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State, Waterman bank enter into consent order

Published: Friday, June 1, 2012 5:30 a.m. CDT

WATERMAN – The Waterman State Bank has entered into a consent order with the Federal Deposit Insurance Corporation on concerns of “unsafe and unsound” banking practices.

The agreement, which was entered into in April and released as part of an Illinois Department of Financial and Professional Regulation discipline report Thursday, requires the bank to adjust its capital, asset and loan policies in the coming months.

The consent order focuses on reducing the bank’s risk by setting benchmarks for the amount and type of capital the bank must maintain and reducing “substandard” assets by collecting, charging off, selling or improving the quality of those assets. The bank also will be prohibited from making certain loans and must gain state approval on lending policies, loan administration and risk monitoring plans and before declaring or paying any dividend.

The order also calls for the bank to set up an account relationship with the Federal Reserve Bank of Chicago to exchange and settle payment transactions through a clearing account balance.

Jeff Weber, senior vice president of the bank, said Waterman State Bank has not handled an increase in foreclosures, but did say, as with many financial institutions, the struggling economy has hurt. Without divulging details, he said the consent order is a road map for the bank to follow to address some of the problems and said customers should not see a difference in day-to-day operations and services.

“We’re fully committed to working out the issues that are part of the order,” he said.

Susan Hofer, spokeswoman with the Department of Financial and Professional Regulation, said she was not able to discuss the issues surrounding the bank beyond the consent order.

According to the FDIC website, as of March 31 the bank had $45.5 million in total assets and $41.4 million in total liabilities.

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