Northfield Bank Released from Extra Federal Scrutiny

After 15 months, First National Bank of Northfield has been released from increased scrutiny from the federal government.

Papers were signed in March to end the additional oversight from the Office of the Comptroller of the Currency, which is the regularly agency responsible for tracking nationally chartered banks, but the termination was not made public until this week.

“We’re making the right strides,” said Rick Estenson, vice president of business development for First National Bank of Northfield. “This was an important step.”

The bank, a staple of Northfield since 1872, signed an agreement for additional oversight in December 2009.

The federal government stepped in to aid hundreds of banks nationwide in the past few years as America was reeling from the Great Recession. In 2009, First National reported a net loss of roughly $600,000, Estenson said. In 2008, the bank had a net income of nearly $500,000.

“We’re a community bank,” he said. “We reflect the issues going on in the community.”

The net loss was also partly to blame on bad commercial loans, again, something Estenson said was not unique to First National.

A month before the OCC entered an agreement with First National in December 2009, Community Resource Bank entered an agreement with the Federal Deposit Insurance Company for additional oversight for loan portfolio issues, an agreement that remains today.

Currently 996 American banking institutions are receiving additional oversight.

In order to terminate the agreement, Estenson said First National had to tweak its procedures, such as requiring additional collateral for some borrowers. He said the oversight was appreciated but not completely necessary as the bank was aware of its issues and working to correct them.

The OCC lists First National Bank of Northfield’s assets at $126.2 million following the first quarter of 2011, down nearly $3 million from the end of 2009, but Estenson said that’s because the bank has granted fewer loans, a large component of a bank’s assets.

And despite the federal oversight, Estenson said the bank was always stable. He says the bank cut its net loss by more than half in 2010 and was profitable in the first quarter of 2011 and is tracking toward profitability in the second quarter.

“Those are the important numbers we watch really closely,” he said. “Things can change in a heartbeat, though. We’re not doing as well as banks or we have done in the past. We’re making the right strides.”