OCALA, Fla., Nov. 13 /PRNewswire-FirstCall/ -- Mark A. Imes, President and Chief Executive Officer of Independent National Bank announced today the bank has successfully completed discussions with the Office if the Comptroller of the Currency and has agreed to the entry of a Consent Order with the regulatory agency. Independent National Bank (INB) (BULLETIN BOARD: IBFL) is a nationally chartered banking institution with five full-service banking center locations throughout Marion and Sumter Counties in Florida.
In making the announcement, Imes commented, "Economic conditions have created a challenging banking environment, and all regulatory agencies are working closely with banks to provide the regulatory guidance and direction to help banks maintain financial soundness and adapt to these challenging conditions." Imes continued, "Independent National Bank will work closely with the OCC to attain full compliance with this order as quickly as possible."
The Order summarizes certain remedial actions the OCC wants the bank to take, primarily related to policy and planning issues, oversight, loan concentrations and classifications, non-performing loans, liquidity/funds management and capital planning. The order also directs the bank to raise additional capital and implement a liquidity risk management plan.
No provision of the Agreement in any way impacts the ability of the bank to transact business with banking customers. Independent National Bank will continue to serve customers in all areas including providing access to lines of credit, paying competitive rates on deposits, and processing banking transactions. All customer deposits are fully insured to the highest limits set by the FDIC, which are $250,000 for individually titled accounts and $250,000 for individually titled IRA accounts. In addition, INB participates in the FDIC Transaction Account Guarantee Program. Under this program, all non-interest bearing transaction accounts are fully guaranteed by the FDIC for the entire amount of the account. The guarantee also applies to interest bearing transaction accounts with interest rates of 0.50 percent or less. This program is in addition to and separate from the coverage available under the FDIC general deposit insurance rules.
In commenting on the content of the Consent Order, Imes stated, "Our management is confident the bank has already completed a great deal of the work required to respond to the directives contained in the Order."
The Order includes directives in twelve categories for the bank to follow to implement certain procedures or take specific actions. In addition, the Order directs the bank to form a compliance committee comprised of members of the board of directors to oversee the effort to achieve full compliance with the Order. The Compliance Committee is directed to meet on at least a monthly basis and to provide written reports of the progress of the bank in achieving compliance with the Order to the OCC.
Strategic Planning
The Order directs the bank to prepare a three year strategic plan within sixty days and submit the plan to the OCC for approval. According to the Order, the Strategic Plan should address financial forecast, growth projections, risk management, control systems designed to mitigate risk, and various evaluations of bank procedures. The Strategic Plan directive also outlines timetables and methods for reporting adherence to the plan.
Capital Planning
The Order also directs the bank to prepare and submit for review a written capital plan consistent with the Strategic Plan, also covering a three year period. The Order establishes a deadline of 90 days to achieve compliance with the capital component of the Order. In addition, the Order directs the bank to increase Capital Ratios to specific levels. The Order directs the bank to achieve and maintain a Tier One capital ratio of 9.0% and a Total Risk Based Capital Ratio of 12%. At September 30, 2009, the company reported a Tier One Capital Ratio of 6.84% and a Total Risk-Based Capital Ratio of 11.00%.
Mr. Imes commented on the capital component of the Order as follows, "All regulatory agencies monitor capital ratios closely, particularly in this challenging Florida economy." He continued, "We have a number of capital raising options available to the bank and we are weighing these options while proceeding with raising capital through private sources."
Loan Policy and Credit Administration
The Order directs the bank to develop and submit to regulators for review, approval and implementation a revised written loan policy to improve credit administration and loan portfolio management. It is directed for the Loan Policy to include improved underwriting and requires standards be set regarding the types of credit information required from borrowers. The written Loan Policy will also include guidelines to be implemented for early identification of problem leans. It is also required for the bank to follow certain procedures in the area of loan renewals.
"The trend we are seeing is one where regulatory agencies are responding to changes in the economy and the market,' stated Imes. He continued, "Market conditions, particularly related to non-performing loans have changed the banking landscape. By directing banks to modify loan policies to market conditions, regulators are ensuring banks can quickly identify loan issues before these issues become problematic."
Concentrations of Credit
The Order directs the bank to adopt, implement and ensure adherence to a written CRE (Commercial Real Estate) management program. The program is to address a broad range of issues including underwriting, credit administration, concentration limits and procedures for monitoring compliance. The Order establishes a timeframe of 60 days to complete this step.
Criticized Assets
A component for managing criticized assets is also included in the Order and directs the bank to adopt a program for protecting the bank's interest in criticized assets within 30 days. The program includes the development of criticized asset reports identifying and monitoring credit relationships over $250,000 classified as 'doubtful', 'substandard' or 'special mention.' The criticized assets component of the order also directs the bank not to directly or indirectly extend credit to borrowers whose existing loans fall into these categories unless special conditions are met.
Credit and Collateral Exceptions
The Order also directs the bank to obtain current and complete credit information on any loans lacking complete information within sixty days.
Independent Loan Review
Also included as a provision of the Order is a directive for the bank to establish an 'effective, independent and on-going on loan review program'. The purpose of this directive is to assure the timely identification of problem credits. On this point, Mr. Imes commented, "We view Orders of this nature as tools for helping banks to improve their procedures and succeed in the new Florida economy. Using independent loan reviews is a solid strategy which will benefit our bank in the long run."
Allowance for Loan and Lease Losses
The Agreement directs the bank to establish and implement a program for the maintenance of an Adequate Allowance for Loan and Lease Losses (ALLL). One of several provisions of the Order addressing credit and credit policy, the establishment of the program does not have a defined deadline.
Appraisals of Real Property
The Order includes a directive for the bank to obtain a current independent appraisal or updated appraisal of any loan secured by real estate under certain circumstances. These circumstances include situations where the appraisal is more than twelve months old or where the borrower has failed to comply with the terms of the loan. In addition, the bank is also required to update appraisals on OREO (other real estate owned) property where such appraisals are required to attain compliance with certain regulations. This directive has a deadline of 60 days.
The bank is also required to develop an independent review and analysis process to ensure appraisals conform to appraisal standards and regulations.
Other Real Estate Owned
The Order directs the bank to develop and implement individual action plans for each parcel of other real estate owned to ensure these assets are managed according to regulatory guidelines. These action plans carry a completion deadline of 60 days and require an ongoing financial analysis to determine the optimum strategy for the bank to employ in management of these assets.
Liquidity and Risk Management
As a part of the Order, the Bank is required to revise and subsequently maintain a liquidity risk management program which assesses the current and projected funding needs of the bank. Compliance with this directive carries a deadline of 60 days. The directive contains a number of guidelines and components to assist the bank in developing a liquidity and risk management program consistent with current economic conditions.
Summary
As previously stated, the Consent Order includes twelve specific directives, of which nine entail the preparation of written plans and policies. Beyond written plans and policies, directives requiring specific actions include raising capital levels either through the injection of new capital, adjusting the asset size of the bank or a combination of both. Additional specific actions required include obtaining current appraisals for collateral meeting certain criteria and compiling credit file information where necessary.
Mr. Imes commented on the totality of the Order by stating, "We take the entry of this order seriously and are committing the necessary resources to this effort in order to obtain full compliance as quickly as possible." He continued, "We are equally committed to retaining the high levels of service and customer satisfaction which have made Independent National Bank a banking leader in this community for over twenty years. No component of this order places any restrictions on our ability to continue to provide exceptional service to our customers." In closing he stated, "I have complete faith that our board, management and staff will successfully meet the directives set forth in this Agreement."
About Independent National Bank - Established in 1988, Independent National Bank is a nationally chartered bank with five full service banking locations throughout Marion and Sumter counties in the State of Florida. The bank provides personal and commercial banking services to the communities it serves and is a wholly owned subsidiary of Independent Bancshares, Inc. (OTC Bulletin Board: IBFL).
This press release and other statements to be made by the Company contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including but not limited to statements relating to projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of management's plans, strategies, and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry, or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "project," and conditional verbs such as "may," "could," and "would," and other similar expressions or verbs. Such forward-looking statements reflect management's current expectations, beliefs, estimates, and projections regarding the Company, its industry and future events, and are based upon certain assumptions made by management. These forward-looking statements are not guarantees of future performance and necessarily are subject to risks, uncertainties, and other factors (many of which are outside the control of the Company) that could cause actual results to differ materially from those anticipated. These risks, uncertainties, and other factors include, among others: changes in general economic or business conditions, either nationally or in the State of Florida, changes in the interest rate environment, the Company's ability to successfully open and operate new branches and collect on delinquent loans, changes in the regulatory environment, and other risks described in the Company's Form 10-Q for the quarter ended September 30, 2009, and as described from time to time by the Company in other reports filed by it with the Securities and Exchange Commission. Any forward-looking statement speaks only to the date on which the statement is made, and the Company disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. If the Company does update any forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements.
Further information regarding Independent National Bank may be obtained by contacting Frank S. Knautz at 941/929-9396, or 941/735-1213. Email - frank@frankknautz.com.
Independent National Bank
CONTACT: Frank S. Knautz, +1-941-929-9396, +1-941-735-1213,
frank@frankknautz.com
