Century Bank President John O'Neil spent part of the past week in Washington, D.C. with some of the country's top banking regulators. He was there for a fight.
Century Bank President John O'Neil spent part of the past week in Washington, D.C. with some of the country's top banking regulators.
He was there for a fight.
Sarasota-based Century, a $920 million institution, was hit with the dreaded “unsafe and unsound” letter from the federal Office of Thrift Supervision March 11. Regulators allege that the bank, a subsidiary of a Delray Beach-based holding company, was too aggressive in its loan strategy and too lax in its loan risk management — a toxic combination that led the bank to lose $21 million in 2008.
The OTS also notified O'Neil and Century's board that it plans to pursue a cease and desist order against the bank.
O'Neil says even though he had been in contact with the federal officers assigned to monitor Century, he was shocked at the orders. To be sure, the bank has taken its hits over the past year, O'Neil acknowledges, but he says those hits are based in the faltering economy and the real estate, not based on systematic problems within the bank's operations or oversight.
Indeed, the bank's majority owner, Delray Beach businessman Barry Florescue, recently pumped $10 million of capital into Century, the largest Sarasota County-based bank and one of the largest banks, based on assets, on the Gulf Coast.
“We went from having a top business plan to all of a sudden being unsafe and unsound,” O'Neil tells Coffee Talk. “It seems like they are singling us out and as far as why, we just don't know.”
While O'Neil isn't the first banker on the Gulf Coast to disagree with regulators, he is one of the first, if not the first, to fight back with such force. Several Gulf Coast bankers say the traditional method of dealing with letters and orders such as the one Century received is to take the lumps, make the changes and move on.
Plus, O'Neil's Washington trip was more like a convoy. The bank's entire board of directors and its chief financial officer joined O'Neil in several high-level meetings that pitted the bank against regulators from the OTS, including the agency's acting director.
And on O'Neil and Century's side for those meetings was a bevy of attorneys, including a lawyer from the firm Bracewell & Giuliani. Yes, that Giuliani.
While O'Neil said the meetings weren't scream sessions, they were tense at times. And even though he called most of the regulators professional, he also said they were “difficult” and “inflexible.”
The good news for Century, its customers and its shareholders: As of the Review's press time, OTS officials had not made any decisions on rescinding or reviewing its initial orders — a span of five days. O'Neil says the bank's lawyers told him that the longer the OTS reviews the situation, the better the bank's chances are of prevailing.