A formerly troubled community bank has shed another regulatory shackle as it continues to recover from a data breach three years ago.
The Federal Reserve Board ended its enforcement action against Lake Shore Bancorp and its holding company last week, according to a Thursday announcement from the central bank.
The entities own Dunkirk, New York-based Lake Shore Federal Savings Bank, which has been under heightened regulatory scrutiny since March 2022, when it disclosed that
The Fed's enforcement action, which was issued in June 2023, required the companies to serve as a source of strength for Lake Shore FSB by ensuring it addressed issues raised by the bank's primary regulator, the Office of the Comptroller of the Currency. It also required the bank to build up its capital by halting dividends, share repurchases and other distributions.
The Fed's move to end its enforcement action against Lake Shore comes after the OCC lifted its own consent order against the $700 million-asset bank in December. The OCC also removed the "troubled bank" label it applied to the institution in early 2023.
Lake Shore and the OCC entered into a written agreement in July 2022, in which the bank pledged to address its cybersecurity shortcomings. In March 2023, after supervisors determined the bank's data protection practices to still be deficient, the OCC issued a consent order with the bank and hit it with the "troubled condition" label, a designation that brought with it heightened scrutiny and growth restrictions.
Shortly after that consent order was struck, the bank's CEO Daniel Reininga announced that he would
The bank has since hired a new top executive and implemented a host of changes, not only to its cyber protection, but also on matters related to anti-money-laundering and Bank Secrecy Act compliance, auditing, management and automated clearing, according to a press release issued last December.
Upon the ending of the OCC consent order late last year, new president, CEO and Director Kim Liddell said the bank has moved rapidly to improve its practices and regulatory standings.
"Our primary goal has been remediation of the operational issues identified by our primary regulator," Liddell said in a statement. "The early lifting of the Consent Order by the OCC reflects the significant and speedy progress our team made. I am proud of the team and their continued focus on serving our customers and communities."
