LYNNWOOD — City Bank is trying to sell its building lots to a national homebuilder to raise enough money to prevent a forced sale by the government, officials said today.
The Lynnwood-based bank, which had invested heavily in local real estate, has been given until April 10 by the Federal Deposit Insurance Corp. to raise more capital by selling shares or other financial instruments.
If that doesn’t work, the bank will be sold, the FDIC directed.
“Our whole team is focused on raising capital and we will continue to sell our houses,” said Martin Heimbigner, president and CEO. Heimbigner assumed his position in January after founder and CEO Conrad Hanson retired.
Heimbigner said the bank has engaged an investment banking firm and is trying to sell its assets to real estate investors. He said that he can’t mention details, but that talks are ongoing.
“We have relationships with large homebuilders all ready,” he said.
Lynnwood-based City Bank had earlier received a directive from the FDIC to increase its capital.
The bank was hard-hit by the recession and the abrupt drop in home sales because of its large percentage of investment in land and homes. He said the bank owns 2,400 building lots. It had been finishing properties on its lots and selling them, signing sales agreements by Feb 28 representing about $48 million in construction loans.
“Clearly getting housing built takes time,” he said. “We’re talking to large homebuilders. That’s the strategy, get the homes buildt and get capital into the bank.”
Heimbigner said the bank repaid $52 million of brokered deposits and public deposits In January and February and will repay another $50 million in March.
He said as of Feb. 26, it had $247 million in cash and equivalents and $63 million in an expected federal income tax refund, providing it with $310 million in 90-day liquidity.
He said the land sales would supply the bank with the needed assets.
“We’re staying very positive,” he said.
To comply with the FDIC directive, City Bank needs to get a minimum of $30 million in investment and reduce its land base and other assets to $1 billion by March 31. He said the bank’s business strategy is to reduce assets again to $900 million by June 30 and to $800 million by year’s end.
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