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July 6, 2010

Border Trust plans recapitalization

By The Mainebiz News Staff

Augusta-based Border Trust is laying out plans to boost its capital, including receiving a loan from a private investor, in order to meet federal requirements as part of a cease-and-desist order.

President and CEO Earle Harvey told the Kennebec Journal an unnamed, longtime customer will join the bank's board and offer its holding company, Border Bancshares, a loan of an unspecified amount. The bank also plans to complete the sale of its Jackman branch to Skowhegan Savings Bank by the end of the summer, relinquishing $22 million in deposits and $15 million in loans. The sale, already approved by the Maine Bureau of Financial Institutions and the U.S. Department of Justice, awaits approval from Federal Deposit Insurance Corp.

Border Trust has operated under the cease-and-desist order from the FDIC since last August, which ordered the bank to evaluate its management personnel, reduce its delinquent loans and expenses, and improve earnings. The bank, however, missed the order's March 31 deadline to boost its three measures of capital -- Tier 1 leverage, Tier 1 risk-based and total risk-based capital -- to 8%, 8% and 10% of assets, respectively, instead reporting ratios of 4.2%, 6.5% and 7.6%, according to the paper. No penalties will be levied on the bank for missing the deadline, Harvey said, adding that its recapitalization plan should show results by September.

Border Trust has $81 million in assets and branches in Augusta, South China and Topsham, according to the paper.

Go to the article from the Kennebec Journal >>

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