Bank turnarounds are CEO's specialty
Directors of the troubled Rocky Mountain Bank & Trust have hired a longtime executive who specializes in turning around struggling financial institutions, including Vista Bank in Colorado Springs, as the bank’s chairman and CEO.
Everett Covington took over both posts July 19, though state and federal regulators must still approve the appointment. He replaced Marty Burelson, of Florence, as chairman and Doug McClure, who remains president. Covington previously had been working for an accounting firm in Chicago under contract with the Federal Deposit Insurance Corp., but said he resigned in March because of the job’s travel demands.
“I know of Everett Covington and his reputation and background. I am pleased he has joined the bank. He has a lot of good experience and expertise that he can bring to bear,” Colorado Banking Commissioner Steve Strunk said.
The 38-year banking-industry veteran was brought in as Vista Bank’s CEO in 2001 by directors amid mounting losses, and helped sell the bank in 2002 to Adams Bank & Trust, a Nebraska institution that pumped more than $5 million into Vista to return it to health. Covington retired from Adams Bank & Trust in 2007 but was recruited shortly afterward by directors of First Bank of Idaho to lead a turnaround for the troubled bank, which failed last year.
Rocky Mountain has been operating under a cease-and-desist order with the FDIC since April 2009 that limits lending and dividends payments and requires the bank’s owners to come up with additional capital, strengthen management and reduce problem loans and large deposits.
Although Rocky Mountain is chartered in Florence, most of its officers are based in Colorado Springs, and most of its deposits and lending are in the Springs area.
The bank reported that 23 percent of its $50. 6 million in loans were delinquent or not accruing interest as of June 30, more than four times the national average. The bank also reported that much of its $82.1 million securities portfolio is made up of mortgage-backed securities that are no longer rated at investment grade. Rocky Mountain’s capital reserves equal just 5.5 percent of its assets, compared with the 9 percent level the FDIC ordered the bank to reach.
“They contacted me a couple of months after I left my previous position to provide my expertise and experience in working with regulatory agencies and getting rid of the bank’s problem assets,” Covington said. “There is always the possibility that things won’t go right, but hopefully we can turn this around. We are making some progress — the bank was profitable in August and we sold our largest piece of foreclosed real estate,” a Broadmoor-area mansion.
As part of the bank’s turnaround plan, Covington said Rocky Mountain also during the past year has sold off more than $30 million of its mortgage-backed securities, shrunk its loan portfolio by $17.5 million and reduced deposits in the bank by an Oklahoma company from more than $100 million to about $5.5 million to comply with a part of the FDIC order that no more than 10 percent of its deposits come from any single depositor.
“I am happy with the progress we have made. We’re not ready to declare victory. This is a difficult situation that will take a lot of work, probably at least two years,” Covington said. “But I wouldn’t be here if I didn’t think there was a possibility of success.”
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