“Imprudent” loans made to the relatives of an Oklahoma bank CEO have led to his prohibition from future bank employment and a fine of $125,000, the Federal Reserve said Thursday.
According to the Fed, it has prohibited Thomas Engelbrecht from future participation in the banking industry and fined him $125,000. Engelbrecht, the former CEO of Bank of Eufaula of Eufaula, Okla., and a former director of the bank and its holding company, S N B Bancshares, Inc., was terminated by the company in July 2024. He has consented to the prohibition order, the agency said.
The Fed alleged that from 2020 to 2023, Engelbrecht “repeatedly” caused the bank to loan more than $5 million to a company owned by his close relative. The Fed said a portion the loans was used to pay down interest on the company’s existing bank loans or to cover overdrafts in the company’s accounts at the bank, despite the company’s evident financial difficulties, in violation of the bank’s policies and procedures.
During that time, Engelbrecht allegedly caused the bank to repeatedly waive overdraft fees and to approve overdrafts in the company’s accounts at the bank when the account was already persistently overdrawn, “at times by over $1 million, in violation of the bank’s policies and procedures.”
The Fed further alleged that Engelbrecht himself loaned the company nearly $200,000 during 2022-23 “compounding his conflict of interest in approving further bank extensions of credit to the company.”
These actions, and more, the Fed alleged, eventually caused the bank losses of more than $3.5 million in connection with loans to the company and overdrafts. Additionally, the Fed alleged, the Fed special purpose vehicle (SPV) set up manage a Main Street Lending Program (MSLP) loan to the company lost about $1.88 million.
The agency asserted that “Engelbrecht’s conduct constituted violations of law or regulation, breaches of fiduciary duty, or unsafe or unsound banking practices, and involved his personal dishonesty or demonstrated his willful or continuing disregard for the bank’s safety and soundness.”
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