Bank bows out
LISBON – The bank hired to invest county funds is canceling the contract because of problems that have occurred with the company used to manage the account.
Columbiana County Commission Chairman Mike Halleck reported at Wednesday’s meeting they received a letter notifying them of 1st National Community Bank’s intention to terminate its contract with the county.
The contract dates back to March 2010, when the county investment board authorized the former county treasurer to negotiate a contract with the bank to invest $5 million in county funds, with the bank using WesBanco Trust and Investment Services to manage the account.
Last month, new Treasurer Linda Bolon reported inheriting a bookkeeping problem with the investment account that resulted in the county’s investment income being overstated by $118,779.
During the course of trying to correct the problem, Bolon also discovered two investments were made illegally by WesBanco because they exceeded the investment period allowed by law. Last Friday, she reported WesBanco made another investment that exceeded the time period allowed by law.
No losses resulted from the transactions.
Bolon indicated last week she was working with Halleck and the bank on a way to cancel the contract and liquidate investment assets, while protecting the county from experiencing any funding loss that might result from such a course of action.
The letter from 1st National Community president Steve Sant indicated they were going to go ahead and do it themselves. Sant said the bank will waive its investment fees for the period, charge no fees for selling the investments, and reimburse the county for any loss resulting from early liquidation of the investments.
Sant said they offered to manage some of the county’s investments in the belief they could generate a better rate of return. “The residents of Columbiana County can be assured there was no loss on any of the non-compliant funds placed with the bank for investment purposes,” he wrote.
The letter caught Bolon by surprise, who said she was in the process of calling an investment advisory board meeting for April 17 to recommend the county’s other investment adviser assume management of the WesBanco funds.
“But if the bank is willing to insure any losses, that may not be necessary,” she said.
Sant, in his letter, said if the advisory board has any objections to the bank’s plan to let them know in writing before Friday. Bolon said she intends to ask the bank to delay taking any action until the advisory board can meet on April 17.
He stated even though the investments in question exceeded the allowable term, “the face value of the securities would have been paid in full at maturity. The Trust Department of the Bank and WesBanco regret the mistake and sincerely apologize for the error.”
The bank was choosing to terminate the contract because it was important that the county officials “be freed from these distractions and be able to concentrate on the important business of running the county,” Sant wrote.