Web posted
Friday, October 17, 2008
Future, not OCC impetus for talks
By DAVE SEATON and TYLER GASKILL
Winfield Courier
While the uncertainty of the future played a role in CornerBank's decision to enter merger talks with Emprise Bank of Wichita, a letter of agreement with the Office of the Comptroller of the Currency did not, according to CornerBank President and CEO Bruce Schwyhart.
That letter, dated July 1, 2008, required CornerBank to increase its capital, among other things.
"That's what they wanted to see, and we did," Schwyhart said Thursday.
CornerBank has since raised $1.6 million by selling additional bank shares to existing stock holders.
Asked if the letter played a part in his board's decision to enter merger talks, Schwyhart was adamant: "Absolutely not," he said.
The letter also required the bank to reduce the share of real estate mortgage loans in its portfolio. Schwyhart said the bank had quickly reduced its commercial real estate loans by a third.
CornerBank is one of 27 Kansas-chartered national banks that have received such letters from the OCC since the early 1990s, according to that agency's Web site.
Home National Bank, which is chartered in Oklahoma, also received a letter from the OCC this summer.
Other banks in Larned, Goodland and Conway Springs have received such letters in the past two or three years. Citizens Bank of Kansas, which operates in Winfield, received a letter in 2004 that was lifted in October 2007.
Personnel from the OCC were at CornerBank last week, Schwyhart said, and the bank has received a letter saying it had complied thus far with the regulators' requirements. The original letter has not been lifted.
Uncertainty about the future, however, has been a factor in the bank's consideration of entering merger talks, Schwyhart said.
The U. S. Treasury has pressured nine major banks to accept capital infusions from the federal government, he pointed out. This suggests more pressure is coming, on community banks as well.
"It does send a message we've not seen before," Schwyhart said. "When you see the government and the treasury taking some of the steps they've taken."
Along with government intervention, banks can expect tighter regulations in the future, Schwyhart said. He did not want to predict more OCC letters of agreement would be coming to Kansas community banks, but said, "It would not surprise me."
Looking back on the history of CornerBank, Schwyhart said most mergers in which it was involved came in times of trouble. This is true in banking generally, he added.
When trouble looms, banks often seek strength in partners, Schwyhart said.
He said he felt CornerBank was fortunate to have OCC guidance at this time.
"I consider them a partner with us," he said.
Tom Page, president and CEO of Emprise Bank, told "The Wichita Eagle" the OCC letter was not an issue for his bank. Emprise has high confidence in management, Page said.
Schwyhart pointed out the OCC letter did not criticize CornerBank's management or its board of directors.
|
