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Citizens Union Bank of Shelbyville (CUB) announced that it has received notice from the Federal Deposit Insurance Corporation (FDIC) and the Kentucky Department of Financial Institutions (KDFI) which formally terminates the Consent Order the Bank entered into with the regulators in January 2010.
A Consent Order is a formal agreement between banks and regulators designed to help address improving certain areas of a bank such as credit quality, capital, earnings and liquidity.
As a result of the “Great Recession” and the following collapse of the housing market, numerous banks throughout the country were placed under formal Consent Orders by the regulators.
Many banks were not able to survive and many others continue to operate under regulatory restrictions. On March 31, 2013 there were 612 banks on the FDIC’s “problem bank” list and 444 banks had failed since 2008.
Like many community banks, CUB had historically focused on loans to support the purchase and development of residential housing in the communities it serves. CUB’s Consent Order was primarily the result of the impact the recession had on its borrowers, many of whom were real estate developers, who struggled to keep their loans current when the housing market dried up.
CUB incurred losses from 2009 through 2012 and saw its past due loans reach a high of 13.58% of total loans in April of 2010. Regulatory capital, a key measure of a bank’s financial health, also dipped to a low of 6.99% on December 31, 2009.
Since entering into its Consent Order CUB’s Management has made numerous changes to improve the Bank’s operations and risk management capabilities. They revamped lending policies and procedures, enhanced credit monitoring and control processes, strengthened lending and management staff and worked aggressively to resolve problem loans. Management, along with the Board of Directors, also recognized the need to focus more on business lending and reduce its reliance on residential real estate loans.
At June 30, 2013 past due loans were 3.38%, regulatory capital stood at 9.28% and the Bank has been profitable in each month of 2013 earning net income of $859,000.
This news comes at a particularly good time for the Bank as it is about to celebrate its 125th anniversary.
Citizens Union Bank originally established in 1888, currently employees 186 people in 15 locations throughout the Shelbyville, Louisville and Central Kentucky areas.
In honor of the Bank’s 125th Anniversary, Customer Appreciation Week is set for October 15th through the 18th at all CUB branches.
A 125th Anniversary Open House will be held CUB’s main office location at 1854 Midland Trail, Shelbyville, on October 18th, from 10:30 a.m. till 2 p.m.
The public is invited to join in the celebration.