First State Bancorp. in Albuquerque confirmed that its banking subsidiary was in discussions with potential investors about a recapitalization.
First State, the parent company of First Community Bank — the largest deposit holder based in New Mexico — said Thursday that the potential capital-raising effort was "in response to inquiries."
The $2.6 billion-asset First Community, in Taos, N.M., was significantly undercapitalized on June 30, with a total risk-based capital ratio of 5.13%. The company reported a consolidated ratio of a negative-2.07% in the second quarter.
Once an active buyer, First State said a year ago that it had hired Keefe, Bruyette & Woods Inc. to help it explore strategic alternatives, including a sale.
Since the end of last year First State has cut its assets by 4.3% and reduced total loans by 12.7%, to $1.76 billion as of June 30.
It said First Community "is committed to developing a plan to assure that the bank is well capitalized" in keeping with regulatory requirements. First State provided no assurance, however, that such a plan or recapitalization would be completed.