By Dan Haley
The Federal Deposit Insurance Corporation has issued two more critical findings against Community Bank of Oak Park-River Forest, just months after the bank last ran into trouble with the nation's top bank regulator.
The Oak Park-based financial institution has received the FDIC's lowest rating for its compliance with the federal Community Reinvestment Act, a law that encourages banks to reach out to low-income neighborhoods.
According to a list posted on the agency's website last week, of a dozen banks rated in the FDIC's Chicago Region during April, only Community Bank was given a notification of "substantial non-compliance" with the act. Each of the other banks was rated as "satisfactory" on CRA compliance.
Additionally, the bank has been issued a consent order by the FDIC in another matter involving the federal Bank Secrecy Act.
Marty Noll, chairman and CEO of Community Bank, told the Journal Monday afternoon that the bank was "highly disappointed" in the Community Reinvestment Act ruling and that the poor showing "flies in the face of what we stand for."
He said the rating was based on an FDIC examination from 2008 but which was only announced by the agency last week. The bank is not appealing the rating, and Noll said it had been working since 2009 to fix the issues which led to the poor showing.
"We will do whatever we have to do. The goal is to have a much improved rating at the next examination," said Noll in the interview.
"The core of this issue is over 2 years old," Noll said in a written statement also provided to the Journal. "Rather than focusing our energy on debating the merits of the regulators' findings as we awaited the final rating, we decided in mid-2009 to attack the issue aggressively."
Noll said the bank's rating was linked to a lack of mortgage lending in the Austin neighborhood of Chicago and in Maywood. A year ago, he added, the bank hired a lender to focus on those communities and has also expanded marketing and outreach there.
The consent order tied to the Bank Secrecy Act relates to a past bank client in a "money service business," said Noll. Though he wouldn't name the client for privacy reasons, one example of a money service business is a currency exchange. The bank, of its own volition, said Noll, severed that banking relationship last year.
"The FDIC came in and found deficiencies on Community Bank's part in handling that business," Noll said Monday. In a written statement, he said, "We were both surprised and disappointed to have received this consent order for alleged Bank Secrecy Act violations."
Noll said the bank has no other clients in a money service business and would not add any such customers in the future.
In its last run-in with the FDIC, last November the regulator placed a consent order on Community Bank based on the bank's capital requirements and non-performing loans. That order resulted in additional reporting requirements for the bank and set limits on some lending practices and on asset growth.
Noll said Monday that the bank was making good headway on those issues through a range of approaches. He said the bank's assets had been consciously reduced from $375 million to $345 million to improve its capital ratio. Additionally, the bank's earnings have bulked up capital, he said, and problem loans continue to be reduced.
"We're making good progress," said Noll. To date, he said the bank has not raised additional capital — by choice.
Asked about the series of negative ratings and findings from regulators, Noll was blunt.
"It's embarrassing. We've really got ourselves on a string here," he said. "It is a different world, a different environment. Everyone is under deep scrutiny. More and more banks are coming under these types of situations. We have to plow through it and do what we do best."