Less than five months after Wilton Bank assured shareholders it was weathering the recession in stable if not stellar shape, the Federal Deposit Insurance Corp. placed the tiny bank on a watch list due to a potential pickup in problem loans.
With just a single branch office, Wilton Bank is among the smallest doing business in Connecticut, but its CEO, Nicki Brown, is known in national banking circles. She served a three-year term as a director of the American Bankers Association while chairing ABA”™s community banking council. Before joining the Wilton Bank in 1986, Brown ran two-dozen bank branches in Fairfield County operated by Hartford National Corp.
In March, the bank had assured shareholders that its capital ratios were nearly double that of the federal standard, but even while reiterating Wilton Bank”™s commitment to small business Brown acknowledged implementing more stringent underwriting standards, also noting that loan demand had dropped. And for the first time in its two-decade history, Wilton Bank suspended its annual dividend to shareholders, and chose not to extend a stock repurchase plan that had expired in August 2009.
“I think the most important thing about the Wilton Bank is that for years we have anticipated a market correction, and that is reflected in our capital ratios,” Brown said in an interview with the Fairfield County Business Journal. “Did we ever know that the economy would be so bad for such a long period, and be such a deep recession? No. But we accumulated the capital.
“It”™s terribly embarrassing because we have been such a high performing bank, but all community banks have been struggling,” she added.
As of June 30, Wilton Bank had $61 million in loans outstanding, with about $27 million issued for residential construction projects. In the first half, Wilton Bank had charged off just $600,000 in loans, or 1 percent of all loans outstanding, which is a better record than the state average.
As of that date, the loans listed by the bank as being in non-accrual included more than $8 million in which payments are current, but which the bank deemed could become troubled looking at borrowers”™ cash flow against future payments due. Those loans are secured by real estate.
In 2009, the bank reported a net loss of $1.7 million, which it attributed to adding $3.2 million to its reserves for loan losses. The company cleared the credit-crisis year of 2008 with a profit of just under $300,000; in 2007 net income totaled $1.7 million.
In its FDIC agreement, Wilton Bank did not admit or deny any lapses that might place the bank in jeopardy, but nevertheless agreed to reduce its exposure to construction and development loans. The bank also brought on an outside consultant to make recommendations on improvements in its operations, personnel or lending policies.
Wilton Bank”™s chairman is Ralph Slater, a Ridgefield resident who is partner in the law firm of Gregory & Adams P.C. and a past president of the Wilton Chamber of Commerce. At last report, the bank”™s largest shareholders are Christopher Lavin of the Wilton-based property management company MCL Ventures; and MCL colleague Lauren Ruttkamp, who is on the bank”™s advisory board.
Bank rules bar officers and directors from obtaining loans from Wilton Bank, save for a negligible amount of overdraft protection credit.
