Community Banks under Federal Reserve scrutiny
Post Independent Editor
The Federal Reserve Bank of Kansas City is giving Community Banks of Colorado 90 days to increase its equity or sell out to another bank.
On Jan. 31, the Federal Reserve determined that Community Banks is “significantly undercapitalized,” and followed up with a formal “Prompt Corrective Action Directive” on Feb. 8.
The five-page directive is co-signed by the Federal Reserve and by Donald Woods, CEO of Community Banks of Colorado.
“We are working closely with our regulators,” Woods said Monday in a written statement. “We have a plan to recapitalize the bank. We are executing that plan. I am confident of success.”
Neither the Federal Reserve nor Community Banks would comment on how much money it would take to recapitalize the bank.
Community Banks, a state-chartered bank based in Greenwood Village, has 35 branch banks in Colorado, including banks in Aspen, Basalt, Glenwood Springs, Rifle, Eagle, Edwards and Avon, and four banks in northern California. The company started in 1989 with the purchase of Rocky Ford National Bank in southeast Colorado.
During the 90-day “corrective action” period, Community Banks must closely follow Federal Reserve rules in paying bonuses or giving raises to senior officers, and paying dividends to stockholders, according to the directive.
Under the directive, the Federal Reserve may choose to extend the 90-day time limit on the directive, and may take other action in the matter.
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