UPDATE 1-Frontier Bank seized, company expects to liquidate

Mon May 3, 2010 8:36pm EDT

* Bank unit placed in FDIC receivership

* Company is insolvent, seeking liquidation or bankruptcy

* Stock to be delisted from Nasdaq

MEXICO CITY, May 3 (Reuters) - U.S. lender Frontier Financial Corp FTBK.O said on Monday that its bank subsidiary had been seized by U.S. regulators at the Federal Deposit Insurance Corp, and that the company expects to liquidate or file for bankruptcy.

Last month, the Everett, Washington-based company revised its fourth-quarter results to reflect higher losses and said its weak capital position raises substantial doubt about its ability to continue as a going concern. [ID:nSGE62G0IF]

The company said at the time that its weak capital position could lead to the conservatorship or receivership of its Frontier Bank subsidiary.

The company said on Monday that its bank unit was closed by the State of Washington, Department of Financial Institutions, Division of Banks, and that the FDIC had been appointed as receiver of the the bank.

It said that following the closure of the bank, the corporation is "insolvent" and all of its directors resigned from its board.

The company said it will either be dissolved and liquidated or file for a Chapter 7 bankruptcy liquidation.

The company's shares were halted by Nasdaq before the market open on Monday.

They closed on Friday at $3.57 per share on the Nasdaq. Nasdaq said on Monday that it would delist Frontier's shares on May 12.

(Reporting by Emily Chasan in Mexico City; Editing by Phil Berlowitz)

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