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.