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Bank Ordered to Stop Risky Lending

FDIC issues cease & desist order to Mesilla Valley Bank

April 9, 2007


A New Mexico community bank has been ordered to overhaul its practices, management and board of directors. The bank is accused of risky lending.

Mesilla Valley Bank is installing new management, including a new president, a new CEO and a qualified senior lending officer, and changing its lending practices in accordance with a consent agreement with the FDIC and the director of New Mexico's Financial Institutions Division, according to the bank and the FDIC.

The bank, which didn't immediately respond to MortgageDaily.com's request for a statement, also has been reconstituting its board of directors to not include any bank officers, owners of more than 5% of outstanding stock and persons who are related by blood or marriage to such persons.

The FDIC, among other allegations, had charged the bank with refinancing loans to borrowers in weak financial positions, failing to obtain proper loan documentation, failing to obtain adequate collateral, failing to establish structured repayment programs and failing to obtain current and complete financial information.

The regulator also charged the bank, with operating with an excessive level of adversely classified loans or assets or delinquent loans and without a qualified senior lending officer.

The company advertises it is "the fastest growing community bank in Las Cruces." It reportedly started operating in 2000.

Under the agreement the bank reduced its level of "adversely classified assets" as of March 31 and is identifying, by type and amount, each problem or delinquent loan it was holding.

The risky loans cited by the FDIC include mortgages as well as other types of loans.

A federal register notice in 2004 indicated New Mexico First Financial Inc. was acquiring 44.36 percent of the voting stock of New Mexico First Financial Inc., "and therefore indirectly, Mesilla Valley Bank, Las Cruces, New Mexico."

Jerry DeMuth is an award winning journalist who has been reporting for four decades.

e-mail Jerry at [email protected]

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