First State Bancorporation (FSNM) of Albuquerque, N.M., must take certain steps to improve its assets and manage credit risk under an agreement it entered into with the Federal Reserve.

The goal of the agreement, which the Fed made public on Thursday, is "to maintain the financial soundness" of First State Bancorporation, the holding company of First Community Bank.

The agreement calls for First State Bancorp officials to hire a consultant to evaluate management and staffing needs, the performance of all bank officers and the composition of the bank's board of directors. Additionally, the bank will need to address the issues presented by the independent consultant.

The bank, among other things, also needs to submit to regulators a plan to strengthen lending and credit risk management practices at the bank.

It will also need to submit a budget plan, a capital plan, and plans to improve management of its liquidity position and interest rate risk management.

Meanwhile, the bank holding company cannot declare or pay any dividends without prior written approval from Fed officials.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255; maya.jackson-randall@dowjones.com