Rodney Barreto Defends U.S. Century Bank Loan Modification Targeted in Lawsuit

Former U.S. Century Bank board member Rodney Barreto claims his $ 17.5 million group of loans from the bank are the ones slammed in a claim by the financial institution’s previous main financing policeman, yet Barreto stated he notted doing anything poor. Barreto claimed the interest rate reductions he got from the financial institution, several months after he left its board, was in exchange for greater than $ 2 ton in money he used to maintain the loans on 7 gas stations existing by paying back taxes, invoices, home enhancements and pre-payments on the mortgage.

Jose M. Monte, who was cancelled as the primary financing policeman of the Doral-based financial institution on Oct. 10, submitted a claim against U.S. Century Bank and President and CEO Carlos J. Davila on Nov. 30. One of its primary counts accuses Davila and the financial institution of breaking financial legislations by making unneeded “concessions” for a set of loans where a customer declined to pay unless those terms were given. This client was entirely able to make the needed repayments and the acknowledgments were “extremely undesirable” to the financial institution, however its management authorized them over Monte’s arguments, the case claims. The complaint further alleges that the loan needs to have been reclassified as “struggling financial obligation restructuring” and its worth jotted down due to the fact that it had a collateral deficiency of greater than $ 5 thousand. UNITED STATE Century Bank didn’t take any type of expenses for loan reduction reserves in the 3rd quarter, which allowed it to make a profit. UNITED STATE Century Bank denies the accusations in Monte’s lawsuit.

The “undercapitalized” bank has a pending deal to be gotten by St. Petersburg-based C1 Bank, although an investor claim seeks to test it. Additionally on the line is $ 50.2 million in citizen money that U.S. Century Bank approved with the Troubled Asset Relief Program (TARP), which might be discounted to $ 6.27 million must the merging close.

The stockholder case calls in to concern the large rate of loans and branch leases with former board users of U.S. Century Bank. Among the accuseds is Barreto, a well-known Coral Gables business owner. He goings getting in touch with firm Floridian Partners, owns electronic health care records company Healthcare Data Solutions, possesses various business residential properties, and is the previous chairman of both the Florida Fish and Wildlife Conservation Commission and the South Florida Super Bowl Host Committees in 2007 and 2010.

Barreto said he partnered with Warren Sands to get $ 17.5 million in home loans on 7 petrol station– one each in Miami and West Palm Beach and the rest in the Fort Myers region– from U.S. Century Bank, with both of them as guarantors. The company strategy was to create the stations and turn them for a revenue, but Barreto said he at some point disagreed with Sands on operations. Barreto stated he collaborated with his lawyers to eventually managed operating command of the gas stations from Sands.

Barreto said several of the petrol station were late on loan payments to U.S. Century Bank in the course of the negotiations with the bank, yet they just weren’t late longer than 90 days, which will have resulted in the financial institution to detrimentally categorize the loans. After the package with the financial institution was gotten to, Barreto said he brought the loans present, paid the past-due taxes, spruced up the properties, and paid the mortgage for 6 months in breakthrough. (Court records show a terminal in West Palm Beach was delinquent in property taxes.).

In exchange, he acquired a lower rate of interest. The mortgages on the gas stations previously paid rates of 5.75 percent to 6.25 percent, yet Barreto said he got the financial institution to minimize the fee to 3.75 percent for the very first six several months, adhered to by a rise to 4.25 percent.

Usually, a loan that has its rates of interest minimized without a principal pay down– practically the bank forfeiting assured income– is grouped as “stressed financial obligation restructuring.” The question increased in Monte’s claim is whether a financial institution needs to decrease an interest rate for a borrower that can manage to pay out of wallet when the property is marine.

“Prime is at 3.25 percent therefore why should I be paying 6.25 percent when I’m a great consumer of the financial institution?” Barreto claimed. “Can I afford to pay at a higher fee? The answer is yeah. However I’m a great businessman. … I preferred a market rate change from the bank.

“I haven’t cost the bank any kind of money. In fact, they made really good cash from me.”.

Barreto claimed he’s seen other gas station owner that obtained even a lot more positive rate of interest reductions from financial institutions to assist maintain their loans existing.

Sands didn’t return a telephone call seeking comment. One more company managed by Sands formerly turned over some South Florida gas stations in deed in lieu of foreclosures.