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CHEROKEE VALLEY SAVINGS NOW UNDER FEDERAL CONTROL

 CHEROKEE VALLEY SAVINGS NOW UNDER FEDERAL CONTROL
 WASHINGTON, June 12 /PRNewswire/ -- The Office of Thrift


Supervision (OTS) today placed Cherokee Valley Federal Savings Bank, Cleveland, Tenn., in receivership and chartered a new federal mutual institution to take its place.
 The new institution, Cherokee Valley Federal Savings Association, will assume certain assets and liabilities of the old thrift, and will operate in conservatorship under the management of the Resolution Trust Corporation.
 The receivership did not result in any interruption of Cherokee Valley's day-to-day operations. The institution and its five branches will remain open for business as usual. Holders of insured accounts are not affected by the action, which was taken by OTS to protect insured depositors and the interests of the thrift insurance fund. Deposits remain insured to the $100,000 legal limit.
 Cherokee Valley was being marketed through the government's Accelerated Resolution Program (ARP), designed to sell certain troubled or insolvent thrifts without subjecting them to a lengthy and more costly federal conservatorship. However, lack of congressional funding for the ARP forced regulators to take control of the institution.
 OTS initiated the action because Cherokee Valley was operating in an unsafe and unsound condition, failed its risk-based and core capital requirements and has suffered losses that have depleted nearly all of its capital, with no prospect of replenishment without federal assistance.
 Cherokee Valley had been consistently unprofitable. The institution had net operating losses of $2.3 million in 1991 and $170,000 for the first quarter
of 1992. The thrift's condition is due primarily to prior management's poor underwriting of commercial business and commercial real estate loans. As of March 31, 1992, assets of $18.6 million, or 13.1 percent of total assets, were classified as substandard, doubtful or loss.
 Despite its condition, Cherokee Valley Federal Savings Bank was eligible for the ARP because there was significant investor interest in acquiring the institution with limited federal assistance. Due to lack of congressional funding, no acquisition could take place.
 Cherokee Valley Federal Savings Bank was a federally chartered stock institution. Shareholders will retain no interest in the new thrift.
 As of March 31, 1992, Cherokee Valley Federal Savings Bank reported assets of $142.5 million, liabilities of $140.2 million and tangible capital of $2.2 million, for a tangible capital-to-assets ratio of 1.54 percent.
 -0- 6/12/92
 /CONTACT: Diana Januska, 312-565-5307, or Thomas P. Mason, 202-906-6677, both of the Office of Thrift Supervision CO: Office of Thrift Supervision ST: Tennessee IN: FIN SU:


KD -- DC020 -- 9745 06/12/92 14:27 EDT
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Publication:PR Newswire
Date:Jun 12, 1992
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