EAST GREENWICH – Federal and state regulators and Independence Bank of East Greenwich have reached a consent agreement in which the bank must ensure that its management practices meet numerous requirements.
The agreement was part of the Federal Deposit Insurance Corp.’s latest round of enforcement actions, released publicly Aug. 30.
Under the agreement with the FDIC and the R.I. Division of Banking, Independence Bank consented to take the steps without admitting or denying any charges of unsafe or unsound banking practices or violations of law relating to a lack of oversight and risk management practices.
The agreement directs the bank to have one or more executive officers with “proven ability in managing a bank of comparable size and complexity and a track record of managing U.S. Small Business Administration Small Loan Advantage loans.”
It directs the bank to have one or more executive officers with “an appropriate level of lending, collection, and loan supervision experience for the type and quality of the bank’s loan portfolio.”
In addition, it directs the bank to have a chief financial officer with “demonstrated ability in all financial areas, but not limited to accounting, regulatory reporting, budgeting and planning, management of the investment function, liquidity management, and interest rate risk management.”
It also directs the bank’s board of directors to “restore all aspects of the bank to a safe and sound condition, including capital adequacy, asset quality, management effectiveness, and liquidity” and directed the board to increase its participation in the bank’s affairs.
Moreover, the agreement calls for the bank to develop a three-year “strategic plan” within 60 days.
That plan is to ensure a concentration of unguaranteed SBA Small Loan Advantage loans as a percentage of total capital “that can be managed satisfactorily given the bank’s risk management framework and management team.”
The plan also should identify “risks to the bank flowing from its heavy reliance” on the SBA Small Loan Advantage program.
Furthermore, it calls for the bank to revise its liquidity and funds management policy to “strengthen the bank’s funds management procedures and maintain adequate provisions to meet the bank’s liquidity needs.”
It directs the bank to submit for review written procedures for dealing with any existing or future transactions or relationships between the bank and “insiders,” as defined by federal regulations.
The agreement bans the bank from paying out any dividends without prior written consent from R.I. Superintendent of Banking Elizabeth Kelleher Dwyer.
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
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