A cease and desist order was issued by the Federal Reserve Board against a Missouri bank because of bad underwriting.
The Fed said it issued the order against Progress Bancshares Inc. and subsidiary Progress Bank of Missouri after an examination found that the company engaged in unsafe and unsound activity, had deficient credit-risk management practices and violated state and federal banking laws.
Without admitting or denying the allegations, Progress consented to recruit within the next two months a qualified chief financial officer and a senior lending officer to oversee the bank's credit function.
Among other things, Progress and its subsidiary also agreed to write a joint written plan to strengthen board oversight of management and operation, including sufficient loan underwriting standards and limits, an effective loan review program, internal control systems and record-keeping procedures.
The Fed ordered the lender to submit written loan policies and procedures such as those prohibiting disbursement of loan proceeds to someone other than the borrower without evidence of proper authorization and for a use other than for the stated loan purpose. Plus, Progress must provide written underwriting standards that require the documentation of a clear source of repayment and the borrower's ability to service the debt.
Progress was also required to correct all documentation and credit information deficiencies, including obtaining accurate and current financial statements and appraisals, according to the order.
Progress must reportedly appoint a joint compliance committee to monitor and coordinate its compliance with the order and submit copies of the meeting minutes to the Fed and the Missouri's division of finance monthly.