The Federal Deposit Insurance Corp. on Sept. 27 released a list of enforcement actions taken against banks and individuals in August and published one order issued in July. One administrative hearing is scheduled for October.
The following list excludes actions that do not meet criteria for S&P Global Market Intelligence's news coverage. Click here to view an Excel template showing our full database of enforcement actions against U.S. banks and thrifts.
Cease and desist/consent orders
The FDIC on Aug. 20 issued a cease and desist order to Jeffrey Fortney, former president and director of Commercial Bank of Oak Grove, a unit of Country Agencies & Investments Inc.
The enforcement action is related to a notice issued against Fortney on Oct. 25, 2018, alleging that Fortney engaged in unsafe or unsound practices and breached his fiduciary duties to the bank by failing to properly manage and reconcile the bank's correspondent account. Due to his failures, the bank found that its UMB Bank NA account balance in the general ledger was out of balance.
Among other things, the cease and desist order requires that in the event Fortney's duties as an employee of an insured depository institution involve creating or compiling the institution's records or reports, respondent shall ensure that all of the records and reports are accurate, and provide the reports and records for review to the institution's CEO, CFO or a designee.
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On Aug. 13, the FDIC and the Illinois Department of Financial and Professional Regulation issued a consent order against Metropolitan Capital Bank & Trust, a unit of Metropolitan Capital Bancorp. The bank consented to the issuance of the order without admitting or denying the charges of unsafe or unsound banking practices and violations of law or regulation relating to weakness in capital, asset quality, management and liquidity.
Among other stipulations, the consent order requires the bank to maintain its Tier 1 capital at a minimum of 9% of its total assets and keep its level of qualifying total capital as a percentage of risk-weighted assets at a minimum of 13%.
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On Aug. 9, the FDIC issued a consent order against Carlos Montoya, former president and CEO of AztecAmerica Bank for engaging in violations of law, unsafe or unsound practices, and breaches of fiduciary duty. Montoya was also ordered to pay a civil money penalty of $25,000.
The regulator determined that Montoya caused AztecAmerica Bank to inject funds in AztecAmerica Bancorp Inc. by proposing and approving payments to two bank employees for the primary purpose of enabling those employees to buy stock in the holding company in July and August 2013. As a result of his actions, the bank suffered more than minimal loss, according to the FDIC's consent order.
Among other things, the consent order required Montoya to attend a total of 40 hours of training in corporate governance and ethics the first time he becomes employed by any insured depository institution.
Montoya consented to the issuance of the consent order and order to pay without admitting or denying any alleged violations of law, unsafe or unsound practices, and breaches of fiduciary duty.
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The FDIC on Aug. 9 also issued a consent order against Edward Hanson Jr. and ordered him to pay a civil money penalty of $10,000.
The regulator determined that while Hanson was CFO and a director of Edina, Minn.-based Crown Bank, a unit of Crown Bankshares Inc., he assisted the former CEO in conducting and obscuring certain transactions that violated the law and Regulation O of the Federal Reserve Board, as well as constituted unsafe or unsound practices. Hanson also breached his fiduciary duty by failing to stop or report the former CEO's misappropriation of funds from a third party's deposit account, according to the FDIC's consent order.
The consent order required, among other things, that Hanson become familiar with and adhere to the written policies and procedures of any insured depository institution he is or may become affiliated.
Hanson consented to the issuance of the consent order and order to pay without admitting or denying any violations of law or regulations, unsafe or unsound banking practices, and breaches of fiduciary duty.
Civil money penalty
On Aug. 27, the FDIC ordered First State Bank of Burnet to pay a civil money penalty of $21,700, having determined that the bank engaged in a pattern or practice of committing violations of certain sections of the Flood Disaster Protection Act of 1973 and the FDIC Rules and Regulations.
The bank consented to the issuance of the order to pay civil money penalty without admitting or denying violations of law and regulation.
The FDIC on July 16 issued a prohibition order against Diana Yates, former CFO of Bank of Oswego, having found that she engaged in violations of law and unsafe and unsound banking practices for which the Lake Oswego, Ore.-based bank suffered financial loss. Yates was also ordered to pay a civil money penalty of $175,000.
In November 2017, Yates and Dan Heine, the bank's former CEO, were found guilty of one count of conspiracy to commit bank fraud and 12 counts of falsifying bank entries, reports and transactions. Heine and Yates were sentenced to 24 and 18 months in prison, respectively, in June 2018.
Termination of consent orders
The FDIC on Aug. 16 terminated the consent order issued in December 2012 against Commerce, Ga.-based First Covenant Bank.
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On Aug. 1, the FDIC terminated the consent order issued in April 2018 against Maryland Financial Bank.
