Colonial Bank sees tighter regulations
Increased federal regulations imposed Tuesday on Colonial Bancgroup will have little impact on local Colonial Bank customers, officials said.
“This (cease and desist) order we’ve received does not mean Colonial Bank has closed,” said Mary Tolbert, Communications Manager for Colonial Bancgroup. “It does not change existing customer accounts or loans, and deposits in our bank are still insured by the FDIC (Federal Deposit Insurance Corporation).”
The order from the FDIC and the Alabama State Banking Department comes after the bank group received an “informal memorandum of understanding” from the two oversight agencies late last year, calling for tighter banking regulations.
In that memorandum, Colonial Bank was told to boost capital and make other improvements. Tolbert said the Order to Cease and Desist formally lists several improvements the company needs to make, some of which have already been in the works.
Some of the biggest of those orders are to increase capital, decrease problem assets and diversify the loan portfolio.
In addition to that, Tolbert said the group has been told to evaluate management of the board of directors, increase board involvement in bank operations, review the allowance for loans and loss policy and review the liquidity and funds management policy.
“It’s a formalized document of the memorandum of understanding we received in December,” Tolbert said. “It has the exact same stuff in it.”
There is no timeframe for all the orders to be complete, but Tolbert said different items were given different target dates.
“We have taken certain actions already toward some of the points brought out in the Cease and Desist, and we’re working on others, as well,” Tolbert said.
Tolbert said this also will not prevent the bank from giving out loans, but it will keep tighter restrictions on lending policies.
“We are still making loans,” Tolbert said. “We are just making sure we make the right loans with good customers.”
Colonial Bancgroup operates 353 branches across the southeast and currently has more than $26 billion in assets.