Bank president responds to Post allegations

RBC — Peter Waller, president of First National Bank of the Rockies, knew there was going to be a story last week in The Denver Post, which would mention the bank.
But, when he saw the published story, he didn’t like what was reported.
First National Bank of the Rockies, based in Grand Junction and with offices in Meeker and Rangely, was mentioned in a story under the headline, “7 Colorado banks rebuked for risky practices.”
Waller took exception to how the bank was portrayed, calling it an “irresponsible reporting job.”
The story said the bank had put more than $15 million in what was called an “illegal investment” in the AT Fund of Funds, which dealt in mortgage-backed securities.
“All of those funds were legal,” Waller said.
“Initially, we put $10 million in the fund, and it performed very well,” Waller said. “Then, later, we put another $5 million in. It continued to perform well until the subprime (crash) hit and credit markets seized up. Look at where the stock market is today. It’s a sign of the times. I’m not making excuses, just stating a fact.”
When told by regulators the AT Fund of Funds “was an inappropriate investment for the bank,” Waller said, “we simply agreed to liquidate the fund.”
Regulators gave the bank 18 months to divest itself of its holdings in the investment program, but Waller said he “put a plan together to liquidate it within 12 months.”
He said the liquidation plan was “a formal agreement with the regulators that became public last March.”
Waller added, “This thing is so exaggerated and so taken out of context. FBNR is not under a cease-and-desist order. … We entered into a voluntary agreement.”
Waller said “the liquidation has occurred almost in lockstep with the liquidation plan,” adding the bank was “down to only $2 million we have invested in that” fund.
“The remainder, in accordance with the plan, should be liquidated by late April or early May,” Waller said. “It’s all but gone, and it will be gone before too long.”
Waller said the FBNR is healthy and the fund represented a small percentage of the bank’s total assets.
“We could write the whole thing off and not severely affect our earnings for ‘09,” Waller said. “It’s $2 million out of nearly $400 million in assets.”
Waller also defended the bank’s investment portfolio.
“We’re far above a statutory definition for well capitalized,” Waller said, “which is the highest category the regulatory agencies use.”