Posted on Sat, Oct. 17, 2009

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Regional bank enters regulatory agreement

BY JERRY SIEBENMARK

The Wichita Eagle

A Junction City bank with four branches in the Wichita area has entered into a formal agreement with its regulator, the Office of the Comptroller of the Currency.

The OCC, regulator of nationally chartered banks, disclosed the enforcement action against Central National Bank on Friday — though the agreement was entered into Sept. 17.

The 24-page agreement said Central National "has engaged in unsafe or unsound banking practices relating to its board and management oversight, strategic planning, credit administration and credit risk management."

Robert Munson, a director of the $850 million bank and president of its Junction City market, said the agreement follows a year in which Central National posted a $3.7 million loss in 2008.

"2008 was quite a difficult year for all banks in general," he said.

Central National was hit with a 2008 loss primarily because of higher loan loss provisions and a drop in the value of the bank's mortgage servicing rights.

"We're going to do what they ask and move ahead," Munson said Friday.

He said the agreement with the OCC was based on an examination of the bank in the spring. Since then, Munson said, the bank has increased its reserves, raised its capital to $86.5 million and reversed its loss to earnings of $4.9 million in the first nine months of 2009.

"We actually think we're well positioned for the future," he said.

As of Sept. 30 the bank had a total risk-based capital ratio of 14.7 percent and Tier 1 risk-based capital ratio of 13.4 percent, Munson said.

Federal regulators generally consider a bank to be well-capitalized when it has a total risk-based ratio of 8 percent or more and a Tier 1 risk-based ratio of 6 percent or more.

Central National has 38 branches in Kansas and Nebraska. In the Wichita area, it operates branches in Halstead, Hesston, Newton and Wichita, at 4838 W. Central.

Reach Jerry Siebenmark at 316-268-6576 or jsiebenmark@wichitaeagle.com.

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