. District Court in Seattle, contends the executives were negligent in approving loans that violated Frontier’s policies and were contrary to prudent lending practices.
Frontier was founded in Everett in 1978. In 2003, the lawsuit said, the bank “instituted an aggressive growth strategy centered on increased commercial real estate lending.”
Frontier’s total real estate loans increased 58 percent to $3.22 billion during a two-year period ending in 2007, the lawsuit said. By 2009, the bank’s concentration of acquisition, development and construction loans relative to total assets was the highest of any insured bank in Washington state.
After the financial crisis of 2008, the bank struggled to survive amid crashing real estate values and a growing percentage of bad loans. But regulators wouldn’t advance Frontier’s application for bailout money and killed a prospective buyer’s $450 million acquisition plan, a Puget Sound Business Journal investigation later showed[1].
State regulators finally closed Frontier [2]in April 2010, and the bank was put into receivership under the FDIC.
Regulators sold Frontier's assets to San Francisco-based Union Bank[3], National Association, which reopened Frontier branches as Union Bank.
Frontier officers and directors named as defendants are Michael J. Clementz, Randy E. Deklyen, Lucille M. DeYoung, John J. Dickson, Robert J. Dickson, David A. Dorsey, William H. Lucas, James W. Ries, Robert W. Robinson, Lyle E. Ryan, Darrell J. Storkson and Mark O. Zenger, according to the lawsuit.
The FDIC told the court that it is seeking damages and interest from the defendants, as determined by a jury trial.
References
- ^ a Puget Sound Business Journal investigation later showed (www.bizjournals.com)
- ^ regulators finally closed Frontier (www.bizjournals.com)
- ^ Union Bank (www.bizjournals.com)