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Six months after Citizens Union Bank came under investigation by the state and federal regulators because of a series of problem loans, bank officials say they have made a number of changes, including hiring an interim CEO and eliminating about 10 jobs.
Darryl Traylor is the interim CEO and comes from First Farmers Bank in Owenton, a sister organization, where he served as president for seven years.
He succeeds Billie Wade, the bank’s CEO since 1991 who resigned after the announcement of the examination. Though Wade departed immediately, bank officials have said repeatedly that his retirement was not related to the inquiry.
Members of the board of directors who were contacted would not comment and referred all questions to the bank’s president, David Bowling. Bowling said the bank is undertaking a number of steps to address the concerns raised by the examination and a need to cut expenses.
Part of the terms of a “consent order,” filed against CUB Jan. 15 by the Kentucky Department of Financial Institutions and the FDIC, mandated that the bank undertake a management study, a procedure that has now been completed, said Charles A. Vice, commissioner of the Department of Financial Institutions.
He added that the bank was not required to take any specific actions regarding employee positions, a point that Bowling emphasized.
“The eight to ten jobs that have been eliminated at CUB branches in Shelbyville, Taylorsville, Louisville and Elizabethtown is not in response to the order; we are just trying to deal with the current economic crisis,” Bowling said. Including that of loan officer dealing with small business loans.
“This does not mean we are not making these types of loans anymore; we are still very much interested in those. It was just part of our restructuring,” he said.
Bowling said a loan officer position in Taylorsville also was eliminated and that regional managers were asked to assume some branch-manager positions.
Traylor said that CUB expects to complete its new organizational chart within the next few weeks. He added that, though it’s possible that more positions could eliminated before all is said and done, it’s not likely.
Bowling said that the bank plans to name a permanent CEO in the future, but Traylor said no search is under way.
Bowling said that the bank is working on resolving the problems that have led up to the consent order. “We are in full compliance,” he said.
Vice said that his office has been making site visits to the bank and will continue to do so until their economic situation is resolved, but he said he doesn’t know how long that will be.
“With the economy the way it is, two years ago, I would have said that a bank could be expected to be back on its feet within 18 to 24 months,” he said. “As long as we see them making a good faith effort, we will work with them.”
Vice said that such orders, which he called a “regulatory course of action,” are a joint action between the FDIC and his department designed to help prevent banks from getting into serious financial difficulty.
Traylor said one thing that he wanted to emphasize was that CUB has always been known for its commitment to the community, and he wants to reassure the public that the bank plans to continue that tradition.
“I remember right after Billie left that everybody was talking about all the wonderful things the bank has done in the community over the years, and I am confident that will continue,” he said. “That’s something that will never change.”