KBRA Comments on Cross River Bank’s Settlement with the FDIC

NEW YORK--()--The FDIC announced yesterday that it had reached settlements with Cross River Bank (“Cross River”) and Freedom Financial Asset Management (FFAM). Kroll Bond Rating Agency (KBRA) believes that the settlement and related consent order have a low likelihood of adverse impact upon the credit profile of Cross River and that of its parent, CRB Group, Inc. (CRB). Cross River’s management indicated that the consent order arose out of a routine examination by the FDIC of Cross River’s compliance with consumer protection laws and regulations covering an operating period from June 2013 through April 2015. The consent order stated that Cross River committed violations of law or regulations in connection with the origination of products offered by FFAM, one of Cross River’s Marketplace Lending (MPL) partners. Both Cross River and FFAM voluntarily entered into the civil consent order with the FDIC. While FFAM represents a very small portion of Cross River’s customer base, KBRA believes any adverse regulatory action draws heightened scrutiny to Cross River and the MPL industry, a factor already considered in the current ratings. Furthermore, KBRA believes that the matters cited by the FDIC were isolated instances and is not representative of pervasive issues with Cross River’s Compliance Management System (CMS). Nonetheless, we believe that has Cross River has since adopted enhanced compliance and reporting requirements consistent with FDIC guidance and incorporated enhancements to their CMS.

Cross River Bank (est. 2008), subsidiary bank of CRB Group, Inc. (est. 2015), is a leading marketplace lending (MPL) bank originator with a focus on partnering with leading MPL platforms to provide unsecured consumer lending solutions.

To read the comment, please click here.

To read KBRA’s most recent ratings action and surveillance report for CRB Group, Inc., please click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

KBRA
Analytical:
M Scott Durant, 301-969-3248
Director
sdurant@kbra.com
or
Vince Arscott, 646-731-2473
Senior Director
varscott@kbra.com

Contacts

KBRA
Analytical:
M Scott Durant, 301-969-3248
Director
sdurant@kbra.com
or
Vince Arscott, 646-731-2473
Senior Director
varscott@kbra.com