By Ed Nadolski
Editor in Chief
Burlington-based Fox River State Bank is now operating under a revised set of regulatory orders issued by the Federal Deposit Insurance Corporation and the state Department of Financial Institutions.
The consent order, which both sides agreed to in February, was formally announced by the FDIC Friday.
The new order extends regulatory oversight intended to improve the bank’s financial position and is, in many respects, an extension of the original order the bank agreed to in the fall of 2009.
Fox River President and CEO Keith Pollek, who was hired in 2009 with the goal of improving the bank’s performance, said its financial condition has improved markedly since that time.
“We’ve been able to start playing offense again,” he said during a recent interview. “We can help local individuals and businesses grow.”
However, Pollek admitted he believed the bank would have emerged from regulatory orders sooner.
“We’re in good standing, but until we get a good track record of income and reduce problem loans…(the regulatory oversight will remain),” he said.
The consent order, dated Feb. 11, includes 14 points, which, in general, require the bank to continue to improve management practices and capital standing, while at the same time reducing delinquent and substandard loans.
“Getting rid of the problem loans has been a long, slow process,” Pollek said, noting that much of the challenge is tied to loans the bank made outside its local service area in the mid 2000s.
“We were aggressive at a time when the economy was doing well and when the economy went south, we got caught,” he explained of the period before he joined the bank.
Fox River, which marked its 10th anniversary last summer, is the only bank headquartered in Burlington. Pollek said it was a management decision to focus on local deposits and service as part of its improvement strategy.
He said core deposits grew 46 percent (to $50 million) in the period from June 2010 to June 2013. In 2009, he said, 58 percent of deposits were from out of the area. That number is now below 6 percent.
The bank currently has $72 million in assets and $61.6 million in deposits, according to Pollek. He also touted the current makeup of its board of directors, which is dominated by local residents with long track records of community service.
In the regulatory order, Fox River is required to maintain a Tier 1 capital ratio of at least 9 percent. At the end of February, the bank’s ratio was 9.37 percent.
“We’re projecting a profit for the first quarter of this year and have strong reserves set up for the future,” Pollek said.
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