Asheville’s Blue Ridge Savings Bank ordered to stop ‘unsafe and unsound banking practices’

In today’s newspaper, the Asheville Citizen-Times takes note of a an FDIC action taken against Asheville’s Blue Ridge Savings Bank. Former U.S. Rep. Charles Taylor is the bank founder/owner, and it’s been in hot water before. Back in September, I wondered aloud if local banks were sound. Now we have an answer.

The FDIC action posted its November enforcement actions on Dec. 29 on its Web site. Or you can read the PDF right here.

The Federal Deposit Insurance Corp. orders Taylor’s bank to:

cease and desist from the following unsafe and unsound banking practices and violations of laws and/or regulation:

(a) Operating with management whose policies and practices are detrimental to the Bank and jeopardize the safety of its deposits;

(b) Operating with a board of directors (“Board”) that has failed to provide adequate supervision over and direction to the management of the Bank;

(c) Operating with inadequate equity capital and reserves in relation to the volume and quality of assets held by the Bank;

(d) Operating with a large volume of poor quality loans;

(e) Operating with an inadequate allowance for loan and lease losses (“ALLL”);

(f) Operating with hazardous loan underwriting and administration practices;

(g) Operating in such a manner as to produce low earnings;

(h) Operating without effective Board oversight and executive management supervision to prevent unsafe or unsound banking practices and violations of laws and/or regulations related to the Bank Secrecy Act (“BSA”), 2 subchapter II of Chapter 53 of Title 31 of the United States Code, and its implementing rules issued by the U.S. Department of Treasury, 31 C.F.R. Part 103; the regulations of the Office of Foreign Asset Control (“OFAC”); the FDIC’s BSA compliance regulations, 12 C.F.R. § 326.8, and the FDIC’s suspicious activity report regulations, 12 C.F.R. Part 353 (“Part 353”) (collectively, “BSA Rules”);

(i) Operating with an ineffective system of internal controls to ensure ongoing compliance with the BSA Rules;

(j) Operating without effective coordinating and monitoring procedures by a designated individual responsible for ensuring day-to-day compliance with the BSA Rules;

(k) Operating with an ineffective customer identification program (“CIP”). CIP is the collective reference to section 103.121 of the Rules and Regulations of the Department of Treasury, 31 C.F.R. § 103.121;

(l) Operating with inadequate policies and procedures to monitor and control risks within concentrations of credit in the Bank’s loan portfolio; and

(m) Operating in apparent violation of laws, regulations, and/or statements of policy as more fully described on pages 13 through 16 of the Joint Report of Examination dated June 9, 2008 (“ROE”).

Wow. That’s quite a laundry list. The FDIC goes further to lay out an equally long list of actions the bank must take within the next few months to make sure the bank’s board and its staff are properly trained and that correct policies and procedures are in place.

The FDIC is still insuring the bank, which the Citizen-Times reports has seven branches in Western North Carolina, as well as three around Charlotte and one in S.C. The bank had $233.2 million in deposits in 18 WNC counties as of June 30 according to FDIC figures, the newspaper reported.