Fed tells Centrue to fix its practices
The Federal Reserve is telling Centrue Financial Corp. to fix its lending practices, write off bad loans and keep enough capital. The company, parent of Centrue Bank, was also forbidden from paying dividends to stockholders or interest on some subordinated debt without Fed permission.
The enforcement action, in the form of a written agreement with the bank, was announced Friday.
Centrue Bank lost $22 million in the first nine months of this year, and 8 percent of its loans were seriously behind in payments. That’s more than double the percent of problem loans at similar banks.
Centrue, with $1.3 billion in assets, is based in Clayton. It has four branches in the metro area, but most of its operations are in northern and central Illinois.
The agreement requires the bank to quickly write off loans that bank examiners had declared a loss unless the bank manages to collect on them sam day payday loan. The bank is banned from extending new loans to borrowers whose old loans were charged off as uncollectable. It must also give the Fed a plan for collecting on overdue loans or doubtful loans of more than $2.5 million.
Centrue was also told to improve its lending practices, and come up with compensation policies that don’t encourage excessive risk-taking.
In a news release, the bank said it has "aggressively taken steps" to address the examiners’ findings.