TierOne Corp. of Lincoln, Neb., has entered into a supervisory agreement with its regulator that calls for the company to strengthen its loan policies and keep an elevated level of capital.

In a press release issued late Thursday, the $3.2 billion company said that the agreement with the Office of Thrift Supervision was in response to its previous performance and the need to "address the current economic environment facing the banking and financial industry."

The agreement requires TierOne to review and revise as needed policies regarding underwriting, classifying loans, allowance for loan losses and management oversight. It also calls for the TierOne Bank subsidiary to maintain a minimum core capital-to-assets ratio of 8.5% and a minimum total risk-based capital ratio of 11.0%. Those levels exceed the normal requirements which call for core capital to be at least 5% and risk-based capital to be at 10%.

At Sept. 30, TierOne Bank's core capital was 9% of assets and risk-based was 11.4% at the end of the third quarter. The holding company infused the bank with $29.1 million in the first 10 months 2008 to help it absorb losses from problem construction and development loans.

TierOne Corp. lost $71.5 million in the first nine months of the year, compared to earnings of $6 million for the same period a year earlier. Its nonperforming loans totaled 5.08% of total loans in the quarter.

The company said in the press release that it has already taken steps to comply with the provisions laid out in the supervisory agreement.

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