Four Oklahoma banks received a “satisfactory” rating from the Federal Deposit Insurance Corp. for their compliance with the Community Reinvestment Act. But another Oklahoma bank was sanctioned by the FDIC and the state Banking Department for engaging in “unsafe or unsound banking practices” and for violating “laws and/or regulations.”
Farmers & Merchants Bank in Duke, Bank360 in Cordell, High Plains Bank in Okeene, and SpiritBank in Tulsa were evaluated by the FDIC last November for compliance with the CRA, and all were rated as satisfactory, the agency announced on Feb. 4.
The Community Reinvestment Act is a landmark law enacted in 1977 to address systemic inequities in access to credit. The CRA encourages federally insured banks to help meet the credit needs of the communities in which they do business, especially low- and moderate-income communities, consistent with safe and sound operations.
But the Bank of Vici, in Dewey County, got its knuckles rapped – hard – by the FDIC and the State Banking Department. For example:
• After establishing an allowance for credit losses, the bank must “maintain its Tier 1 leverage capital ratio equal to or greater than 10% of the bank’s average total assets,” and must “maintain its total risk-based capital ratio equal to or greater than 12%” of the institution’s total risk weighted assets.
• The bank’s governing board was ordered to “increase its participation in the affairs of the bank by assuming full responsibility for approval of the bank’s policies and objectives and for supervision of the bank’s management…” • The bank must prepare “a written assessment of its Information Technology systems.” The assessment must “address the findings” of a 2024 report “with respect to Information Technology systems” and must “include the bank’s proposed corrective measures,” such as quality control.
• In order to address its overdue accounts, the bank, if it had not done so by the end of January, must “eliminate from its books – by charge-off or collection – all assets or portions of assets classified as Loss and one-half of the assets classified” by the FDIC or the State as “Doubtful.”
By the end of this month, the bank must submit “a written Classified Asset Reduction Plan” – to the FDIC’s regional director and to State Banking Commissioner Mick Thompson – “to reduce the remaining assets classified as Doubtful and Substandard.”
• The bank must “have and retain qualified management,” and each member of management “shall possess qualifications and experience commensurate with his or her duties and responsibilities” at the bank.
• An “acceptable” management succession plan that will provide for “the orderly transfer of duties and responsibilities of senior management” of the bank must be developed and adopted.
• The Bank of Vici’s governing board “shall assess the resources needed” to “monitor and ensure compliance” with the government’s Anti-Money Laundering/ Countering the Financing of Terrorism rules and regulations.
Bank employees who deal with customers are required to undergo specific training in this area, and there is automated software that tracks suspected violations of money laundering and terrorism. Also, the government has lists of suspected money launderers and terrorist organizations.
• The bank’s board of directors must review the institution’s loan policy and procedures for effectiveness “and, based upon this review, shall make all necessary revisions to the Loan Policy in order to strengthen the bank’s lending procedures and abate additional loan deterioration.”
• By the end of this month the bank board must develop a written loan review program that provides for “a periodic and independent review of the loan portfolio, credit risk management practices, and the accuracy of loan risk ratings.”
• By March 31 the bank must prepare and adopt a comprehensive strategic plan. That plan must contain “an assessment of the bank’s current financial condition and market area, and a description of the operating assumptions that form the basis for major projected income and expense components.”
The bank also was ordered to implement measures to address interest rate risk and funds management, produce a “realistic” budget/profit plan, and submit periodic progress reports.