The Federal Deposit Insurance Corp. on Friday disclosed a regulatory order to Bank of Las Vegas to take "prompt corrective action" because it has become significantly undercapitalized.
The FDIC's Chicago office oversees the bank's holding company, Capitol Bancorp of Lansing, Mich., and that office routinely issues orders for prompt corrective action when a bank fails to restore capital within two successive quarters, Chief Operating Officer Jim Howard said.
Capitol Bancorp provided Bank of Las Vegas with $27 million in 2010 and the bank expects to need no additional capital so far this year, he said.
The FDIC wants the bank to get back to 9 percent Tier 1 capital, one measure of net worth, but the bank's latest financial report shows it at 4 percent, Howard said.
The FDIC directive rated Bank of Las Vegas as "significantly undercapitalized." The bank submitted a capital restoration plan in July but the federal agency rejected that plan, according to the FDIC document.
The bank submitted a revised capital restoration plan in September, and the FDIC rejected that plan, too, according to the directive.
The bank's condition "continues to deteriorate" and bank management has not shown the ability to return the institution to safe and sound condition, according to the document.
The order required Bank of Las Vegas to sell enough shares to become adequately capitalized or to merge with another bank.
Bank of Las Vegas reported $375 million in assets at year-end 2010, down from $459 million in September. It lost $18 million in the fourth quarter.
Separately, the FDIC and Nevada Financial Institutions Division on Friday released a copy of the previously announced consent order with the Bank of George.
The order requires Bank of George to have 12 percent risk-based capital, adequate reserves for loan losses and sell addition stock to boost capital.
The bank reported $124 million in assets and 13.8 percent risk-based capital at the end of the year. It posted a fourth-quarter profit of $80,000.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.