It's rather entertaining reading, as it makes clear that the state and federal regulators are rather appalled at the state of the banks management:
1. The Bank shall have and retain qualified management.Doh!
(a) Each member of management shall have qualifications and experience commensurate with his or her duties at the Bank.
Read it, it is damning.
Now the part that is going to make it tough for CACB to survive starts with this:
5 (a) Within 30 days from the effective date of this ORDER, the Bank shall eliminate from its books, by charge-off or collection, all assets classified "Loss" and one-half of the assets classified "Doubtful" in the ROE that have not been previously collected or charged off. Elimination of these assets through proceeds of other loans made by the Bank to existing classified borrowers is not considered collection for the purpose of this paragraph."Not more than 75% of capital?
(b) Within 120 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" and "Doubtful" in the ROE, which have not been previously charged off, to not more than 75 percent of capital.
What percentage of capital are these bad loans now? The latest 10-Q filing states that as of June 30th CACB had $1.7 trillion in loans outstanding, of which $204 million was classified as non-performing. They had a $63 million loan loss reserve to try to cover this.
Oh, and the C&D also prohibits any further lending to anyone who has had a loan classified as "Loss" and requires any further lending to anyone with prior loans classified as "Substandard" or "Doubtful" to be approved by Board or entire loan committee. And then only if all past due interest has been collected in cash.
That kind of puts a damper on getting the party started.
The C&D is dated August 26th, just over 30 days ago. These next few weeks are going to be telling for CACB, Bend's flagship.
