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Trinity Capital Corporation, the parent company of Los Alamos National Bank, reached an agreement with the Federal Reserve Bank of Kansas City, to develop a plan to provide financial support to the bank and maintain sufficient capital.
The written agreement, signed Sept. 26, between the two entities bars Trinity from paying dividends or incurring additional debt without the Fed’s approval.
“We entered into the agreement with the federal bank last week,” LANB president Steve Wells said. “The agreement also requires Trinity and LANB to abide by a Nov. 30 agreement between the bank and the Office of the Comptroller of the Currency. That agreement called for the bank to review its management team and credit underwriting and administrative policies."
According to Wells, the OCC was concerned that LANB overextended itself on $5.5 million in loans that were spread out amongst seven customers. The bank extended the loans into 2012. The OCC’s opinion was that the bank should have called in the loans in 2011. Wells said the bank has about $1.2 billion in total loans.
“They have requested us to recognize our risks in the time that it should be recognized and we don’t disagree with that,” Wells said. “We understand the intricacies of the regulations and that we weren’t in alignment.”
In January 2010, LANB signed an agreement with OCC in which it was required to review and revamp its commercial real estate loan procedures.
Wells said that the bank still is in the process of restating its financial statements from 2010 to 2012.
“We are working hard on those,” Wells said. “It is a large and complex task to do all the accounting changes and make sure they are in the proper period. I can’t say when they will be done. We take any regulatory requirements very seriously.”
The agreement between LANB and the federal bank had the following stipulations:
• Trinity shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation (the “Director”) of the Board of Governors.
• Trinity shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Reserve Bank.
• Trinity and its non-bank subsidiaries shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.
• All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice of deferral on trust preferred securities.
• Trinity and any non-bank subsidiary shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank.
• Trinity shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.
The Federal Reserve Bank of Kansas City serves the Tenth Federal Reserve District, which includes western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico.