Banks face fines for flood insurance violations; three prohibited for alleged embezzlement, theft

Flood insurance violations at two banks led to civil money penalties (CMPs) totaling more than $20,000 between them, according to enforcement actions for December released Friday by the federal insurer of bank deposits.

The report from the agency also included notices that three individuals from two other banks had been prohibited from further participation at a federally insured financial institution.

The Federal Deposit Insurance Corp. (FDIC) said that Prairie State Bank and Trust of Springfield, Ill., paid a CMP of $12,416, and Park Bank of Holmen, Wis., paid $7,850, for the violations, which centered around failure obtain, maintain or to “force place” flood insurance. In the case of Park Bank, seven loans were found in violation and for Prairie State, 22 loans, according to FDIC’s filings.

The FDIC said it also prohibited in December three individuals (from two banks) from further participation in a federally insured financial institution (as either an employee or director, or other positions). The agency said Sydney N. Norman, formerly of First Commercial Bank in Gideon, Mo., while acting as a teller at the bank, made multiple unauthorized withdrawals from three bank customers’ deposit accounts, causing a loss to the bank.

The agency also said that Brandy Mize and Vicky Martin, both formerly of The Peoples Bank in Eatonton, Ga., have been prohibited for using their positions as head teller and teller, respectively, at the bank to embezzle and misapply money. The FDIC said both transferred bank funds into their own accounts (or those of family members) and issued cashier’s checks for their own benefit without making deposits to support the transactions. All resulted in losses to the bank, the FDIC said.

The pair have signed individual consent orders agreeing to the prohibitions, the agency said.

In other action, the FDIC reported it had reached consent orders with four banks, including:

  • Southwest Capital Bank of Albuquerque, N.M., following Bank Secrecy Act/anti-money laundering (BSA/AML) violations;
  • Brighton Bank of Brighton, Tenn., for deficient capital levels, inadequate earnings and other issues related to safety and soundness;
  • Columbia Savings and Loan Association of Milwaukee, Wis., for “weaknesses in the area of consumer protection and compliance”; and
  • Gunnison Valley Bank of Gunnison, Utah, for violations related to document preservation and BSA/AML violations.

Gunnison Valley was also the target of a Supervisory Prompt Corrective Action Directive\ issued in October (but made public now) to recapitalize, either by selling enough stock or arranging acquisition by another financial institution.

FDIC Makes Public December Enforcement Actions