The Federal Reserve Bank of Kansas City has ordered Hastings Bancorp Inc. in Nebraska to suspend dividend payments to preserve its capital, and not take on any more debt.

The agreement with the Fed followed cease-and-desist orders issued June 24 by the Federal Deposit Insurance Corp. for "unsafe or unsound banking practices."

Capital levels at its $173 million-asset Hastings State Bank have fluctuated of late as the bank has boosted reserves to cover loan losses. According to FDIC data, the bank's total risk-based capital ratio was 9.39% at June 30 — more than twice what it was six months earlier but below what would be required for the bank to be considered well capitalized. In the second quarter total nonaccrual loans increased 320% from a year earlier, to $2.7 million. Loans 90 days past due increased 418%, to $3.95 million.

The enforcement order, dated Sept. 10 and released Friday, prevents Hastings Bancorp from paying dividends or making other payments that would cause a "reduction in capital" from its bank subsidiary without approval by the regulators.

The agreement also bars the company from incurring, increasing, or guaranteeing any debt. It has 60 days from the order's date to submit a plan detailing sources and uses of cash for the rest of the year.

Cash flow projections for each subsequent year will also need to be filed.

In late July, Hastings hired Thomas Fausch as its president and chief executive. Mr. Fausch said Tuesday that his company has tightened lending standards and has launched an aggressive deposit-gathering campaign.

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