FDIC: Colby bank
must raise capital
must raise capital
A Colby-based bank has received notice
from the Federal Deposit Insurance Corp.
that it must take prompt action to
recapitalize itself.
The FDIC regulates U.S. financial institutions
to assure they are financially sound and
insures deposits in those banks. A bank's
capital serves as a "cushion" for potential
losses.
Community Bank of Central Wisconsin,
which also has branches in Marshfield,
Owen and Thorp, was categorized by the
FDIC as "significantly undercapitalized" in a
supervisory prompt corrective action
directive issued April 14 and released
publicly Friday.
The bank was directed to either "sell
enough voting shares or obligations of the
Bank" so it can regain adequate capital or
become acquired by another depository
institution.
In November, the FDIC told the bank to
send a capital restoration plan for
approval. The bank did so, but the FDIC
from the Federal Deposit Insurance Corp.
that it must take prompt action to
recapitalize itself.
The FDIC regulates U.S. financial institutions
to assure they are financially sound and
insures deposits in those banks. A bank's
capital serves as a "cushion" for potential
losses.
Community Bank of Central Wisconsin,
which also has branches in Marshfield,
Owen and Thorp, was categorized by the
FDIC as "significantly undercapitalized" in a
supervisory prompt corrective action
directive issued April 14 and released
publicly Friday.
The bank was directed to either "sell
enough voting shares or obligations of the
Bank" so it can regain adequate capital or
become acquired by another depository
institution.
In November, the FDIC told the bank to
send a capital restoration plan for
approval. The bank did so, but the FDIC
sent letters in February and March
indicating that the submitted capital
restoration plan and revised plan did not
meet the requirements of the Federal
Deposit Insurance Act.
According to the FDIC notice, "the Bank's
unacceptable capital restoration plan and
deteriorating condition and management's
inability to return the Bank to a safe and
sound condition require that prompt
corrective action be taken immediately."
The corrective action will remain in effect
until Community has been financially sound
for four quarters. The bank had the option
of filing an appeal to the notice within 14
days.
An FDIC spokeswoman declined to
comment on the timeframe in which the
bank must take action on the directive.
"We're working diligently to improve our
capital position," said Marti Machtan,
interim president at Community. "Our
capital level wasn't where it needed to be,
indicating that the submitted capital
restoration plan and revised plan did not
meet the requirements of the Federal
Deposit Insurance Act.
According to the FDIC notice, "the Bank's
unacceptable capital restoration plan and
deteriorating condition and management's
inability to return the Bank to a safe and
sound condition require that prompt
corrective action be taken immediately."
The corrective action will remain in effect
until Community has been financially sound
for four quarters. The bank had the option
of filing an appeal to the notice within 14
days.
An FDIC spokeswoman declined to
comment on the timeframe in which the
bank must take action on the directive.
"We're working diligently to improve our
capital position," said Marti Machtan,
interim president at Community. "Our
capital level wasn't where it needed to be,
Note: This is where Marshfield Property Taxes that fund the City of Marshfield, the School District of Marshfield, Wood County and Mid-State Technical College.
and obviously, we're working to improve
that."
In order to achieve an "adequately
capitalized" position as defined by the
FDIC, the bank must achieve 4 percent tier
one leverage capital. But under the most
recent directive, the FDIC requires
Community to reach 8 percent leverage
capital.
Machtan hopes to achieve that number by
2013, since the directive does not set a
time limit.
Though the bank has not communicated
about the directive to all its customers,
Machtan said Community has explained the
situation to those who inquired about it.
"Any customers who asked us about that,
we've been very candid and we've been
open about our progress," he said.
that."
In order to achieve an "adequately
capitalized" position as defined by the
FDIC, the bank must achieve 4 percent tier
one leverage capital. But under the most
recent directive, the FDIC requires
Community to reach 8 percent leverage
capital.
Machtan hopes to achieve that number by
2013, since the directive does not set a
time limit.
Though the bank has not communicated
about the directive to all its customers,
Machtan said Community has explained the
situation to those who inquired about it.
"Any customers who asked us about that,
we've been very candid and we've been
open about our progress," he said.
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