Gary Gahan, president and CEO of Tacoma-based Pierce Commercial Bank, responded Tuesday to a "prompt corrective action" notice levied last week by the Federal Reserve.
The directive ordered that the bank and its holding company, Pierce County Bancorp, raise money sufficient to become “adequately capitalized.”
At the time the corrective action agreement was signed between the Federal Reserve and Gahan, the bank was officially “significantly undercapitalized.”
The regulator ordered that the bank increase its equity either “through the sale of shares or contributions to surplus in an amount sufficient to make the bank adequately capitalized,” or that it “enter into and close a contract” to be acquired or that it merge with another bank.
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Gahan said Tuesday that the bank has already received more funding – $2.5 million – from the board of directors and senior management, and that he was considering selling assets including interest in a Tacoma office building.
New investors have also been contacted, he said.
Beyond that, the bank had considered selling some securities, Gahan said.
The latest infusion of $2.5 million brings Pierce Commercial closer to adequate capitalization, he said, while an additional $3 million is needed to satisfy the Fed’s requirements.
“We have 60 days to raise the capital, or more time if needed,” he said. “We’re pretty confident we’ll be able to get this capitalization.”
Pierce Commercial is one of a few banks in the state regulated by the Federal Reserve rather than the Federal Deposit Insurance Corp. Qualified deposits are fully insured by institutions overseen by either regulator.
“I hope the economy turns around soon,” Gahan said Tuesday afternoon. “ … We’re seeing more and more customers having difficulty.”