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Federal regulators sued 12 former officials of Frontier Bank on Friday, seeking more than $46 million in damages over loans that allegedly violated its lending policies and contributed to the failure of the largest Washington-based commercial bank.

The Everett-based bank, formed in 1978, was closed by regulators April 30, 2010, at an estimated cost to the Federal Deposit Insurance Corp. of $1.37 billion.

At the time Frontier had $3.6 billion in assets, and its concentration of loans for acquisition, development and construction of commercial real estate was the highest of any bank in the state, according to the lawsuit filed in Seattle by the FDIC.

The 12 officers and directors named in the suit include Michael Clementz, a bank director from 2000 to 2009; John Dickson, the bank’s CEO when the loans were made in 2007 and 2008; and Frontier founder Robert Dickson, who was chairman until December 2008. Clementz also was Frontier’s CEO in 2009.

According to the FDIC suit, the bank in 2003 “instituted an aggressive growth strategy centered on increased commercial real-estate lending.” Between 2005 and 2007 its total real-estate lending increased by 58 percent, to $3.2 billion.

As the bank’s loan portfolio became concentrated, the bank officials knew the risk the bank faced if the real-estate market declined, the FDIC alleged.

The FDIC suit cites 11 loans between March 2007 and April 2008 as examples of what it calls poorly underwritten, speculative loans that violated the bank’s own guidelines.

Among them: a $5.5 million loan to support development of the Streamline Tower in Las Vegas; a $22 million loan to buy 13.5 acres and build two commercial buildings; a $17 million loan to finish the Altura Townhomes in Bothell; and a $4.5 million loan to buy raw land in Bothell for home lots.

The bank’s officers and directors failed to consider market conditions, the loan collateral and the creditworthiness of the borrowers, the FDIC alleged.

For example, the bank disbursed $15.4 million between June 2007 and May 2008 to finish the town homes in Bothell, knowing the sole repayment source would be their future sale, the lawsuit states.

The borrower and his wife had only $79,500 in cash, with the rest of their assets tied up in real estate and other illiquid assets. Moreover, the borrowers’ gross income in 2005 had been negative, and their highest gross income over a three-year period amounted to less than 0.5 percent of the $57 million in outstanding loans from Frontier, the lawsuit stated.

In May 2008 the builder defaulted on the loan, and the later sale of the condo units didn’t cover the debt.

Clementz declined to comment on the lawsuit Friday. Other defendants could not be reached.

Sanjay Bhatt: 206-464-3103 or On Twitter @sbhatt