Report: FDIC supervision fell short for Freedom Bank - Nashville Business Journal:

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The FDIC’s Office of Inspectoer General said in a report released Tuesday that in Bradentob failed primarily due to bank management The FDIC and the also were criticized for failinf to take supervisoryactioj quicker. The criticism of the FDIC was similaf to comments the OIG made in an of the failurrof , also in Bradenton. Freedom Bank was a state-charterecd institution that opened in May 2005 and by regulators inOctobefr 2008.
assumed Freedom Bank’s $254 million in deposits and purchased $36 milliohn of the $287 million in The OIG report said Freedom Bank failedc primarily due tobank management’s “aggressive pursuitg of asset growth concentrated in high-risk CRE [commerciaol real estate] loans with inadequatwe loan underwriting and a lack of other loan portfolil and risk management controls.” The bank’s board of directorsz did not ensure that bank management identified, measured, monitorec and controlled the risk, and did not implement corrective actionse in response to bank examiner and audig recommendations, the report said.
The report zeroed in on an incentive compensationh program at Freedom Bank that it said rewarded loan officerss without consideration of actualloan performance. “Resultinf losses severely eroded [Freedom Bank’s] earningas and capital and negativelhimpacted liquidity,” leading to the bank’s failure, the report During examinations, regulators identified the weaknesses in management and asset quality, but did not take supervisorty action commensurate with the risk the weaknesses the report said. It was not until March 2007 that regulatorstook action, and that was 10 months too the report said.
In a Sandra Thompson, director of the FDIC’s division of supervisionn andconsumer protection, said her division has concluded that additionap action was needed to better control and limit risks. She said the divisiom continues to monitor risks to the Deposigt Insurance Fund and proactively adjust itssupervisory programs.