Federal regulators have ordered Community Resource Bank of Northfield, Minn., to strengthen its loan portfolio and ensure that it has adequate capital. The 132-year-old bank, which has $240 million in assets, must improve its loan review process and reduce its delinquent loans that have balances exceeding $500,000. The bank also was told to come up with a plan to "maintain sufficient capital."
Update: 01/27, 6:50 am: 15-page PDF: Written Agreement by and among NORTHFIELD BANCSHARES, INC. Northfield, Minnesota COMMUNITY RESOURCE BANK Northfield, Minnesota and FEDERAL RESERVE BANK OF MINNEAPOLIS Minneapolis, Minnesota
… But the bank appears to have a healthy cushion to absorb these loan losses. Unlike many banks that have been hit with regulatory actions, Community Resources’ equity — or its cushion against future loan losses — has improved during the economic downturn… Kuehnast, the bank’s CEO, said most of the loan problems are confined to commercial real estate, primarily loans to small businesses backed by property they own. The bank, he added, did not get swept up in the housing boom; construction and development loans represent only a small portion of the bank’s overall balance sheet.