June 11, 2009

Flagstaff bank has been ordered by the Federal Deposit Insurance Corp. to raise $2 million in new capital.The FDIC wants First State Bank of Flagstaff within 120 days to fix its current financial condition.The bank was also ordered by the federal government to develop a plan to identify and review all "problem" loans worth more than $250,000 and put in place new standards for any loans related to real estate.

First State was also ordered to add two new independent directors with banking industry experience to its board of directors within the next 90 days.Bank President Kyle Curtis said the order does not affect customer deposit accounts or loans.FDIC-member banks insure deposits up to $250,000 per person.First State has four branches in Flagstaff and offices in Cottonwood and Payson.