Regulators target Carson River Community Bank |

Regulators target Carson River Community Bank

John Seelmeyer / Northern Nevada Business Weekly

The chief executive officer of Carson River Community Bank in Douglas County says the bank is taking steps to comply with directives from federal and national regulators.

The bank on April 3 signed a consent agreement with the Federal Deposit Insurance Corp. and the Nevada Financial Institutions Division, which issued a cease-and-desist order against the bank. Regulators said the bank was operating with weak management, had a large volume of poor-quality loans on its books, didn’t have sufficient capital and was operating in an unprofitable manner.

The bank reported an operating loss of $513,000 in the first quarter of this year. Its assets totaled $53.8 million as of March 31.

In signing the agreement, Carson River Community Bank didn’t admit the allegations in the cease-and-desist order.

Among the specific steps ordered by the regulators:

– The bank was ordered to retain qualified management. “We are doing so,” said Julie Kidd, who was named acting chief executive officer of Carson River Community Bank this spring after the resignation of founding CEO Dan Dyes. “We have a senior management team in place that is dedicated to making the bank an ongoing enterprise for some time to come.”

– Carson River Community Bank was ordered to maintain core capital ” “Tier 1 capital,” in the words of regulators ” equal to at least 10 percent of its assets.

“As of year-end, we were well within the specified levels,” said Kidd. “We are exploring every venue available to us in order to make sure the bank maintains a strong capital foundation, which is challenging in today’s environment.”

When the bank was launched in 2006, shareholders acquired warrants to purchase additional shares, and Kidd said the bank’s leaders long have recognized that the institution would need more capital at this phase of its life.

– Carson River Bank was ordered to step up collection of delinquent loans and reduce its exposure to the troubled construction and development sectors.

The bank also was told to stop lending to borrowers who have been late repaying earlier loans.

Kidd said the bank began moving away from development and construction lending in mid-2008 and began watching carefully for other signs of stress in its loan portfolio.

“We have strengthened our collection procedures and are diligently working with borrowers to reach resolutions to delinquency problems,” the bank’s acting CEO said.

Kidd said the bank has cut its non-interest expense by more than 30 percent, trimmed its staff by 30 percent (it currently employs 10) and is working with suppliers on more cost-cutting measures.

She said the bank also is looking to boost its use of core deposits ” essentially, money in checking and savings accounts ” to reduce the cost of raising money to fund loans.

Kidd said the consent agreement with the FDIC and the state Financial Institutions Division does not affect FDIC insurance of depositors’ accounts.

She said, too, the bank had begun taking some of the steps outlined by the regulators even before the cease-and-desist order was issued.

“We, as all financial institutions, are facing significant challenges, but none that cannot be overcome,” she said. “We are making significant strides every day.”

The FDIC routinely keeps its enforcement actions quiet for 30 days before they are disclosed. The consent agreement with Carson River Community Bank was one of 57 enforcement actions taken by the agency nationwide during April.

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