WASHINGTON--The Federal Reserve Board Monday terminated enforcement actions it took in 2006 against Puerto Rico bank First BanCorp and Alabama's Bank of York.
Under a March 2006 cease-and-desist order, First BanCorp was directed to revise its portfolio of mortgage loans.
According to the order, First BanCorp found that a substantial portfolio of mortgage loan transactions with two other financial institutions did not qualify as "true sales," and that it should restate its financial statements for Jan. 1, 2001, through March 31, 2005.
The Fed also found, however, that supervisory action was appropriate to address certain safety and soundness issues regarding First BanCorp in the absence of current financial statements for 2005.
The cease-and-desist order called for the bank to have an independent consultant review its portfolios of mortgage loans and prepare a written report on its findings.
Meanwhile, the bank was not able to take dividends or any form of payment representing a reduction in capital from a subsidiary bank without prior written approval of a federal regulator.
In a separate press release, the Fed said it has also terminated its almost two-year-old enforcement action against the Bank of York, a state-chartered bank that is a member of the Federal Reserve System.
In an Aug. 14, 2006, order, the bank was directed to conduct an analysis of its management and staffing needs, with particular emphasis on loan administration, loan collection, asset/liability management and operational needs.
The bank was also prohibited from declaring or paying any dividends without prior approval of the reserve bank.