Colombo Bank In Deeper Trouble
Jan 26, 2011 14:52 - 1 Comment
Rockville Central friend Sean Carr alerted us to an article in The Daily Record concerning the continuing problems with Colombo Bank’s operations.
Although Colombo Bank began its history 96 years ago in Baltimore’s Little Italy, its headquarters moved to Rockville in 2002. Currently the bank has four locations: one in Baltimore, two in Montgomery County, and another in Washington, D.C.
Last Friday, federal regulators issued a second cease-and-desist order related to the bank’s operation. Already facing a June hearing for its loan practices loan including the underwriting and capital levels required to cover bad loans, Colombo must now deal with another order.
A cease-and-desist order is one of the strongest enforcement actions the Office of Thrift Supervision can take. The holding company’s board agreed not to make any “golden parachute” payments to officers as well as abide by restrictions on buying or redeeming shares of stock without written permission from the OTS. This is the third cease-and-desist order in the last seven years and it doesn’t bode well for the Bank’s ability to survive.
The Daily Record article provides the financial background:
According to the Federal Deposit Insurance Corp., as of Sept. 30, 2010, Colombo Bank had assets of $169.7 million, compared with $169 million the prior year. The bank also reported a $2.39 million loss for the quarter, compared with a $2.01 million loss for the same quarter in 2009.
The article also points out the management difficulties:
Colombo also needs to have an approved management plan in place, according to the orders. Former Colombo CEO Lester Johnson resigned in 2010 and the bank has not named a new chief executive.
Washington developer Morton Bender is the majority shareholder and chairman of the board at Colombo.
Without more capital from the primary shareholder, the bank could be forcibly closed. Considering its balance sheet, it continues to be a bad prospect for a merger.
Hmm…what’s the next 3 day federal holiday weekend? The Friday before one of those is usually when FDIC rolls into bad banks, shuts them down, and holds a shotgun marriage to a more stable institution. Washington’s birthday is in a few weeks….hmm…
I heard old Mr Potter will give customers 50 cents on the dollar. But remember - your money’s in Bill’s house and Fred’s house — albeit these days through a complicated set of swindles called MBSs, CDOs, and credit-default swaps.