The Federal Reserve on Thursday said it has issued a consent order to a Baltimore company, instructing it to take action to improve the composition and business practices of its board.
The Fed entered into a consent order with Capital Funding Bancorp Inc. in Baltimore, and its subsidiary, CFG Community Bank. The order follows a February examination, which unearthed "certain safety and soundness deficiencies at the bank and violations of laws and regulations," the Fed said.
The Fed order the $517.2 million-asset bank to hire an independent consultant to assess the effectiveness of the corporate governance and board and management structure. The bank must also hire an outside consultant to review reimbursement policies. The bank's board was also ordered to take actions to have a majority of its member be outside directors and to create a compensation committee comprised only by outside directors.
Capital Funding was ordered to submit "an acceptable written code of ethics and conflicts of interest policy" that would apply to the company and the bank. Also, the Fed mandated an extensive study of loan concentrations and handling of the loan-loss allowance.
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Separately, the Fed announced a written agreement with Huntington Bancshares Inc. in Huntington, Texas. The company agreed to serve as a source of strength to its $245.7 million-asset Huntington State Bank, which has been operating under a consent order from the Federal Deposit Insurance Corp. and the state banking regulator since April 4.
The company was barred from paying dividends or from making payments on interest and principal on subordinated debt and trust preferred securities without Fed approval. The company must also secure regulatory approval before issuing new debt, and it was required to provide the Fed with a cash flow projection for 2012.
