JimBob
01-29-2010, 08:38 PM
Stillwater National Bank agrees to reforms
By DON MECOY The Oklahoman
Published: 1/29/2010 6:10 PM
Last Modified: 1/29/2010 6:10 PM
Stillwater National Bank and Trust Co. must reduce its credit risk and improve its loan portfolio management, under an agreement with federal regulators signed this week.
The Comptroller of the Currency, which regulates all national banks, found “unsafe and unsound banking practices including practices relating to capital planning, asset quality and earnings,” the agreement stated.
Shares of the bank’s parent company, Southwest Bancorp Inc., rose more than 11 percent on Friday as the company reported an $8.8 million profit for 2009 even after boosting net reserves by $22.6 for potential loan losses. In the fourth quarter, the company booked a $2.5 million profit.
Stillwater National is the seventh-largest bank in Oklahoma, based on deposits.
Southwest Bancorp CEO Rick Green said the company is capitalized well beyond regulatory limits.
“The Southwest board of directors and management team are clearly focused on the elements of the agreement and are working to fulfill the agreement’s expectations,” Green said in a statement issued Friday. “The agreement is consistent with our business plan, priorities and goals.”
Among the actions the bank agreed to take was the establishment of a written program to “reduce the high level of credit risk in the bank and improve the bank’s loan portfolio management” and measures to ensure compliance with the plan, the agreement states.
The bank also pledged to eliminate credit weaknesses in nonperforming and potential problem loans; provide on-going review and grading of its loan portfolio; improve its position regarding nonperforming and potential problem loans and real estate; improve loan portfolio concentration risk management; and establish and operate a loan workout department.
In addition, Stillwater National must prepare a three-year capital plan and obtain regulatory approval before increasing its use of brokered deposits or declaring dividends.
Green said real estate construction and commercial real estate represent most of the bank’s problem assets.
The parent company’s primary lending activity is for commercial real estate occupied by businesses and lending to health-care professions for startup medical and dental practices, office buildings, surgery centers, hospitals and facilities for retirement and long-term care, Green said. The loan portfolio includes commercial construction loans and commercial loans secured by completed projects, he said.
“The current economy has significantly influenced many economic factors affecting business real estate,” Green said. “As the economy begins to improve, those risk factors will also.”
Stillwater National also agreed informally to maintain a ratio of total capital to risk-weighted assets of at least 12.5 percent and a Tier 1 leverage ratio of at least 8.5 percent, according to a filing with the Securities and Exchange Commission. On Dec. 31, the bank had a total risk-based capital ratio of 13.84 percent and a leverage ratio of 11.37 percent, both in excess of the agreed levels, and remained well-capitalized for regulatory purposes, the filing said.
By DON MECOY The Oklahoman
Published: 1/29/2010 6:10 PM
Last Modified: 1/29/2010 6:10 PM
Stillwater National Bank and Trust Co. must reduce its credit risk and improve its loan portfolio management, under an agreement with federal regulators signed this week.
The Comptroller of the Currency, which regulates all national banks, found “unsafe and unsound banking practices including practices relating to capital planning, asset quality and earnings,” the agreement stated.
Shares of the bank’s parent company, Southwest Bancorp Inc., rose more than 11 percent on Friday as the company reported an $8.8 million profit for 2009 even after boosting net reserves by $22.6 for potential loan losses. In the fourth quarter, the company booked a $2.5 million profit.
Stillwater National is the seventh-largest bank in Oklahoma, based on deposits.
Southwest Bancorp CEO Rick Green said the company is capitalized well beyond regulatory limits.
“The Southwest board of directors and management team are clearly focused on the elements of the agreement and are working to fulfill the agreement’s expectations,” Green said in a statement issued Friday. “The agreement is consistent with our business plan, priorities and goals.”
Among the actions the bank agreed to take was the establishment of a written program to “reduce the high level of credit risk in the bank and improve the bank’s loan portfolio management” and measures to ensure compliance with the plan, the agreement states.
The bank also pledged to eliminate credit weaknesses in nonperforming and potential problem loans; provide on-going review and grading of its loan portfolio; improve its position regarding nonperforming and potential problem loans and real estate; improve loan portfolio concentration risk management; and establish and operate a loan workout department.
In addition, Stillwater National must prepare a three-year capital plan and obtain regulatory approval before increasing its use of brokered deposits or declaring dividends.
Green said real estate construction and commercial real estate represent most of the bank’s problem assets.
The parent company’s primary lending activity is for commercial real estate occupied by businesses and lending to health-care professions for startup medical and dental practices, office buildings, surgery centers, hospitals and facilities for retirement and long-term care, Green said. The loan portfolio includes commercial construction loans and commercial loans secured by completed projects, he said.
“The current economy has significantly influenced many economic factors affecting business real estate,” Green said. “As the economy begins to improve, those risk factors will also.”
Stillwater National also agreed informally to maintain a ratio of total capital to risk-weighted assets of at least 12.5 percent and a Tier 1 leverage ratio of at least 8.5 percent, according to a filing with the Securities and Exchange Commission. On Dec. 31, the bank had a total risk-based capital ratio of 13.84 percent and a leverage ratio of 11.37 percent, both in excess of the agreed levels, and remained well-capitalized for regulatory purposes, the filing said.