GRAND CHAIN — Financial regulators have taken action to effectively bar Frank William “Bill” Bonan II from the banking industry.
Regulators have also fined him $105,000 for “reckless practices” and personal dishonesty that jeopardized Grand Rivers Community Bank, headquartered in Grand Chain.
The action by the Federal Deposit Insurance Corp. stems from a complicated series of loans to high-risk borrowers involving two banks: Grand Rivers, where Bonan II served as president of the board and Mount Vernon-based Peoples National Bank, where he was also employed as a banking executive.
At the time of the 2015 transactions investigated by the FDIC, Grand Rivers was in the process of merging with Peoples bank. Peoples, long managed and owned by the Bonan family, is a large regional financial institution with branches in Illinois and Missouri. At one time, Bonan II served as president of branches in Marion, Benton and Harrisburg.
The risky loans subject of the FDIC review were associated with oil rigs and a commercial warehouse in Carmi. The FDIC found that Bonan II was dishonest in his dealings with other board members of Grand Rivers as they considered certain loans, and concealed information about the credit worthiness of borrowers he was privy to because of his dual roles at Grand Rivers and Peoples.
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Bonan II knew certain borrowers had multi-million dollar at-risk loans with Peoples at the time Bonan II was encouraging Grand Rivers to extend new ones, but failed to relay this information to a concerned board member, the FDIC notice said.
Further, according to the FDIC report, Bonan II moved to unsecure a loan by removing an oil rig that had served as collateral, causing the bank to suffer financial loss when the borrowers defaulted.
The borrowers in question included two employees of Bonan II’s and companies involved in the oil industry owned by a father-daughter pair who later became his wife and father-in-law. The FDIC concluded that Bonan II’s “reckless practices” and breaches involving “personal dishonesty” showed a “willful and continuing disregard for the safety and soundness” of Grand Rivers.
The May 5 FDIC order stated that Bonan II had 20 days to request a hearing contesting the agency’s findings and punitive actions before an administrative law judge. It was not immediately clear to the newspaper whether Bonan II had requested such a hearing. A FDIC spokesperson said the agency could not offer any additional information beyond that in the published notice, including whether a hearing was requested. A message left with Peoples National Bank seeking comment and/or assistance in relaying a message to Bonan II went unreturned.
Ultimately, Bonan II’s misdealings at Grand River Community Bank as outlined by the FDIC torpedoed the Grand Rivers merger into Peoples. In March 2017, Grand Rivers filed a civil lawsuit against Peoples Bank, Bonan II and other associated entities seeking to void the merger based on alleged “rampant self-dealing, preferential transactions, and improper transfer of low-quality assets from Peoples to Grand Rivers.”
The lawsuit personally accused Bonan II of engaging in a pattern of self-dealing to benefit himself, his family members and friends and a romantic partner. In court filings, Peoples and its affiliates denied all wrongdoing alleged in the lawsuit. Additionally, they filed a counterclaim against Grand Rivers and a third-party entity alleging breach of and interference with a contract agreement for Grand Rivers to merge into Peoples.
The parties settled out of court and the lawsuit and countersuit were dismissed a year later.
In addition to serving as a bank executive, Bonan II has been involved in various other business ventures in Southern Illinois, including managing video game parlors, and was appointed by then-Gov. Rod Blagojevich to serve on the Southern Illinois University Board of Trustees, a position he held from 2008 to 2011.
On Twitter: @MollyParkerSI