Regulators order Ann Arbor-based Michigan Commerce Bank to seek sale or merger
Michigan Commerce Bank - a collective of 11 banks reorganized in 2009 under the charter of Ann Arbor Commerce Bank - is now operating under a consent order to correct “unsound banking practices.”
Among the requirements issued by federal and state banking regulators: The bank must plan to sell itself or merge into an institution that is not controlled by Capitlal Bancorp, its Lansing-based holding company.
The order was issued March 31 and released today by the Federal Deposit Insurance Corp. in Washington and the state’s Office of Financial and Insurance Regulation in Lansing.
According to the April 5 consent order, “the FDIC and the OFIR considered the matter and determined that they had reason to believe that the Bank had engaged in unsafe or unsound banking practices and violations of law, rule or regulation.”
Within 90 days of the order, the bank “shall have and retain qualified management,” according to the order.
The new management, according to the order, must be capable of restoring “all aspects of the bank to a safe and sound condition” in areas including earnings, liquidity and management effectiveness.
Borrowers from any of the Michigan Commerce Banks who are not current on their loans also will face changes: According to the order, the bank no longer will be able to delay payments, charge interest-only to extend loans or otherwise keep that debt on its books.
Michigan Commerce Bank, based locally at the corner of South State and Eisenhower, had $705 million in deposits as of June 30, 2009, according to FDIC filings. Of that amount, about half - $344 million - was from the Ann Arbor office, which ranked seventh in Washtenaw County banking market share as of that date. It held 5.69 percent of local deposits.
Local representatives from the bank were not available to comment this morning. Calls to the Lansing office have not yet been returned.
Other Michigan Commerce Bank offices are located in Auburn Hills, Brighton, Detroit, Grand Haven, Holland, Kentwood, Macomb, Muskegon, Farmington Hills and Portage.
Capital Bancorp, with offices in Lansing and Phoenix, is a bank development company that focuses on establishing new community banks. It operates in 16 states.
In summer 2009, Capital Bancorp said in a public filing that it intended to spinoff Michigan Commerce into a separate entity but had not yet received regulatory approval. At that time, Michigan Commerce had consolidated assets of $1.2 billion and about 1/3 of the holding company's total nonperforming assets.
Read a pdf version of the order here.