Fed consent order lifted on 1st National;
 CEO cites strength

Following the transformation of its lending culture and practices, First National Bank of the Rockies defied critics and emerged from federal scrutiny July 25 with a clean bill of health and stronger than ever, bank President, Chairman and CEO Pete Waller announced this week.

News the bank is free from the federal consent order it agreed to in November 2009 came nearly 30 days late at the request of the Office of the Comptroller of the Currency, the agency that executed the order, Waller said.

The OCC scrutinized the bank for nearly four years as it developed and implemented plans to increase liquidity and strengthen loan loss reserves, he said.

The bank’s capital is now well above peer group numbers, with total risk-based capital as of June 30 at 19.05 percent. The regulatory requirement to meet the definition of “well capitalized,” the highest category, is 10 percent, Waller said. 

Another measure of financial health, the bank’s tier 1 leverage capital, was 10.10 percent as of June 30, well above the 6 percent regulatory threshold to be considered “well capitalized,” he said.

“There’s a lot of misinformation about the banking business out there and we want to clearly communicate the facts about the regulatory issues we faced and the financial strength of FNBR,” Waller said.

Regulators also looked at liquidity as a measure of the bank’s financial strength and First National Bank of the Rockies’ loan-to-deposit ratio compares favorably at 42.97 percent with the bank’s peer group at 74.85 percent, he said. 

“Our investment portfolio consists of highly liquid investment-grade securities. That points to the fact that FNBR’s liquidity is very strong,” Waller said.

“There were rumors going through the community, some of it led by some of our competitors, I’m sorry to say, that the bank was going to fail,” he said. “We knew that that was not going to be the case. We knew we had the capital support from the ownership and we knew we had the management expertise to do the job at hand so we just rolled up our sleeves and got to work and totally changed the lending culture of our institution.”

The consent order came after the bank suffered losses in the commercial real estate and speculative housing markets, losses it initially believed it could weather because of continuing strength in the oil and gas industry, Waller said.

“There was a lot of thought in this marketplace that we were going to be buffered from (the economic decline) because of energy,” Waller said. “(The belief was) everything’s going to be fine here because of oil and gas.”

The consent order required the bank to address 12 areas of concern, including commercial real estate risk management and problem loan management.

Some personnel changes, like the appointment of a new chief credit administrator, contributed to the bank’s successful emergence from the consent order, Waller said.

“Between myself, my chief financial officer and the chief credit administrator, we did a lot of work on the methodology used (to gage risk exposure in certain loan categories) and we totally changed our approach to that analysis,” he said


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