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  Investors and depositors of Mountain National Bank got some good news Tuesday. It now appears the financial condition of the bank is not as serious as originally thought to be. In April of this year, federal regulators indicated they may soon take over operations of the bank and force it to sell or close due to under capitalization. But a recent audit conducted by bank accountants indicate a miscalculation in capital now reveals the bank is in slightly more stable condition.

  Originally, federal regulators reported MNB’s capital was below two percent. Following the audit, accountants revealed the bank actually holds 2.1 percent capital. Though the difference seems slight, it is enough to remove some of the regulatory conditions imposed by regulators.

  “I think  we’ve turned the corner,” stated Jim Friddell, MNB CEO. “We’ve still got some of the past left to clean up, but we are moving in the right direction. It’s going to be a slow process, but we are moving forward again.”

   Representatives with MNB have submitted documents to the Securities Exchange Commission proving the bank is more favorably capitalized.

   The error was made by outside accountants that indicated the $41 million loss the bank sustained last year left its future in doubt. Under federal guidelines, financial institutions with less than two percent capital in relation to its liabilities could face government regulation which would include a mandate to improve the financial outlook within 90 days or face closure or a sale of the bank.

  The bank had been put on notice in April and had just two weeks left on its 90 day notice of intent when the error was discovered.   

  As for the $41 million loss the bank took last year, Friddell said MNB, like many banks in the area, is struggling in a tight economy. The market in commercial real estate has become stagnant since the real estate market melted down in 2008. As businesses failed local banks experienced a devastating number of unpaid loans that took a toll on bank assets.

   MNB still remains under a consent order, which means federal regulators are still keeping a close eye on the institution. The bank will be forced to file updated plans on how it will improve its situation. However, with the slightly more favorable financial statements filed, the bank will not face closure or be forced to sell its assets any time in the near future.