Citizens Union Bank, which has been under the scrutiny of state and federal banking regulators because of problem loans since 2010, has been cleared to move forward.
The Federal Deposit Insurance Corp. and the state Department of Financial Institutions in Frankfort terminated a consent order imposed upon CUB in January 2010.
“When a bank improves their financial conditions and meets the requirements of that order, it is removed,” said Charles Vice, commissioner of the Department of Financial Institutions. “What that means is that their financial situation has improved enough so that that public action can be terminated.”
The release announced Thursday ends a 3.5-year period of significant change at the bank that included a separation with longtime CEO Billie Wade, resignations on its board of directors and other changes at the top of its management structure.
It also comes in time for the company, which is headquartered in Shelbyville and has 15 locations including banks in LaRue and Hardin Counties, to celebrate its 125th anniversary in October without being under the shadow of regulators.
“I think it’s great,” CUB Bank President David Bowling said. “I think we’ve got as good a management team as this bank has ever had. We think we’ll be better able to serve all types of customers today and that’s going to help us continue to grow and be prosperous.”
CUB CEO Darryl Traylor said there is no certain time set by bank regulators for a bank to remain under a consent order.
“It’s on until they feel comfortable,” he said, adding that 612 banks remain on the FDIC’s problem bank list.
Bowling said regulators had concern about loans mostly made to real-estate developers who were struggling to keep payments current when the housing market plummeted.
He said regulatory capital, a measure of a bank’s financial health, dipped to a low of 6.9 percent in December 2009, and the bank incurred losses from past-due loans that reached a high of 13 percent of its total loans in 2010.
Now, he said, past-due loans are at 3 percent and regulatory capitol is standing at 9.28 percent. The bank has been profitable in each month of 2013, earning a net income of $859,000, Bowling said.
With guidance from regulators, Bowling said bank officials have been working hard to address those issues and that the bank emerged healthier and stronger.
The bank revamped lending policies and procedures and enhanced credit monitoring and control processes, as well as having lending and management staff work aggressively to resolve problem loans.
Traylor said CUB’s recovery is the result of a team effort.
“It has taken everyone one involved for the bank to recover in such a short period of time,” he said.