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Liberty Bank told to cease commercial real estate loans for now

Liberty Savings Bank under federal scrutiny

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By Tim Tresslar, Staff Writer Updated 1:53 AM Tuesday, October 27, 2009

DAYTON — Liberty Savings Bank executives said Monday, Oct. 26, they are working on a plan to increase the thrift’s capital levels and address federal regulators’ concerns over its exposure to commercial real estate loans.

But they also said Liberty Savings remains on solid footing, despite an Oct. 19 order by the Office of Thrift Supervision calling for Liberty to stop writing new loans for commercial real estate or lines of credit secured by such commercial properties.

“We take the OTS order seriously, and we are working with the agency to address the questions it has raised,” Ryan Powell, Liberty’s chief administrative officer, said in a statement.

And in an interview Monday, Powell said the recession and soaring unemployment have resulted in more of Liberty’s loans becoming delinquent even as financial-industry regulators call on banks and thrifts to shrink their commercial real estate loan portfolios.

Powell said Liberty Savings did not make subprime mortgage loans or deal in complex financial instruments that caused problems for other financial institutions.

William Ruberry, an OTS spokesman, declined comment on Liberty Savings Bank.

But the thrift industry as a whole has seen an increase in cease-and-desist orders and other actions.

“Anytime there’s a downturn in the economy, there’s an upturn in enforcement actions,” he said.

According to the OTS, the agency in 2007 issued 20 cease-and-desist orders against thrifts, but the number climbed to 34 the following year. During the first half of this year, the agency issued 37 such orders.

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