The Federal Reserve Bank of Richmond has ordered Village Bank and Trust Financial in Midlothian, Va., to serve as a source of strength for its ailing bank subsidiary.
Under the order issued Thursday, the $551 million-asset company must "fully utilize [its] financial and managerial resources" to prop up its Village Bank, which has been has been operating under an enforcement order with its state and federal regulators since February.
Village Bank lost $10.5 million last year and $1.3 million in this year's first quarter, mostly on soured real estate loans. At March 31, nearly 13% of its loans were at least 90 days past due, compared to less than 4% a year earlier, and its total risk-based capital level was down more than 200 basis points from a year earlier, to 10.03%.
The order against the bank requires it to boost its capital levels and reduce its level of problem loans, among other things. The Fed order prohibits the holding company from paying dividends to shareholders without Fed approval and requires it to submit a capital plan to its regulators within 60 days.