1st Financial Services Corporation of Hendersonville, N.C., the parent company of Mountain 1st Bank and Trust Company, announced this week that the Bank has voluntarily entered into a Stipulation to the Issuance of a Consent Order agreeing to the issuance of a Consent Order with the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks.
Mike Mayer, the recently appointed Chief Executive Officer of the Company and the Bank, stated: “Our Board of Directors and management team are united in our efforts to satisfy the requirements of the Consent Order in the coming months.
“We have already fulfilled a number of the conditions for the release of the Order. Our goal is to complete our return to good standing as quickly as possible.” Mayer also said: “We continue to meet the applicable regulatory capital requirements and we continue to meet the banking needs of our customers and communities. We will not lose our focus on achieving excellence in serving Western North Carolina.”
The Bank also announced that it intends to increase the Allowance for Loan Losses by approximately $11 million for the 4th quarter of 2009. This increase in the allowance is the result of an exhaustive internal and external loan review process coupled with the implementation of new, automated loan loss software. This software will now allow the Bank to continuously update its allowance and provide prompt, accurate measurement and guidance of the loan portfolio moving forward.
“As we continued to analyze our loan portfolio, we felt it important to not only update our internal capabilities for reviewing our portfolio, but to also engage Risk Management Group to provide an independent third party review,” Mayer said. “Both of these reviews led us to the same decision to increase our loan loss allowance to cushion against any potential further deterioration in the loan portfolio.”
With the increase, the Bank will now have an Allowance for Loan Losses of over $28 million against approximately $34 million in non-performing loans at December 31, 2009.