First State Bank and Trust making changes to comply with consent order
Tonganoxie-based First State Bank and Trust is working to boost its capital relative to liabilities, part of a plan to comply with a consent order reached with federal and state regulators.
First State Bank and Trust, which has two branches in Lawrence, agreed in November to an order that was approved Dec. 3 by the Federal Deposit Insurance Corporation and the Kansas state banking commissioner. The FDIC released the order at the end of January.
The bank consented, “without admitting or denying any charges of unsafe or unsound banking practices or violations of law and/or regulation,” to making several changes. Among them: Boosting the bank’s “leverage capital ratio” to 8 percent, up from 6.05 percent at the end of 2010; and “total risk-based capital ratio” to 12 percent, up from 11.25 percent at the end of 2010.
The bank is selling a branch in Clearwater, just west of Wichita, to Emprise Bank in a deal expected to close in March.
“After that transaction, we’ll be very close to the 8 (percent) and 12 (percent), and certainly should be there by midyear,” said Jilinda White, executive vice president.
White noted that the bank’s capital levels — akin to a savings account for the bank itself — at the end of last year would be considered within the range of what the FDIC calls a “well capitalized” bank.
First State is working to make required changes, and follow approved plans, for seeing that the bank continues to be strong going forward.
“What they’re asking us is not something that we’re not already working on,” White said.
The bank had close to $300 million in assets at the end of 2010, and intends to have about $250 million once the Clearwater branch’s sale closes, she said. The bank plans to go forward with its seven locations.
“We’re very committed to our footprint in this area,” White said. “The sale signals a recommitment to this area.”