The Rockville bank controlled by businessman Morton A. Bender was fined $10,000 in August for alleged violations of a dozen banking regulations, according to an order recently made public by federal regulators.
The order imposing the fine also requires Bender to halt his efforts to merge his ColomboBank of Rockville with Independence Federal, according to the Office of Thrift Supervision, which regulates the institutions. Bender owns 21 percent of Independence Federal, the only majority-black-owned thrift headquartered in the District.
Examiners allege that Colombo did not have procedures in place to detect and report suspicious transactions and failed to strengthen its compliance program after a federal review in 2002 found that it was not monitoring whether employees were following consumer compliance laws.
Bender and the bank's directors, who did not admit or deny the claims, agreed to pay the fine and abide by all banking regulations. The bank is barred from merging with another institution until regulators confirm that it is following the law.
Bender declined to comment on the cease-and-desist order yesterday.
The action by bank regulators is the latest twist in a costly takeover battle for Independence Federal, which put itself up for sale last year.
Bender was the first suitor to win federal approval to acquire Independence Federal, but the thrift rejected Bender's overtures and in March signed a merger agreement with Carver Bancorp Inc. of New York.
Bender, who has long been a major shareholder, spoke publicly against the Carver agreement and said he would vote his shares against the merger.
His pursuit of Independence stopped in August when a securities filing by Bender indicated that the Office of Thrift Supervision had directed him to halt any actions that would increase his control over Independence Federal. He said he had been barred from buying more stock and seeking to change the composition of Independence Federal's board.
Bender is still embroiled in a legal tussle with Independence, which has alleged that he is trying to derail its merger with Carver for his own benefit. It is unclear how the thrift's lawsuit against Bender will proceed now that Bender no longer has approval to take over Independence. Independence Federal's interim president, Thomas L. Batties, did not return a phone call late yesterday.
The future of Independence Federal's deal with Carver, one of the largest minority-owned banking institutions in the country, is also unclear. Their plans to merge, creating an East Coast black-owned bank, have been stalled by a disagreement between the two institutions over the purchase price. Carver has said that it still wants to buy Independence, but not at the $21-a-share price it agreed to in March because of changes in the D.C. thrift's financial condition.
Independence has countered that Carver is in material breach of its merger agreement and that Independence is not going to renegotiate the deal.
Independence's stock closed unchanged yesterday at $17.13.