Integra Bank Corp. said Monday that its banking subsidiary will not meet a Nov. 10 regulatory deadline to raise capital but that it has not stopped trying.
The Evansville, Ind., parent of Integra Bank reported a total risk-based capital ratio of 9.34% at Sept. 30 — an improvement from 8.33% at June 30 — thanks to branch and loan sales. But the $2.6 billion-asset bank fell short of satisfying its regulatory consent order, which required it to reach at least 11.5% to be considered well-capitalized. Its tier 1 leverage capital ratio of 4.31% at Sept. 30 was not close to an 8% mandate.
The Office of the Comptroller of the Currency had given the bank 90 days, expiring Nov. 10, to raise its capital ratios to the specified levels. The company said its bank has given the OCC a three-year plan describing how it will bolster its capital ratios but that it does not expect to do so by this month's deadline.
Meanwhile, Integra's management is pursuing alternatives including selling equity securities and realigning some of the bank's capital structure.
"We are having ongoing discussions with private investors, private-equity firms and others about investing in our company and look forward to announcing the results of those efforts at the appropriate time," Integra Bank Corp.'s chairman and chief executive, Mike Alley, said in the announcement. "Our goal is to be able to announce more definitive information on our capital plan initiatives during the fourth quarter."
Integra Bank has trimmed its portfolio and restructured in recent months.
It completed three rounds of branch sales in the third quarter, raising its total risk-based capital ratio by 101 basis points. The loan sales that were included also created a $10.5 million gain, mainly because the bank did not have to set aside a provision for losses in that portfolio.
Integra's total construction and land development loans, the sore spot in terms of capital and credit, fell 16.8%, to $139.6 million, during the third quarter.
Despite improvements in credit quality and capital, the bank had a net loss of $15.2 million in the third quarter, largely due to a $26.2 million provision for loan losses and $26.9 million in net chargeoffs, mostly driven by lower real estate valuations.
"The results for the third quarter were negatively impacted by the increased deterioration of valuations of commercial real estate, particularly for unimproved land held as other real estate owned," Integra Bank's executive vice president and chief credit and risk officer, John Key, said in the release.
The company's chief executive could not be reached for comment.
