The State Corporation Commission of Banks and Bank of Asheville have entered into an agreement that requires the bank to reduce the number of bad loans on its books and take other steps to improve its financial position.

The bank, which has had financial problems related to bad real estate loans, also has settled a lawsuit brought by companies that had developed the Queens Gap residential development in Rutherford and McDowell counties.
The companies had alleged the bank mishandled a large checking account.

The regulatory agreement, called a conset order, was expected.

Terms of the suit settlement were not released, but sources said it will not have a material impact on bank earnings.