FDIC frees Columbia bank from consent order
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- Scott Harrison
- Staff Reporter- Nashville Business Journal
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The Federal Deposit Insurance Corp. has lifted its enforcement order on Community First Bank & Trust, the Columbia bank said in a news release.
It's a sign the Columbia bank has firmed up its capital base, which was tested by problem loans following the recession.
The move comes more than three years after the FDIC placed Community First under a formal enforcement action in September 2011, instructing the bank to shore up its capital position and maintain a higher capital cushion.
"We are very excited about the progress that has been made to correct the issues that led to enforcement actions being place on the bank," Community First's President and CEO Louis Holloway said in the release.
Under the FDIC's consent order, Community First was told it needed to raise additional capital and set aside more money in its loan loss allowance, which protects against potential losses on troubled assets. It also was told to reduce concentration in certain types of real estate lending.
One key issue at the bank was problem assets tied to construction and land-development loans, as the Nashville Business Journal previously reported. In 2011, the bank posted a loss of $11.8 million.
Though the FDIC terminated its consent order, Community First is still subject to informal regulatory action, according to the news release. That will require the bank to improve earnings and maintain specific capital ratios, while restricting its payment of dividends to stockholders unless given approval by the FDIC.
Getting to this point has meant a significant downsizing of Community First's assets and a reshuffling of management. The bank shed branches, selling one in Cool Springs to CapStar Bank in 2012. Months before the FDIC order, Community First named Holloway CEO.
Scott Harrison covers government and economic development, banking and law.
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