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Regulatory Matters
3 Months Ended
Dec. 31, 2011
Regulatory Matters  
Regulatory Matters

(2) REGULATORY MATTERS

 

In December 2009, the FDIC and the Washington State Department of Financial

Institutions, Division of Banks ("Division") determined that the Bank required

supervisory attention and, on December 29, 2009, entered into an agreement on

a Memorandum of Understanding with the Bank ("Bank MOU").  Under the Bank MOU,

the Bank must, among other things, maintain Tier 1 Capital of not less than

10.0% of the Bank's adjusted total assets and maintain capital ratios above

the "well capitalized" thresholds as defined under FDIC Rules and Regulations;

obtain the prior consent from the FDIC and the Division prior to the Bank

declaring a dividend to its holding company; and not engage in any

transactions that would materially change the Bank's balance sheet composition

including growth in total assets of five percent or more or significant

changes in funding sources without the prior non-objection of the FDIC.

 

In addition, on February 1, 2010, the Federal Reserve Bank of San Francisco

("FRB") determined that the Company required additional supervisory attention

and entered into a Memorandum of Understanding with the Company ("Company

MOU").  Under the Company MOU, the Company must, among other things, obtain

prior written approval or non-objection from the FRB to declare or pay any

dividends, or make any other capital distributions; issue any trust preferred

securities; or purchase or redeem any of its stock. The FRB has denied the Company's

requests to pay dividends on its Series A Preferred Stock issued under the U.S.

Treasury Department's Capital Purchase Program ("CPP") for quarterly payments due for

the last seven quarters commencing with the payments due May 15, 2010.  For additional

information on the CPP, see Note 3 below entitled "U.S Treasury Department's

Capital Purchase Program."