LandMark Bank has entered into a written agreement with the Federal Reserve to address oversight issues related to loan concentrations, non-performing loans, asset improvement and capital planning.
Stemming from a bank examination in June, the letter of agreement requires 10 written plans as well as setting up a compliance committee with members of the bank’s board of directors to oversee compliance. Most of the plans are required to be submitted within 60 days of the Nov. 5 agreement.
“We have been a very conservative-run organization and we fully intend to comply with all the requirements in the agreement,” said Thomas Quale, president and chief executive officer of LandMark Bank of Florida, which has branches in Manatee and Sarasota counties. “We are well under way with these plans and several have already been submitted.”
As of Sept. 30, the bank’s assets were $351 million with $19.05 million in non-accrual loans and $4.76 million in other real estate loans. The bank was opened in 2000 by a group of local organizers and directors. It has four branches in Sarasota and one in Lakewood Ranch.
Many of the requirements are either being worked on or completed, Quale said.
“Over the course of the four months since the exam, management has worked with the regulatory agencies to address specific items in the agreement. As a result, we can report significant progress has been made towards addressing a number of the activities outlined in the agreement,” he said.
In the agreement, the Fed is asking the bank to strengthen board oversight of management and operations of the bank, including loan review, credit risk management, credit concentrations, liquidity, staffing and earnings.
The agreement also directs the bank not to extend or renew any credit to borrowers who have been in default or extend credit to those classified as “doubtful” or “substandard.” Quale said this was accomplished in September.
The compliance committee was formed in June, shortly after the Federal Reserve’s examination, and has been meeting every two weeks since then, Quale said.
The faulty economy and its impact on financial institutions has affected LandMark, Quale said.
“This is an informative process that regulatory agencies are going through to make sure banks are maintaining their soundness rather than improving their soundness,” said Frank Knautz, a consultant to LandMark.
He termed the action by the Fed “as light as you can possibly get” in terms of disciplinary agreements.
“They (Fed) are using letters of agreement to shore up the industry and as preventative oversight,” he said.
LandMark received a two-star rating from Bauer Financial in September, which classified the bank as “problematic.” Bauer Financial rates banks every three months based on financial reports that include capital, non-performing loans and liquidity.
In many stricter agreements, the Federal Reserve includes many deadlines and mandates, Knautz pointed out.
He called the agreement “a preparatory and remedial step in making the bank stronger.”
Quale, who said this is the first regulatory action the bank has faced, said it will continue business as usual, reminding customers that all deposits are fully insured by the FDIC.
“We have a very solid relationship with our customers and will continue to work with our customers as we work through this process,” he said.
Jennifer Rich, Herald Business editor, can be reached at 745-7087.
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