I Understand, Please CONTINUE

Letter to Customers
Tuesday, February 22, 2011


Dear Liberty Bank, N.A. Customer,


The Office of the Comptroller of the Currency (OCC) is the division of the U.S. Treasury Department that regulates commercial banks. One of their primary responsibilities is to examine banks in order to ensure that they are operating within the supervisory rules and regulations set forth by the federal government. Due to the significant issues facing the financial industry today, some of the rules and regulations for banks are being applied on a more stringent basis. You may recall hearing about some of these in recent months.


The biggest issue in the banking industry today is capital. At the end of 2010, Liberty Bank, N.A. exceeded the minimum “well capitalized” capital ratios under the Federal Deposit Insurance Act. Late last month, OCC notified us that we are now required to maintain capital at least equal to eight percent (8%) of adjusted total assets and total risk-based capital at least equal to twelve percent (12%) of risk-weighted assets. Currently, our capital ratio is at 8.1%, while our risk-based capital is at an 11.1% ratio.

In 2009, we began the process of raising new capital. Our current goal is to raise $5 to $10 million in new capital and I am confident that goal will be met by June 30, 2011. As the Bank has grown, we’ve twice raised $5 million or more in capital (in 2004 and 2006).


The OCC also notified the Bank of changes needed in order to meet their current standards. Among the changes are:


  • Chief Credit Officer – The OCC requires the Bank to appoint a Chief Credit Officer who will have the authority to oversee the Bank’s credit function. I was performing this duty previously, but as the Bank continues to grow, the credit function needs additional management support. The Bank has hired an exceptionally qualified individual who will join the Bank on March 7th. Once the OCC has completed their investigation of this individual he will receive the title of Chief Credit Officer.


  • Concentrations of Credit – The OCC requires the Bank to further diversify its credit pools through eight (8) specific steps. We are currently finishing our plan that addresses all 8 steps and expect to submit it to OCC for approval before the end of April.


As part of the OCC’s recommendations, we are revising our incentive compensation program, enhancing our internal process of document collection/tracking, and making other improvements to our loan and credit processes.


We are taking these recommendations very seriously and significant progress has already been made in many areas. We are fully confident all the issues will be addressed to the OCC’s satisfaction and as such we will continue to work closely with local OCC staff.


On behalf of the staff and Board of Directors, thank you for the confidence you have in us. If at any time you have questions or concerns, please feel free to contact me directly at 216-359-5500 or by email at: Additional information will be posted on our website at as it is available.



William A. Valerian
Chairman and CEO