Independence Bank in East Greenwich, R.I., plans to liquidate under a plan approved by the Federal Deposit Insurance Corp.
The FDIC, which had accused Independent of charging illegal fees tied to Small Business Administration 7(a) loans, announced the liquidation in a Jan. 14 consent order with the bank. Independence was also required to pay affected consumers $3.4 million of restitution.
The FDIC had claimed that the bank’s actions had caused the SBA to lose about $8.8 million.
Independence, which plans to terminate deposit insurance and surrender its banking charter, must dispose of any SBA loans still on its books while ensuring the continuance of servicing rights and obligations connected with any of its SBA loans, according to a consent order.
The bank neither admitted nor denied the FDIC’s allegations. The agency removed Robert Catanzaro as the bank’s CEO last year.