Legacy Bank must develop a profit-earning strategy that will carry it through the end of the year and make other improvements to its capital position, according to a consent order with the Federal Deposit Insurance Corp. (FDIC) and Iowa Division of Banking.

The Altoona-based bank agreed to the order under the stipulation that it was not admitting or denying any charges of unsafe or unsound banking practices. The agreement was announced April 29 by the FDIC. The bank agreed to the order on March 15.

Legacy reported net quarterly income of $34,000, average assets of $88 million and equity capital of $7.4 million on March 31. For the year ended Dec. 31, 2010, the bank reported a loss of $237,000.

The order requires Legacy to eliminate through collection or charge-off all unrecoverable loans on its books and develop a plan for improving its risk exposure to problem loans in excess of $150,000.

Bank President Robert Chittenden said many of the changes are in place and that by cooperating with regulators Legacy will have a quicker recovery from the market downturn.

Legacy also must maintain a level of its most secure capital of 8 percent of average assets, and total risk-based capital must be 12 percent of average assets. At the end of March, those ratios were 8.39 percent and 13.61 percent, respectively.

Legacy also is prohibited from paying a dividend for the duration of the order.