First State Bank of Crossett has entered a consent order with the Federal Deposit Insurance Corp. regarding unsafe or unsound banking practices and violations of law or regulation.
Officials at the $44.6 million-asset bank signed the order on Jan. 3 without admitting or denying the charges, which included operating without: adequate supervision by the board of directors, an effective Bank Secrecy Act program, an effective compliance management system, information technology system and effective supervision of third-party risks.
The consent order was made public by the FDIC on Friday.
The bank reported a $605,000 profit during 2011. Officials couldn’t be reached for comment Friday.
On Tuesday, Howard Beaty Jr., president and CEO of the bank, issued this statement in connection with the order.
"First State Bank appreciates the Arkansas State Bank Department and FDIC’s diligence in their review of our BSA, Information Technology, and Compliance Programs.
"We have already implemented many of the recommended enhancements to our programs, policies and practices and are fully committed to swiftly and thoroughly addressing all of the issues identified within the written order.
"The order was a direct result of the bank providing banking services to a commercial customer, that later, through discussions with the regulatory agencies, was determined to be a both a commercial customer, as well as, an indirect service provider of remote merchant capture and remote deposit capture for the bank.
"The regulatory agencies asserted that the bank was indirectly offering these new products and services by agreeing to provide banking services to the commercial customer.
"Service providers for the bank require additional due diligence measures and review procedures. Numerous revisions to the bank’s policies and procedures were required directly related to third-party payment processors, remote merchant capture and remote deposit capture.
"On Jan. 31, 2012, the bank elected to terminate the business relationship with the commercial customer primarily due to the burdensome regulatory review process and the numerous potential risks associated with the bank’s indirect offering of products and services through the third party service provider.
"The order comes as the bank was enjoying the completion of its most profitable year of operation."
Sign up for Daily E-news
