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Towson bank firm agrees to U.S. terms

The Baltimore Sun

Towson-based AmericasBank said yesterday that it has taken steps to maintain its financial soundness under an agreement with federal and state regulators.

The enforcement action, announced last week by the Federal Reserve Bank and the Maryland Division of Financial Regulation, calls on AmericasBank to address specific issues, such as operational oversight, credit risk management, asset improvement and allowance for loan and lease losses, among others. The bank operates Towson Community Bank in Towson and Annapolis Community Bank in Annapolis.

It is the first commercial banking company in the Baltimore area to come under a federal supervisory agreement in recent months. Suburban Federal Savings, a Crofton-based thrift institution, has been operating under federal oversight since March.

Lee Warner, AmericasBank board chairman, said in an interview yesterday that the bank has addressed some of the issues, including hiring an outside consultant to review the bank's loan loss reserve. The consultant has gone over 70 percent of the bank's loan portfolio, and the bank remains confident that it has taken enough reserves, Warner said.

Moreover, the bank has revamped its loan review procedures, Warner said. And it is in the process of raising $3 million to $7.5 million in additional capital through a private placement, a move it hopes to complete in the fourth quarter, he said, adding that the bank is well-capitalized.

"There is nothing on that list that the bank doesn't completely agree with or has not already addressed," Warner said. "And in that sense, it's a nonissue; it's a list of sound business practices that we already had on our list going back to January of this year."

Acting Chief Executive Officer A. Gary Rever said customers will not see any service disruption.

The bank has been hurt by turmoil in the mortgage lending business.

At the end of January, the company announced it would take a $2.9 million loan loss provision to cover the partial write-down of five loans, including three residential construction loans made to a group of borrowers who might have committed fraud. Without going into details, Rever said the bank is looking into its options to resolve the situation.

In May, the company dismissed its chief executive.

For 2007, AmericasBank reported a net loss of $2.3 million, or 86 cents per common share, compared with a net loss of $431,000, or 18 cents per common share for 2006. The company blamed the losses on its dependence on mortgage lending.

The bank has been working to expand into commercial and industrial loans to diversify its portfolio, Rever said.

In July, the bank decided to stop originating mortgage loans through brokers and voluntarily delisted its common stock from Nasdaq.

Under the enforcement action, AmericasBank agreed to submit plans that would strengthen board oversight of the bank's management and operations; manage credit risk; and maintain sufficient capital.

The bank also agreed to not extend or renew any credit to any borrower whose loans have been charged off by the bank or classified as "substandard" by the Federal Reserve and Maryland Division of Financial Regulation. And it agreed to submit a plan to obtain repayment, amortization, liquidation or other recovery on each problem loan or asset worth more than $200,000.

Moreover, the bank is forbidden from paying dividends without regulatory approval.

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