National bank regulator seeks $1 million penalty against former Chicago banker

A $1 million civil money penalty was assessed against a former Chicago bank chief executive in February for alleged actions taken that ultimately led to the failure of the bank and caused a $111 million loss to the federal deposit insurance fund.

The Office of the Comptroller of the Currency (OCC) said Friday it filed a notice of assessment for the civil money penalty (CMP) against Hiren Patel, former chairman of the board of directors, chief executive officer and controlling stockholder of The National Republic Bank of Chicago, Chicago, Ill.

The OCC disclosed the action against the Chicago banker in its March report on enforcement actions and terminations, issued Friday.

According to the OCC’s notice, the failure of National Republic (in October 2014) was due “primarily because of undue influence by the chairman of the board over the bank’s operations and critical decisions, as well as deficient senior management oversight and governance.” Patel resigned as chairman and CEO in July 2014.

The national bank regulator also noted that the Federal Deposit Insurance Corp. (FDIC) estimated that as of March 31, 2015, National Republic’s failure caused a $111.6 million loss to the agency’s Deposit Insurance Fund.

The OCC is also seeking to bar Patel from future participation in “the affairs of any federally insured depository institution or any other institution, credit union, agency” or similar entity.

In other actions, the OCC reported:

  • A $20,000 assessment against a California bank director for failing to take “necessary actions to ensure that the Bank corrected the deficiencies” resulting in violations of 2010 and 2014 consent orders. The OCC said it assessed the CMP against Theodore Roberts, director of Merchants Bank of California, N.A., Carson, Calif. The bank was assessed a $1 million CMP last year based on the 2010 and 2014 consent orders, OCC said.
  • A cease-and-desist (C&D) order against City National Bank of New Jersey in Newark for a variety of capital, governance, management and compliance deficiencies, including those related to anti-money laundering and Bank Secrecy Act (AML/BSA) requirements.

Also in its March report, OCC reported terminations of six existing enforcement actions against financial institutions, including:

  • In Colorado, two cease-and-desist orders against Grand Mountain Bank, a federal savings bank in Granby;
  • In the District of Columbia, a “formal agreement” (FA) with The National Capital Bank of Washington;
  • In New Jersey, a 2010 C&D against City National Bank of New Jersey in Newark;
  • In New York, an FA with Trustco Bank in Glenville;
  • In Texas, a C&D against ACE Cash Express, Inc. (a former agent and bank service provider for Community West Bank, National Association, formerly known as Goleta National Bank, Goleta, Calif.) in Irving.

OCC Enforcement Actions and Terminations for March 2018