Blue Ridge Savings runs afoul of feds

Asheville-based Blue Ridge Savings Bank, chaired by former Congressman Charles Taylor, is seeking to right its ship after the Federal Deposit Insurance Corp. recently ordered the institution to stop an array of “unsafe and unsound” banking practices.

Bank blues: Federal and state bank regulators have ordered Blue Ridge Savings Bank to cease a series of “unsafe and unsound banking practices.” Former U.S. Rep. Charles Taylor of Brevard chairs the bank’s board. File photo by Jonathan Welch.

The bank’s depositors are not at risk, however, according to the FDIC, which insures accounts up to $250,000.

Though the allegations remain devoid of details, the charges sound severe. The FDIC and N.C. Commissioner of Banks allege in a 25-page cease-and-desist order that the $298 million-asset bank engaged in a series of practices (13 to be precise) that put the bank at risk. Among them: inadequate board supervision and management; operating with a large volume of poor-quality loans; operating with “hazardous” loan underwriting and administration; operating in a manner as to produce low earnings; operating with inadequate allowance for loan and lease losses; and failure to adhere to numerous provisions of the Bank Secrecy Act, a federal law that requires banks to assist the government to detect and prevent money laundering.

The order was filed in November but only recently made public. The bank neither admits nor denies it did anything wrong; however, in recent weeks, bank officers have evidently already made haste to correct the situation and comply with the order. The bank issued a statement saying its board “is committed to complying with the Order and operating a safe and sound institution. The Board of Directors proactively, prior to issuance of the order, implemented an action plan that was shared with the regulators and embraced by the management team to address the contents of the Order.”

The order against the bank also comes on the heels of an independent analysis from the Florida-based bank-rating agency Bauer Financial, which gave Blue Ridge a two-star, or “problematical,” safety rating based on the bank’s quarterly reports to regulators. The bank is one of only a handful in the state to receive such a low rating.

To regain favor with regulators, the FDIC has ordered Blue Ridge undergo numerous reforms. Those include beefed up board training and retention of an independent third party to assess the bank’s management as well as its staffing needs. The bank also will be obligated to inform regulators and seek approval for any new board members or senior-executive hires. Further, it must develop a plan to correct a wide array of lending practices and credit rules that have resulted in millions of dollars in bad loans, largely commercial and construction loans.

To read the FDIC order, go to The Xpress Files at www.mountainx.com/xpressfiles.

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