Park Avenue Bank in New York must act immediately to boost its capital and improve its safety and soundness under a cease-and-desist order from state and federal regulators.

The New York State Banking Department said Friday that it had discovered numerous problems at the $478 million-asset Park Avenue Bank in a joint safety and soundness examination it conducted with the Federal Deposit Insurance Corp this past summer.

The two agencies issued an order Wednesday requiring the bank to improve its capital, earnings, and liquidity; hire a consultant to assess the performance of its management and board; strengthen board oversight; reduce its excessive concentration of brokered deposits, commercial real estate loans, construction loans, and adversely classified assets; and submit quarterly progress reports to the regulators, among other things.

Park Avenue Bank had a leverage ratio of 4.99% and a Tier 1 risk-based capital ratio of 6.41% as of Sept. 30, according to data from the Federal Deposit Insurance Corp. The order gives it 60 days to increase the leverage ratio to 8% and the Tier 1 risk-based capital ratio to 10%, levels that exceed the typical minimums regulators require for a bank to be considered well capitalized.

Park Avenue Bank posted a $2.1 million loss in the third quarter, compared to $1.3 million loss the year earlier, FDIC data showed. It also had a nonperforming loan ratio of 6.20% as of Sept. 30.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.