FDIC targets Nevada banks
Regulators on Friday disclosed regulatory enforcement actions against six community banks in Nevada, underscoring concerns about the banks' ability to withstand the continuing relentless recession.
Regulatory directives were delivered to Sun West Bank, SouthwestUSA Bank, Town & Country Bank, Bank of Las Vegas and 1st Commerce Bank, all of the Las Vegas area, and Nevada Security Bank of Reno.
The Sun West order follows a previous Federal Deposit Insurance Corp. order that was disclosed in February. In the previous order, Sun West agreed to take action to resolve its financial problems.
On Friday, however, the FDIC disclosed a notice that criticized Sun West for taking inadequate action in response to the earlier order.
The bank failed to submit a capital restoration plan by year-end 2009, the FDIC said in the new notice. The bank gave regulators a capital restoration plan in early March, but the FDIC said the plan was unacceptable.
"The bank's unacceptable capital plan and deteriorating condition and management's inability to return the bank to a safe and sound condition require that prompt corrective action be taken immediately," the FDIC stated.
As a result, the federal regulatory agency ordered Sun West to raise additional capital or merge with another bank.
Developer Ken Templeton is board chairman at Sun West.
In another newly disclosed order, SouthwestUSA Bank agreed to regulatory action "without admitting or denying any charges of unsafe or unsound banking practices."
The FDIC and George Burns, commissioner of the Nevada Financial Institutions Division, required SouthwestUSA to increase its net worth or risk-based capital ratio to 12 percent or higher. The regulators ordered the bank to fully fund a reserve for loan and lease losses.
The order, which was dated March 3, gives SouthwestUSA 90 days to reduce nonperforming assets by collecting payments or charging off or improving the quality of its loans. SouthwestUSA also must prepare a written plan for reducing its reliance on deposits sold by brokers to investors.
SouthwestUSA Bank acknowledged the regulatory order and said its board has been exploring ways to increase its capital since late 2009.
The bank focuses on serving wealthy individuals, in competition with the private banking operations of giant national and regional banks. Former County Commissioner Bruce Woodbury is board chairman at SouthwestUSA, and Jacob Snow, general manager of the Regional Transportation Commission, is a director.
Regulators on Friday also released copies of March 15 enforcement letters sent to two banks operated by Capitol Bancorp of Michigan and Arizona. They are Bank of Las Vegas and 1st Commerce Bank.
The regulators said the banks have unsafe or unsound business practices. To correct their problems, regulators ordered that the two banks operate independently of Capitol Bancorp.
1st Commerce and Bank of Las Vegas were ordered to start efforts to sell themselves or merge with another bank not controlled by Capitol Bancorp.
Bank of Las Vegas was formed in February from merging four bank subsidiaries of Capitol Bancorp -- Black Mountain Community Bank, Red Rock Community Bank, Desert Community Bank and the previous Bank of Las Vegas.
Burns and the FDIC separately complained of unsafe or unsound practices at Town & Country Bank in a March 3 letter. The regulators ordered Town & Country to plan how it would reduce its concentration in commercial real estate loans and called for action to charge off more bad loans.
The FDIC concluded that Nevada Security of Reno was undercapitalized and determined that the bank's capital restoration plan was unacceptable.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
