Bank gets enforcement order; chief predicts similar actions

The chief executive officer at Nevada Commerce Bank on Monday tied a regulatory "consent order" to the stalled Southern Nevada economy.

In addition, Nevada Commerce CEO Kathy Phillips said she suspects many of her peers soon will be getting enforcement orders from regulators, too.

"I gather that up to 70 to 75 percent of banks in Nevada and California are going to see some sort of enforcement action," she said.

Phillips said she made the prediction based on information from bank trade publications.

The Federal Deposit Insurance Corp. and the Nevada Financial Institutions Division on Monday disclosed a consent order signed by Nevada Commerce Bank.

The regulators directed Nevada Commerce to "have and retain qualified management," specifically mentioning the bank's CEO, chief financial officer and senior lending officer.

"The key word is 'retain,'" she said. "They want us to make sure this team stays in place and helps the bank work through some of the problems we're having."

The order said the qualifications of executives will be evaluated based on their ability to "restore all aspects of the bank to safe and sound condition," among other things. The order mentioned asset or loan quality, capital adequacy, earnings, liquidity, management effectiveness and sensitivity to market risk.

The regulators told Nevada Commerce to develop a plan to return its risk-based capital, one measure of the bank's equity or net worth, to 12 percent.

"That's because of the local market, and the economy we're in, and it's a reasonable requirement," Phillips said.

Nevada Commerce has 9.6 percent in risk-based capital, lower than the 10 percent that is considered well capitalized, Phillips said. Nevada Commerce Bank is preparing a private offering in hopes of raising $3 million to $6 million in additional capital from existing and potential investors by the end of March, she added.

The $223.6 million asset bank reported 5.5 percent of its assets, including loans and foreclosed real estate, were nonperforming. It lost $1.1 million in the third quarter, data compiled by SNL Financial show.

Separately, the FDIC on Monday disclosed a consent order for Torrey Pines Bank of San Diego, which is part of Las Vegas-based Western Alliance Bancorporation. It also required Torrey Pines to "have and retain qualified management."

The order focuses on the bank's credit card operations, but it also called for reduction of commercial real estate loans as a percentage of total loans.

Western Alliance shares fell 14 cents, or 3.52 percent, Monday to close at $3.84 on the New York Stock Exchange.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.