An Aurora, Ill., community bank that has not turned a profit since 1999 and is under orders to raise capital has had talks with potential buyers, its president said.
Randal A. Wright, the president and chief executive officer of the $158 million-asset Continental Community Bank and Trust Co., declined Tuesday to name those with which its board has had discussions. He said its holding company, Continental Mortgage Corp., is also considering a stock sale to raise capital.
State and federal regulators have ordered the bank to boost its equity capital-to-assets ratio to at least 7%. The current figure is 4.97%, well below the 10% average ratio for commercial banks in its asset class, according to the Federal Deposit Insurance Corp.
Mr. Wright said Continental Community would need an infusion of at least $3.4 million to comply with the capital requirements but would need more to fund future growth.
"We have talked to a number of interested parties," he said. "Our holding company is evaluating what is in the best interest of the shareholders."
The Illinois Office of Banks and Real Estate and the FDIC hit Continental Community with a cease-and-desist order Jan. 9. The order said the 50-year-old bank's capital, earnings, and allowances for loan and lease losses were inadequate. It also faulted loan records and said the bank had too much noncore funding.
The bank is also under orders to create a written profit plan, add to its loan-loss reserves, and hire a consultant to review its management.
Its losses have grown steadily since 1999, when it earned $400,000. It lost $831,000 in 2002 and $2.4 million last year, when it charged off $3 million of commercial and industrial loans, 1,200% more than in 1999.
The order addressed problems uncovered in a regular examination in June, Mr. Wright said. The next month he was named president and CEO - he had been working for Continental Mortgage for a year to review the bank's loan portfolio - and a new chief lending officer was appointed. Last month the bank named a new chief financial officer.
Mr. Wright, a former commercial lender at Fifth Third Bancorp, said Continental Community had been working to correct the problems before the order and has made progress. "We have not identified any new problems since last fall," he said.
