After a recent investigation the Federal Reserve Board handed down a list of requirements that Prineville Bancorporation and Community First Bank must adhere to.
The Federal Reserve Board on Wednesday announced the execution of a written agreement by and among Prineville Bancorporation; Community First Bank of Prineville; the Oregon Division of Financial and Corporate Securities, in Salem; and the Federal Reserve Bank of San Francisco.
According to Federal documents, the written agreement constitutes a common goal of restoring and maintaining the financial soundness of Prineville Bancorporation and Community First Bank.
"2004 was a challenging year for Prineville Bancorp and Community First Bank," said Robin Freeman president and CEO of the Prineville based bank. "In the early part of 2004, the bank commenced a data processing conversion which did not go as planned. The conversion was necessary due to the obsolescence of the bank's in-house system and the desire to enhance service and expand services. While the bank continued to provide quality service to our customers, issues with the data processing conversion focused management's attention away from building the bank to correcting some deficiencies.
Problems identified with the data processing conversion have been completed. However, due to some fundamental problems that were encountered in 2004, the board of directors recently entered into the agreement with the regulatory agencies to implement certain policies, procedures and programs, and to continue to improve the overall condition of the bank going forward. Most of the policies, procedures and programs are consistent with the normal operation of a stable banking institution and the board and management have already taken the steps necessary to develop and implement these programs."
The Federal Reserve documents state that the bank's board of directors shall submit to the reserve bank and the Division a written plan to strengthen board oversight of the management and operations of the bank. The bank also must develop and plan a comprehensive audit plan for 2005, as well as a written strategic business plan for 2005 for improving the overall condition of the bank.
"There's no requirement to raise more capital, and there's no restrictions on our growth or increasing our loan-loss reserves," Freeman said. "Any order that comes from the Federal Reserve, we need to take seriously, but from my standpoint, this is more administrative than operational. Our earnings are on a par with last year, even with some of the problems we faced. Our asset quality is better than it's ever been. Unfortunately, we've been hit with something that happened seven months ago."