After almost two years, the downtown bank formerly known as Consolidated Bank & Trust finally has regulators off its back.
Consolidated, now known as Premier Bank, and its $1.1 billion West Virginia parent company announced Tuesday that the Federal Reserve had lifted the written agreement the bank had been under since July 2010.
The agreement was put in place after too many problem loans deteriorated Consolidated’s capital base. Consolidated was among a handful of local banks to enter into such agreements in the recession’s wake.
As parent to Consolidated, W.Va.-based Premier Financial Bancorp also was named in the agreement. It then devised the plan to merge and rebrand Consolidated and four of its other banks into Premier Bank, in part as a way to more quickly get out from under the agreement.
Consolidated and its lone branch at First and Marshall streets in Jackson Ward were consequently renamed the Consolidated Division of Premier Bank in April 2011. But the written agreement took some time to shake.
“It required further review even after we merged the banks,” said Bob Walker, chief executive of Premier Financial. The Fed wanted to make sure the plan that the company had devised for its new Premier Bank would still help it satisfy the requirements of the agreement.
“We met their expectations, and I certainly feel we’re a viable bank brand,” Walker said.
With the extra scrutiny gone, Walker said the company could get down to business and grow its new brand. The company had said from the outset that it would look to grow Premier Bank’s presence in some markets, including in Richmond.
“While you’re under additional regulatory scrutiny, you get internally focused and spend too much of your energy complying with those issues,” Walker said. “Now we’ll get busy thinking about expanding our footprint.”
Premier Financial’s shareholders should also feel some relief.
The written agreement prevented the company from paying dividends of any kind without first receiving permission from regulators. That’s a typical provision of such agreements, but Premier’s situation was fairly uncommon in that it remained a profitable bank holding company hindered by Consolidated’s past troubles.
The lifting of the agreement leaves the company free to regularly pay dividends to its regular shareholders and to the U.S. Treasury Department, which is owed $22.25 million as part of Premier’s participation in the TARP Capital Purchase Program.
On Monday, Premier was named among 12 banks whose TARP shares will be auctioned off by the Treasury. The auctions are part of a program the government has been pushing of late to unload TARP shares in banks that have been unable to buy their way out.
Glen Allen-based First Capital Bank was part of a similar auction in June. It was able to buy back its $10.9 million in TARP shares at the auction at an 8 percent discount.
The Consolidated Bank & Trust name has roots in Richmond dating back to 1903. Maggie Walker, the nation’s first female bank CEO, founded the bank as St. Luke Penny Savings Bank in 1903. Consolidated was also at one time known as the oldest continually African American-operated bank in the country.
The implication of the headline and the article is that somehow it was the government’s fault that the bank has been under intense scrutiny and subject to strict regulations (damn those government regulations and how they stifle businesses).
And now that the bank has been able to shed those business killing regulators, the bank can go hog wild and build the business without having to focus on complying with all those business killing regulations and regulators.
Well, the only reason those pesky regulators were there at all was because of all the bad loans the bank made in the first place. If the bank hadn’t needed TARP funds to bail them out of failure, the bank wouldn’t have been plagued with those pesky business killing regulations.
It never ceases to amaze me at how many individuals and companies who decry government involvement in their lives one minute are among the first to take a handout from the government when things go wrong. No one needs FEMA disaster relief, until the disaster affects them. No one needs the EPA until the oil spill ends up on their beach. No one need the FDA until the head of lettuce with e.coli bacteria ends up on their plate and they get sick. No one needs the fireman until their house is on fire. No one needs the police officer until their house has been burglarized. No one needs the teacher until it’s their child who is in the classroom with 40 students per teacher.
I believe it’s called hypocrisy, and all those people of whichever party who believe that government should stay out of their lives should be required to sign a waiver releasing the government from any liability for anything that happens to them because the fire department doesn’t come to put out the fire, or the police department doesn’t come to a movie theatre in their home town the next time some crazed person does an Aurora, etc.
Give me a break, get real and shut up about all the regulations. Review them and get rid of the outdated or useless ones, but stop whining about job killing, business killing, growth killing, innovation killing, and anti-competitive regulations. We all need them to protect us.
I am unaware of anyone affilliated with Consolidated Bank who has made those
whining arguments. It appears that Consolidated
drectors with the approval of its shareholders tok steps to address its issues within exisitng regulations.
If Premier and other successor institutions complaijn about regulators verbally assail them.
In most cases, the bad loans weren’t made but got that way with the deterioration of the businesses they were made to. If a company qualifies for a loan, a bank or other financial institution is there to loan them the money. had anyone had a crystal ball into this economic nightmare five years ago there are many things that many banks, business owners and government officiars would have done diffferently.
Not every bank that was eligible for the TARP did so, though I know first hand that they were highly encouaged to do so, because they did not want the government – who can barely manage itself – in its board rooms.
Bottom line – not all the regulations make sense in terms of helping small businesses prosper and ensuring banks have the money available to lend.