Nuestro Banco must halt 'unsafe' practices

Staff WriterApril 24, 2009 

Nuestro Banco, the first bank chartered in the state that focuses on the Hispanic community, is being pressured by regulators to turn around its operations. A cease-and-desist order issued by state and federal regulators, made public today, requires the Garner bank to halt "unsafe and unsound banking practices and violations."

Nuestro Banco, which opened its first and only branch in Garner in the fall of 2007, consented to the order without admitting or denying any unsafe practices or violations of law or regulations, according to the order issued by the Federal Deposit Insurance Corp. and the state Commissioner of Banks. The order was issued March 12 but wasn't previously made public.

Tom Caffrey, who took command of Nuestro Banco's operations after president and CEO David Flores resigned in October, couldn't immediately be reached for comment.

The last time that a Triangle-based bank faced a cease-and-desist order was 2007, when Mutual Community Savings Bank of Durham was in regulators' crosshairs. A few months later Mutual Community agreed to be acquired by the corporate parent of crosstown rival Mechanics and Farmers Bank, a deal that combined two of the nation's oldest black-owned financial institutions.

Nuestro Banco lost $3.3 million last year and $2 million in 2007, according to the FDIC. The bank had $16.8 million in assets as of Dec. 31, up from $14.4 million a year earlier.

The cease-and-desist order calls upon Nuestro Banco, among other things, to stop:

-- "Operating with management whose policies and practices are detrimental to the bank and jeopardize the safety of its deposits."

-- "Operating with hazardous loan underwriting and administration practices."

-- "Operating with inadequate allowance for loan and lease losses" and with an "inadequate" loan policy.

The order also requires the bank to come up with a strategic plan to improve its operations.

david.ranii@newsobserver.com or 919-829-4877

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