Federal regulators hit two more Colorado banks with enforcement orders to try to reverse their “unsafe” practices.
Valley Bank and Trust of Brighton and Park State Bank & Trust of Woodland Park were each cited for at least a half-dozen violations of banking laws or regulations, records show.
Under the Federal Deposit Insurance Corp. cease-and-desist orders, both banks must find ways to boost capital, reduce delinquent loans and enhance scrutiny by their governing boards. Executives at each bank said they were cooperating with the agency.
The enforcement actions bring to at least 11 the number of commercial banks in Colorado found to have run afoul of regulatory standards in the past two years.
Park State’s books reflected a high concentration of commercial real-estate loans surpassing the government’s recommended limits — a problem besetting many Colorado banks.
In response to regulators’ concerns, the $97 million Woodland Park bank has raised more cash, much of it from sitting board members, president Tony Perry said.
“We’ve already raised a million and a half dollars that the directors of the board put in themselves in March, and we intend to raise more from current shareholders and investors locally,” Perry said.
The FDIC highlighted 16 deficiencies at Park State, including faulty loan documentation, “hazardous” investment practices and inadequate oversight by corporate directors.
Park State must hire a consultant to critique management and recommend whether executives should be replaced, among other steps.
Valley Bank and Trust of Brighton, posting about $260 million in assets, has closed four unprofitable branches in the past 18 months to deal with its financial woes, according to a statement the bank issued to The Denver Post on Friday.
Like Park State, Valley Bank was faulted for “creating concentrations of credit,” along with five other unsafe practices.
In its statement, Valley Bank executives attributed its loan troubles to customers who “have had difficulties meeting the obligations.”
The FDIC ordered both banks not to pay out cash dividends without approval.
Miles Moffeit: 303-954-1415 or mmoffeit@denverpost.com
