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Federal regulators, who have drawn criticism for not doing more to arrest the nation's financial crisis, have clamped down hard on Utah banks this year.

They have ordered at least 18 lenders to clean up their books, and more enforcement actions may be on the way. Given that Utah has only 71 banks, the number of lenders with problems dire enough to warrant federal intervention raises questions about the stability of some and the willingness of others to extend credit as the state tries to restart its economy.

Bankers say the intense scrutiny by the Federal Deposit Insurance Corp. and the Federal Reserve is galling and unwelcome, but not surprising. Utah banks focused heavily on real-estate lending during boom times earlier this decade. Many of those loans went bad when the state entered its worst recession in 80 years and real estate collapsed.

The actions do not threaten deposits at any of the banks. The FDIC insures bank accounts for up to $250,000.

"When you look at the involvement that the banks have had in the real-estate market and the dramatic change in values, it's created a lot of pressure" on banks, said David Brown, president of First Utah Bank.

The Salt Lake City-based lender reached an agreement with the Fed in September to strengthen board oversight of management, shore up credit risk-management practices and charge off or foreclose on loans that weren't collectible.

"It's really a loan-quality issue," said Howard Holt, president of Brighton Bank, which is not under any enforcement action.

Earlier this year, the FDIC seized two Utah banks -- America West Bank of Layton in May and MagnetBank of Salt Lake City in January. They were among 130 banks closed nationwide by the agency so far this year.

Drawing less attention, though, were actions taken by the FDIC and the Fed against 11 Utah-chartered banks, four industrial banks and one out-of-state bank with a state charter -- America West -- which later was closed.

The FDIC issued 13 cease-and-desist orders to 12 banks, demanding measures ranging from boosting capital reserves to cleaning up bad-loan portfolios. Similar directives called written agreements went to three banks from the Fed. Two banks received orders from both agencies.

By contrast, the FDIC sent six formal orders to Utah banks last year. One went to the defunct MagnetBank. The Fed issued none.

The orders from the FDIC also called on banks to improve lending and collection practices, and to increase reserves for future loan losses. Bank directors were instructed to improve their weak oversight of management. Managers were told to fix policies and practices that put deposits in jeopardy.

Industrial banks, which are state-chartered financial companies that lend money, were instructed, variously, to shore up their capital or extend credit to their parent companies, some of which have filed for bankruptcy.

It isn't clear exactly how worried the Fed, the FDIC and their state partner, the Department of Financial Institutions, are about the wobbly banks. None would elaborate on their orders, preferring to let the documents speak for themselves. The paperwork provides tantalizing clues, but the language is generalized. The orders are broad statements written mainly to confirm the banks' problems and the corrective actions lenders must take or face sanctions, ranging from fines to being seized.

"We don't want to get misconstrued in what we are saying. We hope that what is in the cease-and-desist order is clear enough," said Paul Allred, deputy commissioner of the Department of Financial Institutions.

Howard Headlee, president of the Utah Bankers Association, said orders from the Fed and the FDIC are "tools to improve the situation" and that "regulators are like a doctor. They've come in and identified an issue or issues, and [orders are] a prescription for health. In the vast majority of cases, that is what they lead to."

Banks, he said, are a business, "and as we know, businesses throughout our economy are under tremendous stress in this recession. And that's where you find out where the weaknesses are. The enforcement actions just help to address those weaknesses."

Additional financial institutions may be struggling, too. John Allen, president of SunFirst Bank in St. George, recently estimated that "about half of the banks" in the state are under some sort of formal or informal order to improve their operations.

"The economy caught everybody," said Allen, whose bank received a cease-and-desist order.

Randy Hoyt, president of Western Community Bank in Orem, said what hasn't been made public by the FDIC or the Fed are numerous nonpublic "MOUs" -- memorandums of understanding -- that banks and regulators have agreed to this year.

"Every bank in the state of Utah is most likely dealing with some type of formal or informal action to improve or strengthen their foundations," said Hoyt, whose bank received a cease-and-desist order. "This is a time when regulators and banks working together certainly requires patience on both sides as financial institutions work through this uncertain economy."

Banks aren't the only lenders struggling. Holt of Brighton Bank said credit unions with big bets on real estate are in trouble, too.

"I don't know of any traditional Utah banks or credit unions that were involved in real-estate lending that have not experienced at least some loan problems. It just goes with the territory," Holt said.

Brighton Bank wasn't placed under a cease-and-desist order, but it has at the FDIC's request consented to increase its reserves for loan losses, he said.

"I think a number of the banks that they visit, they are recommending increasing their allowance for loan loss, and I think this is wise. This is a prudent move," Holt said.

At the same time, banks have cut lending and stiffened credit standards, which means they aren't supporting Utah's recovery with loans to start or expand businesses as they otherwise might.

"If you were to go to a gas station and they rationed the gas that you can have, it's going to limit how much you can drive," said Kendall Phillips, president of Liberty Bank of Utah in Salt Lake City.

"When you have lending that is curtailed, it slows down everything."

Utah community banks loaded up on real-estate loans in the years leading up to the recession because of inroads credit unions have made into areas such as car loans and consumer loans, said Headlee of the bankers association.

"In many cases it wasn't a choice. The encroaching of credit unions into many of the areas traditionally served by banks has forced us to focus our resources on a smaller and smaller segment of the economy, real estate being the primary segment."

Ezra Harris, a credit risk-management consultant in Kaysville, traces banks' real-estate loan woes to legislation Congress passed in 1977 that required them to lend in low-income neighborhoods where they take deposits. The Community Redevelopment Act forced banks to make loans they would otherwise would reject as unsound, he said.

"Then [Congress] went further and pressured Fannie Mae and Freddie Mac to be the ultimate financing sources of these loans. So here you have an unqualified borrower come into the bank. The bank says we've got to make our quota of CRA loans. Here's one. We'll make it and we'll sell it to Freddie Mac," Harris said.

Harris said former Fed Chairman Alan Greenspan's low-interest rate policy after the 2001 recession also stoked the subprime financial crisis. Cheap loans drew millions of people into the housing market, setting off an unsustainable bubble.

But he also blames the greed of boards and obliging management of some banks. Many community banks are closely held institutions, owned by a small number of shareholders. Their ambitions are to grow their banks' profitability in order to sell them or to increase the value of their shares.

"Can they dominate management? You'd better believe it," said Harris, a former president of New England Savings Bank in New London, Conn.

One way investors can boost a bank's value is to push managers to make riskier high-return loans that carry high fees and interest rates.

"But the offsetting factor is the probability that a higher percentage of high-risk loans are going to get in trouble, especially if there is a concentration of real-estate loans and the real-estate market goes into the tank," Harris said.

The upshot of so much regulatory and market turmoil has gone to the bottom line of many lenders. They are diverting profits into building reserves against the possibility of more loan losses, said Hoyt of Western Community Bank.

Utah banks under fire from federal regulators this year:

Advanta Bank, Draper, two cease-and-desist orders from the Federal Deposit Insurance Corp., June 24

American Express Centurion Bank, Salt Lake City, cease-and-desist, FDIC, June 5

America West Bank Members, Layton, written agreement, Federal Reserve, Jan. 22; closed by FDIC and Utah Department of Financial Institutions, May 1

Barnes Bancorp and Barnes Banking Co., Kaysvillle, written agreement, Federal Reserve, May 13

Capital Community Bank, Provo, cease-and-desist, FDIC, May 18

Capmark Bank, cease-and-desist, FDIC, Oct. 1

Centennial Bank, Ogden, cease-and-desist, FDIC, June 25 (Vision Bancorp has agreed to buy controlling interest in Centennial)

CIT Bank, Salt Lake City, cease-and-desist, FDIC, July 16

First Utah Bank, Salt Lake City, written agreement, Federal Reserve, Sept. 22

Gunnison Valley Bank, Gunnison, cease-and-desist, FDIC, Sept. 23

Liberty Bank, Salt Lake City, cease-and-desist, FDIC, May 21

MagnetBank, closed by the Utah Department of Financial Institutions and the FDIC, Jan. 30

Prime Alliance Bank, Woods Cross, cease-and-desist, FDIC, June 22

SunFirst Bank, St. George, cease-and-desist, FDIC, Oct. 7

Utah Community Bank, Sandy, cease-and-desist, FDIC, July 15

Western Community Bank, Orem, cease-and-desist, FDIC, Aug. 20

Woodlands Commercial Bank, written agreement, Salt Lake City, Federal Reserve, Feb. 4

Deposits insured

The Federal Deposit Insurance Corp. insures bank accounts and other deposits up to $250,000.