Admirals Bank reported more than $2.5 million in losses in the third quarter, bringing total losses year-to-date to roughly $17.8 million.
The company also dropped another 10 full-time equivalent employees in the third quarter, bringing the number of employees at the company down to 78. The move comes after Admirals Bank reduced its workforce by 36 employees in the second quarter. One year ago, the bank had 150 employees.
The bank may also be violating a federal consent order that was still in effect as of Oct. 30, requiring that total capital stay at least equal to 13 percent of risk-weighted assets, and Tier 1 capital stay at least equal to 9 percent of adjusted total assets.
According to its third quarter call report, the bank’s total capital ratio had fallen to 12.6 percent. Its Tier 1 capital ratio, although less than in the second quarter, remained 11.5 percent, and its Tier 1 leverage ratio had increased slightly to 9.2 percent.
The struggles are nothing new for Admirals, which has not been able to turn a profit since 2013 and has been dealing with regulatory issues throughout the majority of the year.
The bank announced last year that it would sell most of its assets to a group of banking executives that planned to start a new bank. But in March of this year, the U.S. Office of the Comptroller of the Currency issued a cease-and-desist order to Admirals Bank, stating that the bank must maintain certain capital ratios, and adopt an “independent, internal audit program” of bank-paid expenses.
The OCC, which declined to comment for this article, wanted the program to examine expenses related to bank-issued credit cards, entertainment and travel expenses of insiders, telephones or electronic devices, cars, legal fees, prepaid assets, insider reimbursements and insider expense-related accounts. The enforcement action also required the bank to “engage an independent party” to audit senior management expenses between the years 2014 and 2016.
Following the order, the group of executives planning to acquire most of Admirals’ assets walked away from the deal. Former CEO Nicholas Lazares left the bank soon after.
In its second quarter call report, Admirals reported millions in losses, the trimming of its work force and the termination of its FastTrack Program.
The FastTrack program, a loan program designed to provide affordable solar financing for small- to medium-sized businesses, had been thought to be the strongest part of Admirals’ business, but instead resulted in over $2 million in losses in the second quarter.
After reporting second quarter losses, the Federal Reserve Bank of Boston entered into a consent agreement with Federal One Holdings LLC, the holding company of Admirals Bancorp, which is in turn the holding company of Admirals Bank in Boston.
Banker & Tradesman reported in September that Admirals Bank spent far more than comparable institutions in expenses over the years, racking up $17.8 million combined on legal fees, consulting, marketing and advertising and entertainment and travel between 2012 and 2016.
The bank incurred more than $1 million in legal fees in the third quarter alone, according to their call report, bringing total legal fees on the year over $4.8 million.
Admirals lost about $25 million in assets from the second quarter, bringing total assets to around $303 million.
