First Bank and Trust of New Orleans is currently operating under a consent order served by the FDIC. A consent order is an agreement with the regulatory agency requiring the bank to make changes to its practices and procedures. First Bank signed the consent order on July 9 and is required to raise capital ratios, revise loan policies, and eliminate problem loans or submit a plan to clear them, among other requirements. First Bank President and CEO Gary Blossman says the order came on the heels of a resolution by the board of directors to take action on the same issues. He says the order has had no impact on customer service or insurance, and little on deposits. “It has been more of a non-event,” Blossman says. “We are working through our problems, but it is a long-term process.”
Blossman says the bank is in the midst of a capital fundraiser, has rewritten loan policies and has made significant progress in their IT department since he came on board in January. A major challenge facing the bank is how to resolve problem loans made after Hurricane Katrina to neighborhoods that have not recovered the way the bank believed they would. The consent order does not mean that the bank is in danger of imminent failure, says Brian Andrews, an adjunct instructor of finance at LSU and contributor to Business Report. Rather, he says, it is part of an examination process that identifies bank weaknesses. The First Bank order does not call for a more active board of directors or a management study mandate, an indication to Andrews that the FDIC has “confidence in the abilities of the current management team.” —Emma James
