Community Bancorp agrees to loan limitations

Community Bancorp, a $1.9 billion-asset holding company based in Las Vegas, and its key subsidiary, Community Bank of Nevada, signed a regulatory agreement to limit their loan concentrations in development and commercial real estate and to address several other regulatory concerns, the company said Wednesday.

The agreement also requires the banks to address capital needs, change procedures for problem loans and to improve oversight by the board.

Agreements like this one do not spell doom for a struggling bank, analysts say. However, the agreement serves to underscore problems at the bank holding company including past-due loans and repossessed assets that represent 25.9 percent of its total assets.

"The regulatory agreement is the result of ongoing discussions between the (Federal Reserve Bank) and the company to address the negative impact that the current market conditions are having on the company and the subsidiary bank and how best to resolve them," Edward Jamison, chief executive officer, said in a statement.

"Although we face difficult challenges, we are attempting to address them in a prudent and effective manner," Jamison said.

Commissioner George Burns of the Nevada Financial Institutions Division, an official with the Federal Reserve Bank of San Francisco, and Edward Jamison, chairman and chief executive officer of Community Bancorp., signed the 15-page agreement, which is dated May 21.

The agreement limits the bank holding company to accept brokered deposits totaling 41 percent, or $647 million, of total deposits. It allows the company to keep its brokered deposits at that level, but not to exceed it. Brokered deposits are usually certificates of deposits sold by stockbrokers to investors around the country.

The document directs bank managers and the board of directors to develop procedures to limit loan concentrations. About half of Community Bancorp's loans are for land development and construction while another 30 percent are in commercial real estate.

The regulators ordered the company to adopt a plan to maintain minimum capital. Community Bancorp must stop giving new funds to borrowers with problem loans. Bank executives also were directed to develop a plan for dealing with loans that are more than 90 days past due and for foreclosed real estate. Community Bancorp must charge off or make collections on more of its problem loans. The company must also establish new standards for setting aside appropriate reserves for loan losses.

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