HarVest Bank agrees to consent order with federal regulators

Posted: 2:21 pm Fri, August 27, 2010
By Ben Mook
Daily Record Business Writer

HarVest Bank has reached an agreement with federal regulators it hopes will restore the Gaithersburg-based commercial bank to financial health.

Under the terms of a consent order that was agreed to at the end of June and made public Friday, the bank agreed to a number of fixes to bolster its capital levels and reduce the number of bad loans on its books.

HarVest Bank CEO John P. (Jack) Hollerbach said the bank sees the consent order as a collaborative effort with regulators. The bulk of the planning called for in the consent order, including crafting a strategic plan for the bank and specific plans for raising capital and addressing bad loans, has already been completed, he said.

“We fully expect to work through this,” Hollerbach added. “We have a good, solid business and we expect to get back to full good health.”

A good portion of the troubled loans are from a portfolio of 93 residential mortgages HarVest Bank purchased from Countrywide Home Loans Inc. in 2006. HarVest is locked in a lawsuit with Countrywide over the portfolio, challenging how the loans were underwritten and alleging breach of contract and negligence.

HarVest Bank had $217 million in total assets at the end of March. They had $136.5 million in net loans at at the end of March, with 10.7 percent of the loans categorized as noncurrent.