Quontic Bank Holdings in New York faces limitations on distributing capital under an enforcement action with the Federal Reserve.
The parent of the $584 million-asset Quontic Bank entered into a written agreement that requires Fed approval before it can pay dividends, repurchase stock or make any other capital distributions. Fed approval is also required before the company incurs, increases or guarantees debt.
Quontic must provide a written plan for maintaining sufficient capital levels, along with cash flow projections for the rest of this year.
Quontic Bank is already operating under an October consent order from the Office of the Comptroller of the Currency. That order, which requires Quontic Bank to have a total capital ratio of 13% and a leverage ratio of at least 9%, claims that the bank failed to address certain regulatory concerns outlined in a 2018 agreement.
“The bank is fully committed to addressing all issues identified in the written agreement,” Quontic Bank President Robert Russell said in an email to Banking Dive. He said that the bank’s total capital ratio on March 31 exceeded 20%.
“The bank has already made progress in several areas and has added significant resources throughout the organization,” Russell added. “It is important for our customers and the public to know the matters outlined in the … agreement do not pose a risk to depositors’ funds and Quontic Bank is FDIC insured.”