FDIC critical of Community Bank on two fronts

Poor rating under community investment guidelines and one business relationship

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By Dan Haley

Editor and Publisher

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."

Contact:
Email: dhaley@wjinc.com Twitter: @OPEditor

Reader Comments

29 Comments - Add Your Comment

Comment Policy

Sidney from Forest Park  

Posted: May 3rd, 2011 1:07 PM

heidi...how is fed treating the bank poorly? that doesn't even make sense. try the new usbank in o.p. they are good for me.

Ed from Oak Park  

Posted: May 3rd, 2011 9:26 AM

I bank with Bank of America and find them very good. They gea bad rap because they are big.I think they offer great service and are very friendly. I think Community Bank should sell to new owners.

Heidi Spoor from Oak Park  

Posted: May 2nd, 2011 12:54 PM

We banked at LaSalle, right down the street from our house. Not always the best, but decent place to do business. Now it's Bank of America. BOA is in no way a community bank and never will be. Have not had good service at all, continuously increasing fees and I know from friends working in real estate that their dealing with foreclosures is horrendous. We will be moving our money to Community Bank even though it is not as convenient for us. Feds seem to be treating Community Bank poorly.

John from Oak Park  

Posted: April 15th, 2011 9:05 AM

Every community needs a great community bank. That doesn't mean that the bank cannot be a US Bank or a Bank of America, etc. It is the people working at the bank that make the difference, not the bank itself. What we have here with CBOPRF is a failure of leadership and management to follow the rules. Now they are "embarrassed" that they are under scrutiny. Give me a break Mr. Knoll, your bank has failed what, three FDIC investigations? That isn't "embarrassing" it is a joke.

Cheryl from Park Forest  

Posted: April 13th, 2011 2:00 PM

I agree with Larry. The bank is operating under the same laws as every other bank, yet they are getting "slapped" repeatedly by the FDIC. What's wrong here? Either they are incompetent or they are knowlingly violating the law. If I were a customerI would wonder what else is wrong?

Larry from Oak Park  

Posted: April 13th, 2011 1:29 PM

This is a leadership issue. The FDIC has had to "force" the bank to comply with the law, again. CRA does not say a bank has to make "bad loans". It says that it has to demostrate (advertise, makes sales calls, have a plan)that it is making lending available to low-to-moderate income areas within it's delinated market area (where it collects deposits). The question therefore is: Did the bank have a CRA plan? Who was the CRA officer? Mr. Knoll in my opinion is simply incompetent.

Bridgett Baron from Oak Park  

Posted: April 13th, 2011 12:27 PM

@Paul: Good point.

But at least I voted  

Posted: April 12th, 2011 3:49 PM

Wait, election judges can serve in their own voting precinct? Somehow that seems wrong. And it certainly seems wrong for an election judge to publicly comment on their neighbor's voting habits, even anonymously. But hey, at least YES leaning judges didn't wear their campaign buttons INSIDE the polling sites like they did for the last high school money grab....err referendum.

paul  

Posted: April 12th, 2011 3:43 PM

From reading this article, I don't really understand what the violations are. "Not in compliance" with a "law that encourages banks to reach out to low-income neighborhoods"... So, the bank didn't reach out as it was encouraged, but not required, to do? Does Oak Park/River Forest even have any low-income areas? This is a community bank we're talking about. Sounds like the bank is being faulted because it happens to serve two towns that are pretty well-off.

OP Resident  

Posted: April 12th, 2011 2:49 PM

Just for the record, John. The discussion you are having is not with the "original" OP Resident. This "one" totally agrees with you regarding the low turnout at the polls. I was an election judge and know that my some of my neighbors didn't cast a ballot. Yet, the same had plenty to say about our "YES" yard sign. With absentee voting at Village Hall; there's no good excuse.

john murtagh from oak park  

Posted: April 12th, 2011 12:57 PM

Hi OPR - I guess D97 could do it but to what purpose? My point is that all citizens (individuals, corporations, non-profits, churches) have a right to express their opinions in an election. The view expressed by the group that Mr. Noll is a member was a reasoned opinion as did many who expressed the opposite opinion but in a reasoned manner. In an election that had so few voters, I hate to blame those that participated when our real argument should be with those that didn't.

rdglnd from oak park  

Posted: April 12th, 2011 10:44 AM

Thanks to the Tribune for bothering to talk to someone besides Noll. http://www.chicagobusiness.com/article/20110412/NEWS01/110419983/oak-park-bank-slapped-on-community-lending

Tom Paine  

Posted: April 12th, 2011 9:40 AM

Wow, a really insightful piece of reporting! Did you just cut and paste the platitude filled PR release from the banks spin masters? Does the Wednesday Journal not think federal allegations related to possible money laundering important enough to press Mr. Noll to answer with facts as opposed to vague references to "getting the job done"?

Galen Gockel  

Posted: April 12th, 2011 8:30 AM

The two FDIC "critical" findings reported here are not related to the bank's financial strength.

OP Resident  

Posted: April 12th, 2011 7:29 AM

I think if school Dist 97 removed its deposits there could be a news worthy issue. No?

john murtagh from oak  

Posted: April 12th, 2011 4:02 AM

Hey OP Resident - comparing a band compliance issue with the D97 Referendum is like comparing watermelons and lemons. I think it was a cheap shot.

Luke Scottwalker from Oak Park  

Posted: April 11th, 2011 11:44 PM

Careful, Bob from OP...Tom from RF is quickly searching freedictionary.com to find a synonym for "teasel". No objective empiracist is he! And to reiterate, CRA is only one of many layers of regulatory burdens placed upon all business...time to back off. And to OP Res who points out that Mr Noll supported a NO vote for D97 (gasp!!), get over yourself...I'll trust Mr Noll's views school reform over yours any day.

Bob from Oak Park  

Posted: April 11th, 2011 10:58 PM

Contrary to Ray's comments below, the leadership of Community Bank is competent and strong. Mr. Noll fully addressed the issues raised by the FDIC -- issues which are questionable to even raise at this point. Further, the CRA is a flawed, big government, socialistic law which interferes with our free market economic system.

Tom from River Forest  

Posted: April 11th, 2011 10:11 PM

Mr. Bowman is still peddling that right wing teasels I see. Fortunately, objective empiracists have debunked it: http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4136

Patricia O'Shea  

Posted: April 11th, 2011 10:10 PM

I appreciate Mr. Noll's candor.

mmds from Oak Park  

Posted: April 11th, 2011 9:54 PM

I'm a big believer in and supporter of community banks. We've received excellent and personal service from Community Bank. I too appreciate the candor from the bank on these issues, and believe the institution will take the steps necessary to remedy them.

OP Resident  

Posted: April 11th, 2011 9:36 PM

......And on top of it Marty Noll signed his name to a letter NOT in favor of the Community Grammar school Dist 97 referendum!!

Ray from Oak Park  

Posted: April 11th, 2011 9:21 PM

These are essentially management issues, lack of ability to navigate maze of regulation and poor judgement/oversight with respect to loan and administration activity. I really like this institution but, clearly, leadership may be in over their heads. Impact of economic downturn is significant factor in what ails CBOPRF, but competent leadership would mitigate much of the problem. Too bad.

Jim Bowman from Oak Park  

Posted: April 11th, 2011 9:05 PM

Luke S's "It's overbearing nonsense like this that CAUSED the financial meltdown" is apt. CRA was apparently abused, imprudent lending resulted. Whom does that serve?

Nancy Trock T-Renegade Fitness from Oak Park  

Posted: April 11th, 2011 8:36 PM

FDIC is a big bully. I'm standing behind Community Bank all the way.

Bridgett Baron from Oak Park  

Posted: April 11th, 2011 8:32 PM

The FDIC's report is about stuff from over two years ago? Seriously? After sixteen years at the building across the street (that place has been four different banks in that time...Good grief.) we moved our money over to Community Bank in the beginning of this year. And we will keep it there. I appreciate their candor in this article; a nice change from their neighbor across the street.

Luke Scottwalker from Oak Park  

Posted: April 11th, 2011 8:18 PM

That the FDIC waits until April of 2011 to list an "offense" from 2008 clarifies the fundamental problem with the financial regulatory system in this country. It's overbearing nonsense like this that CAUSED the financial meltdown, not a lack of regulation. Banks have made mistakes for sure, and some have paid dearly for them (FBOP, etc). But poorly designed and badly enforced rules are not to be overlooked, and those who created them (Dodd/Frank etc) need to be held accountable. Support CBOPRF!!

sheila martinotti from oak park  

Posted: April 11th, 2011 8:17 PM

Community Bank may have it's issues, but which bank doesn't? The staff at Community make it just that..a community. They have been wonderful to us, and continue to be. Sheila Montroy is by far, one of the best officers of a bank i've ever encountered. My money stays!

Paul Obis from Oak Park  

Posted: April 11th, 2011 8:04 PM

I'm going to keep my checking account at Community Bank. They're good people.

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