The bank that holds many of the City of Carmel’s funds and provides other financial services was found to be engaging in several “unsafe or unsound practices,” according to the U.S. Department of the Treasury’s Office of the Comptroller of the Currency.
According to an OCC consent order signed in October 2023, United Fidelity Bank is in “troubled condition” because of its practices related to managerial and board oversight and reporting, capital planning, credit review and analysis, data management, internal audit, internal controls and more. The consent order outlines steps Evansville-based UFB must take to avoid cease and desist proceedings.
An OCC official stated in an email that the OCC does not comment on enforcement actions and directed Current to its website for more information about the process.
Angie Peters, UFB vice president of marketing, stated that the bank’s rapid growth led to the OCC’s concerns.
“The bank was highly successful in its affordable housing finance activities and as a result, the bank grew very quickly,” Peters stated. “Over the past two years, the bank has generated approximately $200 million in profits – well in excess of our peer banks. Despite the financial performance, our regulator, the Office of the Comptroller of the Currency, was concerned about the pace of that growth.”
Existing banking products and services have not been impacted by the situation, Peters said. In addition to a branch at 800 S. Range Line Rd. in Carmel, UFB operates 25 banks throughout the U.S. and two in the U.S. Virgin Islands.
“Clients of UFB still have access to the same great staff and premium services at the same convenient locations,” Peters said.
Carmel Mayor Sue Finkam, who took office Jan. 1, said the city is aware of the consent order and has taken steps to address the situation.
“This issue was discovered during our transition and our team took immediate action,” Finkam stated. “We consulted with financial advisors who assured us that the city money is secure, fully insured and not at risk. We are also requesting proposals for banking services, as 2016 was the last time a banking RFP was completed. Taxpayers can anticipate an expedient, thorough and transparent RFP process.”
Carmel officials did not clarify as of press time whether the city would consider remaining a customer of UFB if it is among banks to submit a proposal.
The city ended its 15-year partnership with Fifth Third Bank in mid-2016 after the Carmel City Council voted to transfer its funds to UFB, which is owned by Carmel-based developer Pedcor. The decision came after the city issued a request for proposals for banking services and received 11 bids. At the time, then-Clerk Treasurer Christine Pauley said switching to UFB would save the city more than $146,000 a year in reduced fees.
According to the consent order, the UFB board must monitor the bank’s compliance with the order and submit a quarterly progress report to the OCC.
The order requires UFB to maintain prescribed capital ratios, engage an independent third party to review board and management supervision, revise its written strategic plan and submit to the OCC written programs to manage areas of risk and internal audits, among other measures.
Peters stated that UFB has made changes to address the OCC’s concerns, including slowing asset growth and affordable housing lending activities, hiring several new senior officers, increasing staff to address policies and procedures and adding an independent director to its board. She also said UFB has added approximately $100 million in capital over the past year and that its capital levels are “approximately those of peer banks and are well above Basel III minimum requirements.”
Pedcor has been a longtime partner with the City of Carmel on large-scale projects, including the $166 million Carmel City Center development. It is in the early stages of a multi-phase $700 million development at 111th and Pennsylvania streets. In 2022 the city council approved issuing $76.5 million in developer-backed tax increment financing bonds to support the project.
