A community development bank in Washington that has run afoul of regulatory requirements has brought in an industry veteran and Washington mainstay to turn it around.
The $126 million-asset City First Bank of D.C., which specializes in affordable housing, small businesses, and nonprofit organizations, said Feb. 9 that it had hired Edward E. Furash, 71, as its chief executive officer at the end of December.
In a Feb. 6 agreement with the Office of the Comptroller of the Currency the bank undertook to address a number of operational deficiencies. Mr. Furash would not discuss the agreement in detail but said the OCC identified problems with Bank Secrecy Act compliance, information security, credit administration, and asset and liability management.
In his nearly 50 years in the industry, Mr. Furash has worked at numerous banks, founded two consulting companies specializing in banking, and taught at Harvard Business School and the Wharton School of Business.
He led an investment group that bought the $72 million-asset Treasury Bank of Washington in 2000. He moved it to Alexandria, Va., and sold it to Countrywide Financial Corp. in 2001. Under Countrywide he was Treasury Bank's chairman until 2004; when he left it had nearly $16 billion of assets.
"He's as good as it gets," said Chuck Muckenfuss, a lawyer at Gibson, Dunn & Crutcher LLP, a former senior deputy comptroller at the OCC, and a City First board member. "Ed will get the nuts and bolts straight and create a platform that makes … [City First] a premier community development bank."
Mr. Furash became a City First director in 2004. Last November the board asked him to become CEO and address its regulatory problems.
The job required someone with industry experience, knowledge of the local market, and familiarity with the bank, said Marie Mann Bibbs, a City First director who is a senior vice president at National Cooperative Bank in Washington. "All of those things converged, and everybody was looking at Ed," she said.
City First's assets have grown 173% since the end of 2001. It recorded a $1.2 million loss for that year but has been profitable each year since. Last year it earned $642,000.
But Mr. Furash said that over the past five years OCC examiners have repeatedly flagged deficiencies in its processes and procedures. He said that the problems resulted from an ineffective infrastructure and a lack of attention to detail, and that he has been "updating the organization to meet the needs of a modern community bank and to meet all of the regulatory requirements."
Five employees left the bank after a management review, and two senior managers were added; the bank plans to hire 10 people. Mr. Furash also formed task forces to address the deficiencies identified by the OCC.
"We're building a new team," he said. "We believe that in the course of meeting the regulatory requirements the bank will be better than ever."
The OCC will examine the bank again this spring, but compliance with the agreement may take a year, he said.
