Penalty for flood insurance omission, order for independent board, among October actions

A fine assessed on a bank for failure to obtain flood insurance on mortgage loans, and an order for another bank to establish an independent board and hire qualified management, were among the 14 actions taken by the Federal Deposit Insurance Corp. (FDIC) in October.

The agency also approved 10 “section 19” applications, approving individuals to work again at banks, and two terminations of consent orders. No administrative orders are scheduled for December, the FDIC said.

FDIC reported that it assessed a civil money penalty (CMP) of $6,000 on Leona State Bank of Leona, Wis., for engaging “in a pattern or practice of committing violations” of the Flood Disaster Protection Act of 1973 (FDPA). Specifically, the deposit insurer states in filings, the bank: failed to obtain flood insurance at the time of the origination for three loans; failed to obtain adequate flood insurance at the time of the origination of one loan; failed to maintain flood insurance for three loans; failed to follow force placement flood insurance procedures for one loan; and failed “to provide to borrowers a Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance when making, increasing, extending or renewing a loan on four occasions.”

In other action, the agency ordered Citizens Savings Bank and Trust Company of Nashville, Tenn., to establish an independent board of directors, retain “qualified management,” increase and maintain its Tier 1 capital, and restrict dividends (among other things). The consent order was issued after FDIC determined that the bank engaged in unsafe and unsound banking practices, had deficient capital, an excessive volume of adversely classified assets, deficient earnings and weak liquidity.

The agency also:

  • Terminated consent orders for First Trust & Savings Bank of Albany (Ill.) and Pacific Valley Bank (Salinas, Calif.);
  • Approved 10 individuals to again “participate in the conduct of the affairs of any insured depository institution,” including: Mitchell J. Kassman; Herbert M. Davis; Michael Charles Hulse; Nathan D. Weiss; Sabrina S. Tillman Jones; Jaime Mera Pierce; Thomas J. Kobbeman; Christian C. Onuoha; Yomene Nathalie R. Fobi Fongang, and; Devon Lamont Johnson.

FDIC Makes Public October Enforcement Actions; No Administrative Hearings Scheduled for December 2017