Regulators have flunked a $21 million-asset bank in Wyoming on year- 2000 compliance.
Frontier Bank of Laramie County in Cheyenne was issued a cease-and- desist order by the Federal Reserve Bank of Kansas City and the banking division of the Wyoming Department of Audit. The regulators said the company was behind schedule in testing for year-2000 preparedness.
In addition, the regulators expressed concern over the bank's health and ordered it to charge off bad loans, strengthen internal control policies, and improve management oversight.
"We had some concerns, but they are not falling off the edge of the earth," said James H. Jonson, vice president at the Federal Reserve Bank of Kansas City.
Frontier is the second institution to be singled out for year-2000 problems.
The first was Putnam-Greene Financial Corp. in Eatonton, Ga., whose order was issued last November.
Frontier acknowledged that it is behind in preparing its computer systems for 2000.
Chuck Leffler, the newly hired president and chief executive officer at Frontier Bank, said it has hired a consultant to help correct the problem.
"We were not completely surprised," Mr. Leffler said.
To help settle year-2000 concerns, he said, the 14-year-old bank recently spent more than $20,000 for new computer equipment. The computer systems will be upgraded before yearend and testing would begin shortly thereafter, he said.
John McIsaac, president of Market Partners Inc. in King of Prussia, Pa., a risk management and financial consulting firm, said regulators are clearly tightening their grip as they complete their second round of year- 2000 examinations.
"They don't want the banks to become complacent," Mr. McIsaac said.
"They want to make sure the momentum is maintained."
Regulators said Frontier must appoint a senior manager to supervise its year-2000 readiness and must hire a full-time cashier and retain an independent accounting firm.