1st Commerce Bank of North Las Vegas must increase its capital, hire a consultant on top managers and change lending practices under an amended regulatory order disclosed Friday.
In the consent order, the Federal Deposit Insurance Corp. and Nevada Financial Institutions Division complained of "unsafe and unsound banking practices" or regulatory and legal violations at the $45 million-asset bank.
The order, dated July 13, gives the bank 90 days to increase its risk-based capital, a measure of net worth, to a minimum of 12 percent of assets. The bank's risk-based capital was 6.9 percent at the end of the second quarter, according to data compiled by research firm SNL Financial.
Nonperforming assets, including past-due loans and foreclosed real estate, totaled 18.1 percent of total assets, according to SNL Financial.
1st Commerce lost $1.2 million in the first six months of the year, but all community banks in Southern Nevada lost money in the first half.
Executives at 1st Commerce and Capitol Bancorp, a Lansing, Mich., holding company and 1st Commerce's key shareholder, didn't respond to requests for comment.
Consent orders are becoming common in Southern Nevada as commercial real estate loans and other business loans increasingly become delinquent.
The FDIC earlier this year reported consent orders with Bank of North Las Vegas, Town & Country Bank, Bank of Las Vegas, SouthwestUSA Bank and Sun West Bank, as well as an earlier consent order with 1st Commerce. The FDIC reported a consent order with Nevada Commerce Bank late last year.
All but SouthwestUSA Bank and Sun West Bank, which were seized earlier this year, remain in business.
The regulators ordered 1st Commerce to hire a consultant to assess the bank's management needs and review the positions of president, senior lending officer and chief operating officer.
The order required the bank to charge off assets in the loss category in a January examination report and prohibited the bank from extending additional credit to any existing borrower or borrower whose loan has been charged off.
1st Commerce must develop a plan to reduce each of its risky assets, including loans of $250,000 or more that are delinquent, substandard or doubtful.
Regulators also called for a strategic plan. Other plans were ordered for returning the bank to profitability, increasing its liquidity and reducing loan concentrations.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.