Lincoln Federal Savings Bank under supervision order

Lincoln Federal Savings Bank agreed to restrictions imposed by its regulator, the Office of the Comptroller of the Currency, in June, according to documents posted on the agency’s website.

The Comptroller of the Currency said Lincoln Federal engaged in “unsafe or unsound practices” in a number of areas, including its strategic plan, liquidity risk management, emergency funding plan, interest rate risk management, and board oversight and corporate governance.

According to the agreement, the bank must, among other things, take the following steps:

* Form a compliance committee within 10 days;

* Submit a strategic plan, liquidity risk management program, emergency funding plan and interest rate risk management plan within 60 days.

The agreement also sets out what measures the bank must take to ensure that its board is sufficiently informed about the bank’s activities and provides appropriate oversight. This includes the appointment of an independent board member who “has sufficient authority and expertise to ensure that the bank is not subject to undue influence from officers or board members.”

Kyle Poppe, president and CEO of the nearly 120-year-old bank, expressed confidence in a statement that by addressing the areas highlighted by the OCC, “we will strengthen the strong foundation on which Lincoln Federal Savings Bank has always stood.”

Poppe said the bank had already taken the corrective measures required in the agreement, including submitting a new strategic plan and working to strengthen its corporate governance.

“Our management and board are fully committed to meeting all the requirements of the agreement within the specified timeframe,” he said.

This is not the first time that the almost 120-year-old bank has been subjected to special scrutiny by its regulator.

Lincoln Federal received a cease-and-desist order from its then-regulatory agency, the Office of Thrift Supervision, in October 2009 for allegedly engaging in unsound banking practices, including inadequate capital, too many bad loans and a lack of internal oversight. That order was lifted in 2014.

Unlike 2009, when the bank, like many others, ran into trouble and experienced financial difficulties during the Great Recession of 2007-2009, it is currently successful and growing, Poppe said.

He pointed out that Lincoln Federal has ample capital in both the bank and its holding company and said deposits exceeded the $300 million mark for the first time in July.

“The quality of our assets is strong, we have not recorded any losses for many years,” Poppe said. “The bank maintains provisions for loan losses of 1.35 percent, which puts us in the 90th percentile.”

He also noted that the OCC order in no way restricts the bank’s ability to operate and that the bank recently increased the number of its mortgage lending partners in Lincoln and Omaha to increase its market share.