By JIM ANDERSON
NIAGARA, Wis. - The federal agency that regulates banks in the U.S. has issued a civil penalty of $50,000 against Robert Gunville Jr. for activities while serving as chairman of the First National Bank of Niagara, Wis.
The allegations mainly concern improperly documented loans from the bank to Gunville or his related business interests. Gunville is the sole owner of the bank.
According to bank officials, on any of the issues raised, there has been no loss to the bank.
Gunville was cited by the Comptroller of the Currency for "unsafe or unsound practices, violations of law, and breaches of fiduciary duty" during the period from March 2009 through August 2011. Gunville signed a consent order earlier this year, neither admitting or denying several allegations against him.
During the bank's recent regularly scheduled examinations by the Comptroller of the Currency, the bank has received satisfactory comments as to the operation and health of the bank, said Sue Paoli, bank president.
"The activities cited in the consent order do not directly relate to Mr. Gunville's activities as chairman of the bank, but rather to transactions of Mr. Gunville personally and of his related business interests, which took place a couple of years ago as indicated in the order," she said. "The civil money penalty levied is typical for sanctions of this nature."
Paoli and the bank's board of directors, in response to an inquiry from The Daily News and at the request of Gunville, responded to allegations in the consent order that Gunville:
- Overdrew accounts at the bank resulting in the bank extending credit on preferential terms.
"Mr. Gunville or his related business interests did have overdrafts on his related accounts," Paoli said. "These items have been rectified and controls at the bank have been put in place so as to not have a reoccurrence of this matter with Mr. Gunville's accounts or the accounts of any other customer."
- Caused the bank to renew three of his personal loans without paying accrued interest.
According to the bank: "These loans were properly renewed and were fully secured by certificates of deposit held by the bank. The accrued interest was paid within a matter of a few days from the date of renewal."
- Caused the bank to make loans to third party borrowers, who then subsequently loaned the proceeds to Gunville or his related interests. The loans were not approved in advance by the bank board and/or were not properly secured.
"The loans were either fully secured by certificates of deposit held by the bank or the loans qualified for an extension of credit based on other deposits at the bank," First National Bank of Niagara officials responded. "The majority of the loans have been fully repaid. The remaining three loans are fully secured by certificates of deposit held by the bank."
The order further alleges that Gunville failed to properly document loans from the retirement trust of one of his related interests. Proceeds from the loans, along with required interest, were repaid in full, the Comptroller acknowledged in the order.
Under the consent order, Gunville is unable to participate in the affairs of the Niagara bank or any insured depository institution unless he obtains the prior written consent of both the Comptroller and the appropriate federal agency. Gunville said he is in the process of seeking reinstatement.
David Herrick, a longtime director of the bank, has been elected chairman.
"During Mr. Gunville's tenure at the bank, it has grown with the community, is profitable and is solidly capitalized," bank officials said. "Mr. Gunville has been planning to reduce his role at the bank for some time in any event to devote more time to his various business interests, his substantial charitable interests and to the affairs of the community."
The order prevents Gunville from seeking new extensions of credit from the bank unless the loans are fully secured by certificates of deposit at the institution. Gunville is also required to guarantee the bank against any losses incurred with respect to the loans cited in the order.
"The remaining loans are fully secured by certificates of deposit held by the bank," Paoli said. "No losses on these loans have ever been experienced by the bank and none are anticipated due to the secured nature of the loans."
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the U.S. Department of the Treasury that serves to charter, regulate, and supervise all national banks and thrift institutions and the federal branches and agencies of foreign banks in the U.S. The Comptroller of the Currency is Thomas J. Curry.
The consent order concerning Gunville is signed by Kristina B. Whittaker, deputy comptroller for special supervision.
Jim Anderson's email address is email@example.com.