CoreFirst Enters Supervision Agreement With Fed

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TOPEKA, Kan. (WIBW) - Topeka's CoreFirst Bank & Trust has agreed to be placed under the supervision of federal bank regulators.

According to documents reviewed by 13 News Tuesday, on May 23rd, the Federal Reserve Bank of Kansas City signed an agreement with CoreFirst and the company's employee stock ownership plan. It required CoreFirst to submit a capital plan and prevents the bank from paying dividends or increasing debt without federal approval.

CoreFirst reported a $23 million loss in 2012, saying it was a planned move to get bad loans off the books.

Neither President and CEO Kurt Kuta nor board chairman Duane Fager would agree to be interviewed on camera Tuesday, but Kuta did send 13 News a written statement. He says the agreement doesn't reflect any new developments.

"When a bank has a significant loss year like CoreFirst did in 2012, the bank and its holding company will work closely with its regulators," Kuta wrote in his statement. "The Agreement includes commitments and actions the Holding Company already made in 2012 and is implementing to return the overall company to performance. Namely keep capital in both the holding company and bank while improves."

Kuta went on to say that, due to the steps it's taken, the bank is improving.

"Much progress has been realized to date in 2013," Kuta wrote. "CoreFirst Bank & Trust is conducting its banking business as normal, continues to serve its customers and communities, and looks forward to doing this for a long time.

Some of the bad loans from 2012 were made to Topeka developer Kent Lindemuth, who has filed for Chapter 11 bankruptcy. Records indicate CoreFirst had 13 of the 20 largest unsecured claims with Lindemuth.

Kuta and Fager declined comment on the Lindemuth situation.

Kuta says the current capital equity is above what is required by the Federal Deposit Insurance Corporation and said the main operations of the bank will not be affected by the federal reserve agreement.