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Officials say depositors' money safe at City State Bank
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Its owner, Ogden BancShares, Inc. agrees to correct certain deficiencies
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November 04, 2009 |
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Bank officials sought to clarify published reports that Ogden BancShares, Inc., a registered bank holding company that owns City State Bank here, Ames Community Bank, Community Bank of Boone and Vision Bank of Iowa, West Des Moines, and various nonbank subsidiaries, has entered into a written agreement with the Federal Reserve Bank of Chicago and the Iowa Division of Banking, Superintendent of Banking, designed "to correct certain deficiencies . . . relating to safety and soundness."
The official document said, "It is the common goal of BancShares and the Federal Reserve Bank to maintain the financial soundness of BancShares so that BancShares may serve as a source of strength to the banks."
A statement issued Monday by Ames Community Bank said any questions could be referred to Kurt Kuta, Ames Community Bank president and CEO, or Robert Grathwohl, Ogden BancShares, Inc./Ames Community Bank president and vice chairman.
Doug Lau, executive vice president of City State Bank, is also available to answer questions.
Kuta told The Reporter Monday that "Over the past two years, our company has become better managed, more disciplined, much more efficient, and yet still remains committed to serving our customers and communities."
He added, "Like many other banks, Ames Community Bank has experienced performance challenges. Past practices along with the impact of the overall economic downturn contributed to these challenges. Management has been addressing these and achieved a lot of progress."
What follows is the bank's statement. References to Ames Community Bank would include City State Bank, an office of Ames Community Bank.
"The stress on the local and national economy has impacted the performance of our loan portfolio, and thus our profitability. When customers and communities are adversely impacted, community banks will be impacted as well. However, a number of our loan issues are from loan participations and out-of-area real estate loans. We have ceased using those types of loans as a key source of new earning assets.
"Ames Community Bank is a well capitalized, independent bank with local ownership. We are optimistic about a return to good performance in the next few quarters. Our core earnings have been very good this year due to improvements in margin, non-interest income and expense control. We continue to maintain good liquidity for our funding needs. Once our asset quality challenges stabilize, this performance improvement will come quickly.
"To speed up our improvement, we have made commitments to our regulators. We are making the proper decisions and taking action. Almost all of the regulatory commitments are completed and acknowledged by our regulators. Improved asset quality and profitability as well as the maintenance of capital and liquidity are critical in all management decisions.
"During these uncertain economic times, it is prudent to address the safety of deposits at our institutions. Due to the bank's well capitalized position, good liquidity, and core earnings our depositors' money is safe. Additionally, the Bank's deposits are insured by the FDIC up to $250,000.
"On August 27, 2009, FDIC Chairman Sheila Bair stated in a press release "Banking industry performance is - as always - a lagging indicator. The banking industry, too, can look forward to better times ahead. But, for now, the difficult and necessary process of recognizing loan losses and cleaning up balance sheets continues to be reflected in the industry's bottom line." Bair continued 'No matter how challenging the environment, the FDIC has ample resources to continue protecting depositors as we have for the past 75 years. No insured depositor has ever lost a penny on insured deposits . . . and no one ever will.'"
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City State Bank was founded in 1884 as City Bank. It became City State Bank in 1907.
AMONG ITEMS AGREED TO
* BankShares shall not declare or pay any dividends without the prior written approval of the Federal Reserve Bank of Chicago and the Director of the Division of Banking Supervision and Relation of the Board of Governors of the Federal Reserve System.
* BancShares shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Banks without the prior written approval of the Reserve Bank.
* BancShares and its nonbank subsidiaries shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.
* BancShares shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank. |
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©The Ogden Reporter 2010
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