3 FIs to see deposit insurance terminated, 5 enforcements terminated, one CMP issued last month by FDIC; more

Of the 24 enforcement actions taken by the federal bank deposit insurance agency in September, three are orders to terminate federal deposit insurance by this year-end, according to information released Friday by the Federal Deposit Insurance Corp. (FDIC).

In the three orders to terminate deposit insurance, the FDIC said the institutions – two state nonmember banks and one federal savings association (FSA) – were “not engaged in the business of receiving deposits, other than trust funds.”

The orders provide that deposit insurance will be terminated “at the expiration” of Dec. 31, 2018, for Dairyland State Bank, Bruce, Wis.; High Desert Bank (the FSA), Bend, Ore.; and State Bank of Georgia, Fayetteville, Ga. Dairyland has until Nov. 30 to notify any depositors; the other two institutions must make their notifications by Oct. 31 (next Wednesday).

Following is a brief look at the other actions from September:

Terminated enforcement orders

  • Bank of Eastman, Eastman, Ga. – termination of a Feb. 15, 2012, consent order
  • OptimumBank, Plantation, Fla. – termination of a Nov. 10, 2016, consent order
  • Pinnacle Bank, Orange City, Fla. – termination of July 7, 2010, consent order
  • First Chatham Bank, Savannah, Ga. – termination of a July 13, 2010, consent order
  • Higher One Inc., an institution-affiliated party of WEX Bank, Midvale, Utah – termination of a Dec. 23, 2015, consent order and order for restitution

Removal and prohibition orders (with one CMP)

  • Max H. Miller, while serving as vice president and commercial relationship officer of Renant Bank, Tupelo, Miss., the order says, originated “a series of loans in which the distribution of the proceeds of the loans were at variance with the terms of the loan documents,” with some of these loans resulting in loss to the bank.
  • Salvatore Fratanduono, while employed as a senior vice president and chief lending officer of Prudential Bank, Philadelphia, Pa., unilaterally approved a $625,000 loan to the bank’s largest borrower, the order says, adding that the bank suffered a loss.
  • Latrice M. Reid, while a financial service representative at of OneUnited Bank, Boston, Mass., reportedly made unauthorized withdrawals from seven dormant deposit accounts; used her account maintenance access to prevent account owners from receiving monthly mailed statements; and used the misappropriated funds to pay her own credit card balances.
  • Michelle C. Jones, while employed as an executive vice president of First Commerce Bank, Lakewood, N.J., “knowingly removed funds from the account of a Bank customer without permission or authority from July 2014 through March 2017,” the order says.
  • Thomas W. Wilder IV, while president, chief executive officer, and chairman of the board for the Bank of Jackson County, Graceville, Fla., operated his own consumer finance company out of one of the bank’s branches from 2012 to 2013, the order says. It says that in several instances, he allowed his firm to be repaid using overdrafts in customers’ accounts at the bank. He also “caused the release and sale of Bank collateral without full repayment to the Bank when a portion of the sale proceeds were being used to pay on a finance company loan,” the order says. Wilder was assessed a $50,000 civil money penalty (CMP).

Consent enforcement orders

  • Peoples Bank and Trust Company, Ryan, Okla. The order requires the bank to develop and implement a compliance management system “commensurate with the level of complexity of the Bank’s operations.”
  • Countybank, Greenwood, S.C. The order requires specific actions to address Bank Secrecy Act (BSA) compliance, tasking the board with monthly review of related issues and requiring the bank to review and revise its risk assessment processes, revise internal controls and adopt a revised, written BSA compliance program.
  • Sainte Marie State Bank, Sainte Marie, Ill. The order addresses management, board participation in the bank’s affairs, loans to classified borrowers, delinquencies and classified assets, loan policy, restriction of growth; and more.

Modified consent order

  • Gwinnett Community Bank, Duluth, Ga. The modification removes earlier requirements related to Bank Secrecy Act compliance, describing those requirements as having been satisfied. The revised order now focuses on board supervision of management, operations, capital targets and plan, charge-offs, classified assets, credit concentrations, and more.

Termination of supervisory PCA directive

  • First South Bank, Spartanburg, S.C. The order terminates the prompt corrective action (PCA) directive issued Dec. 12, 2012.

Section 19 actions

Section 19 of the Federal Deposit Insurance Act prohibits persons who had been convicted of certain criminal offenses, or entered diversion programs, to participate in the conduct of the affairs of any insured depository institution without FDIC’s prior written consent. In September, FDIC reports issuing six orders under Section 19 for: Ronald LeVar Wylie; Ada Y. Flores; Michael Swearingen; Donnell Franklyn; Elizabeth R. Jerry Willis; and Porter Lee Robertson.

FDIC Makes Public September Enforcement Actions; No Administrative Hearings Scheduled for November 2018

September 2018 FDIC Enforcement Decisions and Orders

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