Arvest Settles with Fine

Arvest McIlroy Bank & Trust in Fayetteville has agreed to pay the National Flood Insurance Program a $10,500 penalty to settle a dispute with the Federal Reserve System.

Arvest didn’t admit any wrongdoing in the settlement agreement, which was signed Oct. 23 and made public by the Fed on Oct. 25.

The accusations against the Fayetteville bank weren’t spelled out, other than to identify them as violations of the section of the National Flood Insurance Act that deals with failure to require flood insurance or to make appropriate notification.

Gary Head, president of the bank, said the matter has been taken care of and it will have no effect on the institution.

“We were guilty of being slow to force place flood insurance on our clients,” Head said. “Some of our customers who had never been in the flood plain before got lumped in when the U.S. Army Corps of Engineers redid the maps.”

Head was one of several bankers who complained about the changes in the official flood plain map of Fayetteville created by the corps and the Federal Emergency Management Agency in 1999.

He said about 300 of his customers would be affected by new flood plain interpretations. Since FEMA uses banks to police its flood insurance compliance, homeowners without mortgages have been able to skirt the costly coverage.