The Bank of the Bluegrass & Trust Co reveals cease and desist order from FDIC

The bank has sent out the following letter to customers today

Dear Bank of the Bluegrass & Trust Co. Customer,

The foundation of service and trust on which the Bank of the Bluegrass is built grew from a tradition of strong management and adherence to sound banking principles. That foundation has enabled the Bank of the Bluegrass & Trust Co. to continue to provide quality, personal service throughout our 36-year history regardless of the strength or weakness of the local economy.

Because we value our relationship with our customers above all else, I am writing to let you know in advance of an important development that you may hear or read about in the news and to assure you that it will in no way alter the way we serve you.

The board of directors of the Bank of the Bluegrass recently voted to approve actions -- relating primarily to the Bank’s real estate loan portfolio -- required by the Federal Deposit Insurance Corporation to assure that we are in compliance with FDIC guidelines.

Financial institutions like ours that are committed to providing significant real estate lending within our own community are adversely affected by any downturn in the United States and local economies and particularly the real estate market.

Regardless of some vulnerability as a result of the economic downturn, the decision by the Board does not in any way affect the continuity of normal bank operations and we will continue to provide the excellent service you have come to rely on from us.

Because we are a local, community bank focused primarily on personal banking and community-based real estate lending, a number of features are in place that guarantee the stability of the bank and its future –

• The Board of Directors has acted immediately to revise portions of our lending operations. We fully expect that the FDIC will verify that this and other actions taken by the Bank will be completely satisfactory.
• FDIC insurance protects depositors up to certain limits no matter what happens in other areas of banking operations.
• We have limited our commercial loan exposure.
• We have not been involved in sub-prime lending.
• We have over $24 million in capital and ample funds in required loan loss reserves.
  

In short, despite the downturn in the real estate market and its affect on a limited portion of bank operations, the Bank of the Bluegrass remains stable and well-capitalized. In fact, our stock price has more than doubled since 2001.

The Bank of the Bluegrass will never waiver in our commitment to our customers and in our determination to provide you a strong, stable banking environment. We are proud of our ability to provide personal attention to all your banking needs.

Thank you for your continued loyalty and patronage of the Bank of the Bluegrass.

Sincerely,
Mark Herren Bill Allen
Chairman/CEO President

P.S. We are happy to discuss the actions the Bank of the Bluegrass is taking with you at any time. Please call 859-233-4500 to talk to either of us or call your personal banker.