Pewaukee-based Foundations Bank today announced that it has agreed to a voluntary consent order with the Federal Deposit Insurance Corporation (FDIC) and the Wisconsin Department of Financial Institutions that includes a plan to strengthen the bank and enhance its overall operations.
Foundations Bank has $224.5 million in assets, according to the FDIC, and has a single location in Pewaukee. According to the FDIC consent order, the bank must retain a third party analysis of its management needs, increase involvement by its Board of Directors, raise its level of Tier 1 capital to at least eight percent and its total risk-based capital ratio to at least 10 percent by late this month. Those levels must be raised to nine and 12 percent, respectively, by this fall, the FDIC order states.
The federal agency has also required the bank to develop a write-off plan for nonperforming loans and other assets. That plan was required to be in place by early June. The bank is also prohibited from writing new loans to customers with substandard or doubtful, unless its board has a written justification for that loan that the FDIC approves.
Foundations Bank President and chief executive officer Greg Kolton said the bank is already implementing steps to improve operations, make the bank more profitable and ensure that it continues to be safe and sound.
“We are actively taking steps and have already made significant progress to help us become more efficient and a better bank moving forward,” said Kolton. “Like many financial institutions, our bank has been affected by the worldwide economic downturn, especially the local real estate market. Now, however, we have seen some positive growth in the economy, and we are confident the measures we are taking will make us stronger and more secure.”
The bank also is restructuring its lending and collection policies to help assure that they continue to extend credit to credit-worthy customers and eliminate underperforming loans.
“These and other operational changes and efficiency steps will make our bank stronger and put us in a positive position to grow as the economy continues to rebound from the past two years of recession,” Kolton said.