EVERETT — Mountain Pacific Bank has operated under the strict guidelines of the federal government since receiving a cease-and-desist order in March stemming from findings in a routine examination last September, bank officials revealed Thursday.
The order, prompted by loan defaults and real estate foreclosures, required the Everett-based bank to maintain higher amounts of capital and to overhaul the policies in place for dealing with loan losses. Staffing reductions, salary cuts and decreased employee benefits were also part of how the bank restructured.
Mountain Pacific agreed to the terms of the order late last year, but does not admit to any wrongdoing, according to a statement released Thursday morning.
“The bank and its directors have been working diligently to address the concerns highlighted by the regulators,” Mountain Pacific President and Chief Executive Mark Duffy said. “We look forward to complying in full and moving forward to improve our financial position for the benefit of our customers, shareholders, employees and community.”
The order was issued jointly by the Federal Deposit Insurance Corporation and the state Department of Financial Institutions. It is the second such order revealed by an Everett bank within the last month; two weeks ago Frontier Bank officials revealed they had massively restructured banking policies in compliance with a cease-and-desist order issued last summer.
As part of the agreements, banks are usually required to divulge to stockholders and depositors that they received the order.
Mountain Pacific blames the economy — particularly the real estate market — for the decline of profitability in 2008.
The order required Mountain Pacific to increase the allowance for loan losses by more than $3 million, a step bank officials took last year. Regulators told the bank to reduce loans to borrowers in the commercial real estate market and develop a three-year strategic plan.
Starting in September, Mountain Pacific started cutting expenses by reducing discretionary spending, cutting staffing levels by more than 10 percent, and slashing salaries and benefits by $511,000 annually.
At the same time, the bank increased liquidity with almost $18 million in deposits.
Bank customers remain insured by the FDIC at the same levels: $250,000 per depositor.
Employees of the state Department of Financial Institutions are prohibited by law from commenting on cease-and-desist orders. The measure is not as serious as a government seizure, but is a legally binding agreement that has become more common since the country entered a recession.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
