The Federal Reserve Board has lifted a written agreement with Baylake Corp. that required the Sturgeon Bay, Wis., company to improve its asset quality and earnings.

The December 2010 order required the $1.1 billion-asset company to submit a plan to reduce its commercial real estate concentrations and improve its earnings for 2011. It also had to maintain an adequate allowance for loan and lease losses and could not pay dividends or repurchase stock without permission.

For the first quarter, Baylake's net operating income was $1.1 million, up 44% from a year earlier, while its core capital ratio totaled 8.74%, up from 8.30% a year earlier, according to the Federal Deposit Insurance Corp.

The written agreement was terminated last week. Baylake said in a news release Tuesday that it expects to enter into a memorandum of understanding with the Federal Reserve and the Wisconsin Department of Financial Institutions.

The Federal Reserve also said Tuesday that it had entered into written agreements with two community banks, ColoEast Bankshares of Lamar Colo., and First Trust of New Orleans, last week. Both orders require the companies to serve as source of strength for their banks.

Under the written agreements, ColoEast and First Trust cannot declare or pay dividends or repurchase stock without approval and maintain sufficient capital.

The $790 million-asset ColoEast also has to submit a statement with its planned sources and uses of cash for debt service, operating expenses and other purposes. The parent of Colorado East Bank & Trust had entered into a consent order with the FDIC in December.

The $793 million-asset First Trust also has to submit audits for its financial statements for 2010 and 2011. First Trust, the parent of First Bank and Trust, had entered into a consent order with the FDIC in July 2010.

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