AmericanWest Bancorporation officials said Friday they are complying with a set of changes included in a “cease and desist” order being issued by the Federal Deposit Insurance Corporation and the Washington Department of Financial Institutions.
The order resulted from a routine FDIC audit of Spokane-based AmericanWest Bank conducted last fall.
A bank press release Friday listed five of the conditions, some of which have already been addressed, said AmericanWest CEO Patrick Rusnak.
They include: raising more capital and improving its capital ratios; aggressive correcting of problem assets related to construction and development loans; reducing the total amounts of brokered deposits issued; focusing on expense reductions through consolidation and reduction of workers.
Some of those areas have been addressed already, noted Rusnak in Friday’s press release.
For instance, brokered deposits — essentially certificates of deposit for short-term investors — have been reduced from $240 million in mid-2007 to $27 million today.
Such brokered deposits are considered non-core assets, as investors can quickly move or shift them from bank to bank.
The FDIC has issued more than 90 bank cease and desist orders in the first quarter of this year, said Kelly McPhee, a bank spokeswoman. Three other Washington banks have been in that group.
McPhee said the cease and desist order was no surprise, and reflected a collective agreement by bank officers and regulators to address concerns facing AmericanWest.
The next step, said McPhee, will be addressing all the respective action items, and each action item in the agreement has a different deadline. Some of the time targets are 60 days in length, others are shorter or longer.
“And ‘deadlines’ is too strong a word. It’s more of a fluid process … where we must show progress toward goals (in the agreement),” said McPhee. “We have every intention of meeting every item by the timeline.”
Friday’s release also noted the agreement with the FDIC specifies the bank will obtain prior regulator approval before paying any cash dividends or appointing or hiring any senior level executive officers.
Once a bank completes the list of goals outlined in the order, the FDIC removes the cease and desist order.
“What we want people to know,” said McPhee, “is this does not change how we do business or how we deal with our customers.”