Park Avenue Bank in New York said Tuesday that its board members and other investors recently gave it a $25 million cash infusion.
The $495 million-asset bank, which was ordered last month to maintain higher capital ratios, said its president and chief executive officer, Charles Antonucci Sr., personally contributed $15 million, on top of his previous $6.5 million investment.
"These investments place the Park Avenue Bank in a sound financial position," Donald G. Glascoff Jr., the bank's chairman, wrote in a letter to customers posted on the bank's Web site.
As a result the bank withdrew its application to participate in the Treasury Department's Troubled Asset Relief Program, he wrote.
In a cease-and-desist order issued Feb. 11, the New York State Banking Department and the Federal Deposit Insurance Corp. gave Park Avenue Bank 60 days to increase its leverage ratio to 8% and its Tier 1 risk-based capital ratio to 10%. Typically regulators require a leverage ratio of 5% and a Tier 1 risk-based capital ratio of 6% for a bank to be considered well capitalized.
Park Avenue Bank did not specify Tuesday what its capital ratios would be with the recent infusion. It had a leverage ratio of 4.47% and a Tier 1 risk-based capital ratio of 5.64% as of Dec. 31, according to data from the FDIC.
The bank narrowed its loss to $2 million in the fourth quarter, from $7.8 million a year earlier, the data showed. It also had a nonperforming loan ratio of 7.23% at yearend.
Glascoff conceded in his letter that the bank has been under stress, but said it is committed to helping business customers grow.
"There can be no question that the current financial climate has caused significant hardship to many in our community. Indeed, I would be remiss not to say that our bank also has been impacted," he wrote. "However, through our significant investments, our close cooperation with the regulators and our new strategic plan focused on customer service, risk management and operating controls, we have taken those necessary steps to strengthen our capital structure and overall business."
Besides boosting capital, the order requires the bank to improve its earnings and liquidity; hire a consultant to assess the performance of its management and board; strengthen board oversight; reduce its concentration of brokered deposits, commercial real estate loans, construction loans, and adversely classified assets; and submit quarterly progress reports to the regulators, among other things.