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Eastern Shore bank ordered to find buyer or merge

Federal Reserve

Federal banking regulators have ordered an Eastern Shore bank to take measures to establish adequate capital levels, which could include finding a buyer, merging with another institution or selling shares, among other options.

The Bank of the Eastern Shore has 60 days to comply with the prompt correction action issued this week by the Federal Reserve Board, which found the institution undercapitalized at the end of April.

The order said that the Cambridge-based bank reported a net loss of almost $3.2 million at the end of June from December 2010 and that its equity capital declined to $7.7 million from $10.9 million.

Last year, the bank entered into an agreement with the Federal Reserve and the Maryland Commissioner of Financial Regulation to shore up its operations, including strengthening its credit risk management and its capital levels.

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