The Bank of Santa Barbara CEO steps down
The Bank of Santa Barbara is seeking a new CEO as it races to comply with a regulatory order related to violations of Bank Secrecy Act reporting rules.
The bank said Eloy Ortega has left his position as CEO of the Santa Barbara-based lender and that it’s now searching for a new chief executive. Board members declined to comment on the reasons for Ortega’s departure.
Ortega told the Business Times he was “stepping down as CEO due to differences in strategic direction with the board of directors.”
The search for a CEO comes soon after the bank entered into an agreement with one of its regulators, the Federal Deposit Insurance Corp. The February consent order, which was made public last month, relates to issues with the bank’s reporting under the Bank Secrecy Act, or BSA, a piece of legislation designed to combat money laundering and tax evasion, and its internal controls.
“At this point we feel very strongly and positively that we have put in place the resources and the training to meet both of those two items that are on the consent order,” bank board member Julie McGovern said in a May 13 interview.
The regulatory order followed a routine bank examination in mid-2013. The FDIC said it doesn’t make the exam reports public and that it can’t comment on specific issues at a bank. In the consent order, regulators give the bank 30 days to comply “in all material respects with the BSA and its rules and regulations” and to “correct internal control weakness.”
In response, the bank has built out its compliance department, Chief Operating Officer Joanne Funari told the Business Times. “They’ve been working diligently and have done all the training, and now internal controls are in place and are just being tested,” she said.
Enacted in 1970, the Bank Secrecy Act was designed to help law enforcement agencies identify possible money launderers and drug traffickers by having banks report red-flag activity such as cash transactions of more than $10,000. Regulators can slap monetary fines and regulatory enforcement actions on banks that fail to comply.
The bank’s board is slated to appoint an interim CEO and to create a search committee to recruit a new chief executive. The board hopes to have a new CEO in place and to have made progress on the regulatory front by its August shareholder meeting, McGovern said.
“The timeline is of high priority for us,” Chairman Dave Mokros said in an interview.