PAB Bank receives corrective action directive
The Park Avenue Bank has entered into an agreement with The Federal Reserve to take corrective action to increase the bank’s equity through the sales of shares or contributions, or enter into and close a sale of the bank to another depository institution holding company.
Park Avenue Bank, based in Valdosta, Ga., has a main Bainbridge branch at the corner of Broad and Shotwell streets and a drive-through branch on Shotwell Street near Harvey’s in Bainbridge.
Current depositor accounts are not affected, and all deposits remain insured up to $250,000.
The board of governors of the Federal Reserve System in Washington, D.C., issued the directive to Park Avenue Bank to take corrective action no later than 90 days of the date of the directive.
Citing the directive, the Federal Reserve has deemed the bank to be “significantly undercapitalized.”
The order, known as a prompt corrective action, was signed by Bank President and CEO Donald J. Torbert Jr. and Robert deV. Frierson, deputy secretary of the Board of Regulators on Nov. 30, with an effective date of Dec. 13.
The bank had submitted a capital restoration plan dated Oct. 29, describing specific actions necessary to raise capital. That plan was acceptable to the board of governors and the board has deemed the actions of the prompt corrective action directive as necessary to carry out the plan.
Some of PAB’s troubles have been tied to loans made to metro-Atlanta real estate developer, Thomas D. Reese, who was planning a massive development near Peachtree City before the housing market crash. It was being financed with tens of millions of dollars in bank loans from several banks, one of which was PAB’s Athens-based bank.
The order also said the bank is restricted from making any capital distributions, including, but not limited to, the payment of dividends to those holding stock in the bank.
On Sept. 8, PAB Bankshares, which controls Park Avenue Bank, received notice from the Nasdaq Stock Market because the company’s common stock, PABK, was less than $1 per share for 30 consecutive days. Although the stock is still listed, opening at 55 cents on Friday, PAB has until March 7, 2011, to regain compliance with Nasdaq’s Bid Price Rule. To do so, the stock would have to close above $1 for 10 consecutive days.