August 14, 2013
CITIZENS UNION BANK RELEASED FROM CONSENT ORDER
Citizens Union Bank of Shelbyville (CUB) announced today 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. At 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.
After working closely with regulators for the past three and a half years to address their challenges, the Bank’s Management and Board of Directors believe that Citizens Union Bank has successfully weathered the storm and has emerged a stronger, healthier organization.
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.
President David Bowling stated, “We are very proud of the work done by our staff and the Board as we have worked through our recovery. We still have some work to do but we believe we have the management structure and personnel in place to achieve sustainable earnings and future growth. We are also pleased that we were able to get there without massive layoffs and without turning our backs on our customers. This economic environment has been hard on them too and we have tried to work with our customers and in turn they have been very loyal to us.”
“It has taken everyone involved for the Bank to recover in such a short period of time” added Darryl Traylor, CEO. “Also, unlike many banks that have gone under Consent Orders, we were fortunate in that we did not have to take TARP money or any other type of government bailout in order to recover.”
This news comes at a particularly good time for the Bank as it is about to celebrate its 125th anniversary. Bowling added, “Not many banks can say they survived the Great Depression and the Great Recession but it’s a testament to our employees and our customers that we have made it through successfully. We are very excited about the future here at CUB.”
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 18that 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.