Select Bank in Grand Rapids, Mich., has been hit with a cease-and-desist order that requires it to improve underwriting, boost loan-loss provisions, and reduce its reliance on brokered deposits.
The $137 million-asset bank, a subsidiary of the $353 million-asset Harbor Springs Financial Corp., lost $2.5 million in the first three quarters of this year after reporting earnings of $654,000 for the same period last year, according to Federal Deposit Insurance Corp. data.
More than 5.5% of Select Bank's loans were past due as of Sept. 30, and more than 58% of its deposits were brokered.
In the order, issued by the FDIC and the Michigan Office of Financial and Insurance Regulation in August and made public last week, Select Bank agreed to establish "acceptable" guidelines for the collection of delinquent credits, reduce delinquencies within 12 months of the order, and establish a specific contingency funding plan.
