The US Federal Reserve Board has fined a monetary penalty of $46m against Regions Bank for misconduct related to the process followed by the bank in the first quarter of 2009 for identifying and reporting non-accrual loans.
A consent order was also issued by the Federal Reserve jointly along with the Alabama Department of Banking and the Securities and Exchange Commission, which will require the bank to continue to improve its relevant policies and procedures. The Alabama Department of Banking is considering a $5m penalty against the Birmingham-based lender.
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The US central bank said that three former senior managers of Regions Bank will face fraud charges for intentionally misclassifying loans, which should have been recorded as impaired for accounting purposes.
Thomas A Neely Jr., working as head of Regions Bank’s risk analytics group in 2009, acted as the principal architect of the scheme, with help from the bank’s head of special assets Jeffrey C Kuehr and chief credit officer Michael J Willoughby, says Fed.
The trio wrongly classified $168m in commercial loans as performing with intention to save the bank from recording a higher allowance for loan and lease losses, according to the SEC.
Additionally, the Fed also initiated enforcement actions against three former employees of Regions Bank.
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