Having defeated regulators in court, Louis DeNaples is nearly free to reclaim the chairmanship of First National Community Bancorp.
Removed from the Dunmore-based bank company's board and prohibited from engaging in banking for life by banking regulators, Mr. DeNaples has remained a nominal, non-participating member of the board at the battered bank.
That's likely to change in light of January's long-shot victory before the Washington, D.C., Circuit Court of Appeals, whose judges agreed to vacate the prohibitions, a cease-and-desist order and a requirement that Mr. DeNaples divest his FNCB stock.
The opportunity for regulators to request a rehearing of the matter expired last week. The court this week issued a mandate enacting its decision. The orders against Mr. DeNaples evaporated.
It is not clear when Mr. DeNaples will resume his involvement in banking. His attorney in the matter, Howard N. Cayne, said Mr. DeNaples may wait to see if regulators take another course. Regulators from the Federal Reserve Bank and the Office of the Comptroller of the Currency could attempt to appeal the case to the U.S. Supreme Court. They also have the option of bringing a new case against Mr. DeNaples under the standards set by the court in its decision.
OCC spokesman Brian Hubbard said any possibility of appeal or further action means the case is considered active litigation and as such, the agency would not comment.
If the OCC does act, Mr. Cayne said Mr. DeNaples is prepared to "spend years and a lot of money" fighting it.
"Mr. DeNaples is committed to seeing this matter through to the end, including, if necessary, another appeal to the D.C. Circuit, where it is all but certain the case would again be resolved in his favor," Mr. Cayne said. "The ill-considered and meritless OCC and FRB enforcement proceedings have taken a heavy toll on Mr. DeNaples."
Mr. DeNaples' return would probably help the bank psychologically, said Lou Ingargiola, of Ingargiola Wealth Management, a Dunmore-based investment firm. While the bank is still in the red, most recently reporting $13.7 million in losses in 2013, the management and credit issues have been mostly corrected, in Mr. Ingargiola's view.
"With the oversight from the OCC, the bank is on much better footing," Mr. Ingargiola said. "His coming back won't change the day-to-day operations, but would give a psychological boost, particularly among investors, because he continues to be held in high esteem in this area."
A lot of FNCB stock is held locally, so people's perception of the company and the stock is closely tied to Mr. DeNaples, a self-made man who parlayed an auto salvage business into a diversified range of business ranging from lumber to landfills to a casino, Mr. Ingargiola said. He has been a director at the bank since 1972.
There could be a downside. Mr. DeNaples' return to the bank board could strain further the bank's relationship with regulators, said Bert Ely, a financial institution consultant based in Alexandria, Va. Mr. DeNaples may have been cleared in the eyes of the court, but he hasn't been in the eyes of regulators who initially banned him from banking. Meanwhile, the bank is striving to get back in the good graces of regulators, toiling under a consent order imposed by the OCC and heightened oversight.
"The regulators got beat. They don't get beat too often, and they don't like it," he said. "Many people don't want to go up against regulators like DeNaples did, because they worry about payback."
Mr. Ely said regulators will likely continue "very careful scrutiny" of the bank.
Since Mr. DeNaples began his leave of absence five years ago, his brother, Dominic DeNaples, has served as chairman of the board.
In January 2008, a Dauphin County district attorney charged Mr. DeNaples with perjury for failing to disclose whether he had relationships with organized crime figures in his testimony before the Pennsylvania Gaming Control Board. As is common when bank officials face criminal charges, the comptroller's office issued an order suspending him from banking. Mr. DeNaples took a leave of absence. After charges were dismissed, regulators banned him from banking, saying that the agreement he reached with prosecutors was a "pre-trial diversion" program subject to removal.
Mr. DeNaples challenged that definition. Although he lost before an administrative law judge, the appellate judge agreed.
Contact the writer: dfalchek@timesshamrock.com