WASHINGTON Guaranty National Bank of Tallahassee,
Tallahassee, Florida, was closed today by the Office of the Comptroller of the
Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) was
appointed receiver. The bank, with
approximately $71 million in assets, was chartered in 1986.
The OCC acted after finding substantial violations of law
and a substantial dissipation of assets and earnings due to unsafe and unsound
practices. The violations of law and
unsafe and unsound practices also weakened the banks condition and seriously
prejudiced the interests of the banks depositors and the deposit insurance
fund.
The bank had losses of over $4 million in 2003 and over $2
million in 2002.
The bank was poorly managed and lacked a permanent president
and senior lending officer and appropriate strategic direction at the time of
its closing. Significant losses were
caused, in part, by poor underwriting decisions, standards and credit analysis. Problem areas included a high loan-to-value
home equity lending program which the bank failed to properly oversee and which
led to substantial losses. The OCC
found numerous violations of consumer laws in this lending program and
responded by strengthening its enforcement actions and imposing civil money
penalties against the bank. The OCC ordered the bank to exit the program in an
August 2002 enforcement action.
The bank entered into a cease and desist order with the OCC
in May 2003. That enforcement action
replaced a temporary order to cease and desist issued in August 2002 regarding
the high loan-to-value lending program and a formal agreement from January 2002
with which the bank failed to comply.
The cease and desist order addressed, in part, strategic, capital and
profit planning, correction of consumer law violations, lending operations,
capital levels, earnings and management.
However, the banks board and management also failed to substantially
comply with the cease and desist order.
The FDIC will release information about the resolution of
the bank.
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The OCC charters, regulates
and examines approximately 2,100 national banks and 52 federal branches of
foreign banks in the U.S., accounting for more than 55 percent of the
nations banking assets. Its mission is to ensure a safe and sound and
competitive national banking system that supports the citizens, communities
and economy of the United States.
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