A small New York bank that previously ran afoul of risk-management requirements has agreed not to distribute capital without the permission of its regulators.
The holding company for Queens, New York-based Quontic Bank on Wednesday entered into a written agreement with the Federal Reserve Bank of Philadelphia.
Under the enforcement action, Quontic Bank Holdings Corp. pledged not to pay dividends, repurchase shares or make any other capital distributions without the Philadelphia Fed's prior written approval.
The holding company also agreed to provide its regulator with a cash-flow projection for the rest of 2023, and to submit a written plan for maintaining sufficient capital to provide financial support for Quontic Bank.
Also party to the written agreement with the Philadelphia Fed is Quontic Bank Acquisition Corp., which owns and controls Quontic Bank Holdings Corp.
Steven Schnall, the founder and onetime CEO of Quontic Bank,
Under Schnall's leadership, Quontic developed a reputation as a tech-focused bank. It was the first U.S. bank to
"Since Steve's passing, we have made some significant hires with substantial industry experience to ensure our mission remains intact," Robert Russell, Quontic Bank's president, said in an email Thursday.
The enforcement action by the Philadelphia Fed is the third against Quontic in five years. In 2018, the Office of the Comptroller of the Currency ordered Quontic Bank to develop a revised plan that assessed its capital adequacy in relation to its size and risk profile.
Then late last year, the OCC said in a second agreement with the $584 million-asset bank that Quontic had failed to address certain regulatory concerns outlined in 2018. The OCC ordered Quontic to maintain a total capital ratio of at least 13% and a leverage ratio of more than 9%.
Russell said Thursday that the bank's total capital ratio as of March 31 was in excess of 20%. He also said that the bank's management and board of directors remain fully committed to addressing the issues identified by the OCC.
"The Bank has already made substantial progress and has added resources throughout the organization," Russell wrote in a response to a question about the OCC's 2022 consent order. "It is important for our customers and the public to know the matters outlined in the Consent Order do not allege a risk to depositors' funds and Quontic Bank is FDIC Insured."
Russell also said that Quontic Bank's holding company, which is not publicly traded, was not paying dividends prior to the most recent enforcement action by the Philadelphia Fed.
