CMS Bancorp in N.Y. Discloses Material Weakness

CMS Bancorp in White Plains, N.Y., is working through a material weakness unearthed by a recent audit.

The $273 million-asset company disclosed in a regulatory filing Friday that it received a letter this week from its independent accounting firm noting an issue in its financial reporting. The issue involved a $101,000 audit adjustment tied to unaccrued legal fees at the end of the third quarter. The unaccrued fees were later identified based on bills submitted by the company's outside legal counsel during the fourth quarter.

CMS attributed the material weakness, in part, to the sudden death of Stephen Dowd, its chief financial officer, in August. His death led to a "loss of institutional knowledge" that was a "significant obstacle to overcome," the filing said.

CMS noted that it hired a new CFO in October and has enhanced its internal controls to make sure the material weakness was fully addressed. Still, CMS said it plans to file an amendment to its most recent annual report admitting that its internal controls were ineffective while disclosing the steps taken to address the issue.

CMS agreed in September to sell itself to Putnam County Savings Bank in Brewster, N.Y., for $25 million. CMS also reached an out-of-court settlement earlier this month to resolve lingering issues over its terminated sale to Customers Bancorp in Wyomissing, Pa.