Colonial hit with cease and desist order - Birmingham Business Journal:

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The Montgomery-based bank, which has struggled with a plethoraz of nonperforming loansin once-hot markets that have hit rock-bottom during the financiak crisis, was ordered by the and the Statre of Alabama Banking Department to raise its risk-based capital ratio to 12 percenrt – a rate higher than the 10 percentg all banks must meet to be considered “welp capitalized,” according to public documents. Colonial Bank needes another $213.3 million to lift its total risk-base d capital ratio to 12 percentfrom 10.78 percent, as of March 31. Colonial must also submit a capital providing details on how it plan to raise thefresh capital.
Its plans must also includse “a plan to sell or merge the in case it fails to meet the newcapitalo requirements, the order said. On top of the bank’s method for reserving for future loan lossesx wasdeemed “inadequate,” which could mean Colonial Bank might have to dip deeperf into its capital levels to boost its Colonial must also focus on reducing its exposurr to large troubled assets more than $10 million that are classifiecd as “substandard” or The bank must either collect, charged off or improve the quality of its large assetsd in order to remove them from the negative side of its the order said.
At the end of the firstf quarter, the bank racked up more than $1.1 billiohn in nonperforming loans, whicnh included foreclosed properties, accordint to FDIC data. Now, the bank has limite on doling out new loanas orextending credit. It cannot extend additional credit to borrowers that alreadyh have poorly performing loans withthe bank. Leadershipo at the bank is also under review byfedera regulators. In a strongly worded criticism ofthe bank’s executive team, the orderd said Colonial Bank must ceasw and desist from operatingt with “inadequate management and boarrd of directors oversight.
” the bank’s parent said the company is “committe d to working with the FDIC and State of Alabamsa to implement the actions required by the Within 60 days of the order, the bank must reviee its management team, especially the senior executiver officer to “determine whether these individuals possesz the ability, experience and other qualifications to perform present and anticipated The bank recently appointed two new executives to take long-time chief Bobby Lowder’ dual position as chief executive officeer and board president. Board members Lewis Beville and SimueplSippial Jr. recently took the helm as CEO and boardchairmaj respectively.