As complications with a federal financial regulations agency thicken, Carrboro will turn to the “next most local” bank as its official depository.
After receiving an “Order to Cease and Desist” from the Office of Thrift Supervision on Nov. 23, Chapel Hill-based Harrington Bank likely won’t have the approval from the agency it needs to be chosen as Carrboro’s official town bank by its Dec. 31 deadline.
Anticipating this outcome, Harrington withdrew its application Oct. 27 after it still had not received approval from the federal office, clearing the way for BB&T to become the town depository.
“The (Carrboro) financial staff was asking us on a regular basis — ‘Did we know yet,’ ‘Were we going to meet that Dec. 31 date,” — we felt we needed to do something,” said President and CEO of Harrington Bank Larry Loeser. “We were fairly confident we weren’t going to meet the Dec. 31 deadline. That’s why we withdrew.”
The federal thrift supervision office, which oversees savings associations in the U.S., examined the bank in June to find if it had 12 percent of its capital to back up its assets. At that time, it did not, which prompted the order.
The cease and desist order will not change future operations of the bank, Loeser said. It was an agreement entered into by the office and the bank to reach the 12 percent goal, which it since has done by selling its sister bank in Los Angeles.
In September, the Carrboro Board of Aldermen voted 4-2 to select Harrington Bank as the official town depository over BB&T on the condition the thrift supervision office remove a restriction it placed on the local bank after it lost about $1 million in 2008.
“Harrington swore up and down to us in September that it was basically just procedural to resolve the previous situation, and it’s possible that they didn’t know the latest cease and desist order was coming,” Alderman Dan Coleman said.
“But it certainly is troubling that so soon after that, a much stronger action by a regulative authority has taken place.”