The Federal Reserve has sent Bank of Bartlett a notice of “Prompt Corrective Action” that suggests the bank is undercapitalized and requires the bank to raise capital within 90 days.

The notice is dated Monday, Jan. 30. The first sentence reads, in part, “The Board of Governors of the Federal Reserve System determined that, as of Oct. 27, 2011, Bank of Bartlett, Bartlett, Tennessee, a state chartered bank that is a member of the Federal Reserve system, was undercapitalized.”

The bank’s board met Jan. 19 and authorized a resolution consenting to compliance with each provision of the notice. One possibility it gives the bank to raise capital is to “enter into and close a contract to be acquired by a depository institution holding company or combine with another insured depository institution.”

Bank of Bartlett President Harold Byrd, though, said the notice is based on outdated information – specifically, on second quarter numbers that were current at the time of the bank’s last examination in the summer.

“We’ve made a lot of progress since then,” Byrd said. “With their deliberative process, they just sent this to us. And we certainly plan to adhere to its requirements.”

To Byrd’s point about progress, the bank within the last few days posted a fourth quarter profit, as well as a profit for the second half of 2011.

The bank reported Q4 net income of a little more than $712,500, compared to a more than $1.5 million loss during the year-ago period.

The bank reported a decline in non-performing assets, a 39 percent drop from more than $46.5 million in Q4 2010 to $28.2 million in Q4 2011. Non-accrual loans dropped 70 percent to $8 million from $27 million during the same quarter in 2010, and total delinquencies dropped to 7.5 percent.

Bank of Bartlett is the 11th largest bank based in Memphis as ranked by deposits, according to the Federal Deposit Insurance Corp.