Federal regulators issue a cease-and-desist order for Iowa's Luana Savings Bank. | File Photo
Federal regulators issue a cease-and-desist order for Iowa's Luana Savings Bank. | File Photo
The Federal Deposit Insurance Corporation has issued a cease-and-desist order for Iowas-based Luana Savings Bank, a 113-year-old family bank, requiring it to restructure its administration, reduce its loan portfolio and increase retail depositors, KCCI reported.
The FDIC's primary concern is that the bank is increasing lending and expanding through the utilization of wholesale deposits.
The FDIC cautions these increases, combined with the bank's holdings of fixed-rate loans, creates a risk of the bank losing money if interest rates increase.
Luana is challenging the FDIC's ruling, claiming that the majority of the allegations against the bank are "manufactured," KCCI reported.
“If federal regulators believe there is something wrong at Luana Savings Bank, the bank should pay attention and comply with their directions instead of suing," blogger Paul Deaton stated on Twitter Sept. 2.
Luana is also being investigated by the Federal House Loan Bank of Des Moines for allegedly being involved in hundreds of millions of dollars worth of home loans. The bank disputes this allegation as well, KCCI reported.
Alerts Sign-up