FNBR agrees to added investment changes

RBC I After completing the conditions of one agreement — at the direction of government regulators — First National Bank of the Rockies has agreed to make further changes.
“FNBR has consented to another voluntary agreement with the OCC (Office of the Comptroller of the Currency), whereby the bank has agreed to correct certain matters, primarily centered on credit risk and management as pointed out by the regulators,” the bank said in a news release received last week by the Herald Times.
First National Bank of the Rockies, based in Grand Junction, has branches throughout northwest Colorado, including in Meeker and Rangely.
Previously, the bank agreed to liquidate investments in the AT Fund of Funds, “a registered investment company with a select group of hedge funds that invested largely in sovereign debt and mortgage-backed securities,” according to the news release.
“(When told by regulators the fund) was an inappropriate investment for the bank, we simply agreed to liquidate the fund,” Peter Waller, FNBR president, said last March.
“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 sub-prime (crash) hit and credit markets seized up.”
In last week’s news release, Waller said, “… the bank has successfully divested itself of those investments and the agreement has been completed.”
As far as the new agreement, Waller said, “When loans are classified by the banking regulators, the aggregate amounts of classified loans are measured against the bank’s capital. When this ratio exceeds certain limits, banks are placed under enforcement actions. The current economic environment is causing regulators to be critical in their grading of credits. More loan classifications lead to increased regulatory pressure for additional capital.”
During the economic downturn, Waller said banks have been forced to balance this regulatory criticism and “standing by distressed customers.”
Waller said FNBR will stand by its customers “when it is appropriate and prudent.”
“FNBR is working with borrowers who will work with us in an effort to allow them time to sell property, provide additional collateral, or liquidate collateral, but not at distressed levels,” Waller said. “When banks are too quick to foreclose, too much property is put on the market at a time when prices are depressed. Mostly ‘bottom feeders’ purchase foreclosed property, further depressing market values. FNBR will temporarily sustain regulatory criticism (classified loans) in order to work with borrowers who will work with us.”