HomeBank of Arkansas is operating under a consent order with the Federal Deposit Insurance Corp.
The April 8 order, which was released publicly by the FDIC on Friday, charges the leadership of the $76 million-asset lender with unsafe or unsound banking practices.
The board of directors also consented to charges of violating banking laws and regulations related to weaknesses in management, capital, earnings, asset quality, liquidity and sensitivity to market risk.
Tasks assigned to the bank leadership include expanding the board membership with more independent directors, increasing more board participation to improve supervision and developing a written policy and providing better oversight of reimbursement of insiders’ expenses.
Other items to be addressed are improving internal audit control, developing a written plan to address liquidity and asset/liability management, establishing adequate allowance for loan and lease losses, eliminating assets classified as a loss as a result of a June 11, 2018, regulatory examination and correcting violations noted during that exam.
The order says the bank, "by and through its duly elected and acting Board of Directors," consented to the order "without admitting or denying any charges..." But CEO John Stacks said Friday that the order "was totally surprising to me."
"I was just made aware of the order," he said. "It's certainly not an accurate reflection of what's going on with the bank today."
HomeBank posted a profit of $92,000 during 2018 after losing $27,000 during 2017. For the quarter ending March 31, the bank recorded a loss of $70,000.
Chartered in Portland (Ashley County), HomeBank operates four other full-service locations in Little Rock, Greenbrier, Marshall and Damascus with a staff of 27.
The bank is restricted from paying dividends while under the order.