A South Shore bank executive has been named president and chief executive officer of the Martha’s Vineyard Savings Bank, trustees announced on Thursday.

Paul Falvey, 48, is a resident of Hingham and currently president and chief executive officer of the Holbrook Cooperative Bank. His 25-year career in banking began at the Bank of New England and includes experience in restructuring and working closely with bank regulators, a press release issued by the bank said.

With total assets of $700 million, including $180 million in assets at the Martha’s Vineyard Financial Group, the savings bank is the largest local bank on the Island. Edgartown National Bank has $134 million in assets. The third Island bank is Sovereign, an international banking institution based in Wilmington, Del., with assets of $80 billion. “We are excited that Paul has agreed to lead our organization,” bank board chairman Philip J. Norton Jr. said in the release.

Mr. Falvey, who traveled to the Vineyard late Thursday to be introduced to bank employees, spoke briefly to the Gazette outside the main bank office in Edgartown.

“I’m happy for this opportunity,” he said. “This is a well-respected banking franchise throughout New England and with great people.”

Mr. Falvey takes the helm of the Island’s largest bank during a period of transition following the abrupt resignation of president and CEO Christopher Wells in late May. Although bank officials said at the time Mr. Wells left for personal reasons, they have since confirmed that the bank had come under the scrutiny of bank regulators.

Thomas Sharkey, the bank’s chief financial officer who has served as interim CEO for the past four and a half months, and Mr. Norton the board chairman spoke to the Gazette briefly, and for the first time publicly last month, about the circumstances surrounding Mr. Wells’s departure. While they would not be specific, the two bank leaders said there were problems that had caught the attention of state and federal banking regulators, and this had led to Mr. Wells’s resignation.

Mr. Wells, a well-regarded community banker, took over as the head of the Dukes County Savings Bank in 2004. Three years after his arrival he presided over the merger of the savings bank and the Martha’s Vineyard Cooperative Bank, becoming president of the newly-named Martha’s Vineyard Savings Bank.

“Through discussions with regulators we learned about credit matters where maybe the Is were not dotted or the Ts crossed and Chris decided that the best thing for him and the bank was to resign,” Mr. Norton said.

Mr. Sharkey elaborated slightly. “Loan policies and procedures were the areas that had some issues . . . It was just the practices and the handling of matters that were not followed to the letter. No one lost any money, no customers were affected and the financial position of the bank was not affected,” he said.

Both stressed that the 103-year-old savings bank is healthy, stable and well-capitalized. Mr. Sharkey said the bank has been on target with projected earnings for the first six months of the year and continues to outperform its peer groups in the commonwealth. The savings bank had total assets of about $520 million at the end of the summer and about $66 million in available capital, he said, more than twice the minimum required for a bank of its size.

The bank has about $400 million in loans, 70 per cent residential and 30 per cent commercial.

A recent report from Veribanc rated the saving bank as well capitalized with a leverage ratio (the ratio of capital to assets) of 12.52 per cent. A minimum ratio for a bank to be considered healthy is five per cent, Mr. Sharkey said, putting the savings bank well within a comfort zone of health, stability and profitability. In the Veribanc report, Edgartown National Bank, with a leverage ratio of 12.26 per cent, was also rated as well capitalized.

The Gazette obtained a copy of a letter dated June 12 that was sent to bank trustees from the Federal Deposit Insurance Corporation that described an on-site examination of the bank. The letter, described as prelimary, flagged the bank for numerous deficiencies. In the letter assistant regional director Mary A. Barry notified the bank that the FDIC was tentatively downgrading the bank’s composite rating to three, due to “numerous loan underwriting and administration weaknesses.” (Federal regulators assign a composite rating to financial institutions based on an evaluation of financial and operational criteria. The rating is based on a scale of one to five. Problem institutions with financial, operational, or managerial weaknesses are rated either four or five.)

The letter criticized the board for poor oversight and management supervision, and set forth a series of recommendations for corrective actions and strengthening bank management. “The board of trustees has the responsibility to ensure that actions taken are prudent and do not further elevate the bank’s risk profile,” the letter said, adding that a final report of examination would be issued when the review process was complete.

Mr. Sharkey and Mr. Norton had no comment last month about the letter.

But speaking to the Gazette yesterday, Mr. Sharkey confirmed that regulators had completed an examination of the bank and issued a final report on Sept. 19 that spelled out a recommended course of action. While he would not elaborate on the details, he emphasized that it was not related to the bank’s financial position. “We went through a difficult examination and now we need to address issues related to matters of bank policies and procedures — and we hope Paul will guide us,” Mr. Sharkey said. Due to the situation involving the examination, the bank needed FDIC approval for its choice of Mr. Falvey as president and CEO. The FDIC stated no objections, he said.

Mr. Sharkey said the forecast is for the bank to end the year slightly below budget, with a profit of about $4.2 million, just under the forecast for $4.5 million. He said unforseen expenses can be tracked to the CEO search, legal bills and the replacement of automated teller machines in bank branches this year to conform with the requirements of the Americans for Disabilities Act. Bank profits are reinvested in the community in the form of more loans.

“We are basically a strong bank,” Mr. Sharkey said. “When you speak of earnings in decline, that’s a relative term.”

The bank has its main office in Edgartown and eight branches spread among five of the six Island towns, plus a relatively new branch in Woods Hole. The bank has 100 employees and makes many charitable contributions in the Vineyard community.

Mr. Sharkey said the new president was chosen from a field of seven final candidates, two internal and five from outside the bank. Mr. Falvey was the top choice of the search committee, he said.

“He has a good background in the kind of areas that are important to this bank and he has experience in dealing with regulators,” said Mr. Sharkey, who was not himself a candidate. “I think he will be a good person to lead the bank in a challenging environment where banks are under pressure due to the nature of the economy nationwide. I think he will help instill new leadership in the bank and get us moving forward, with a focus.”

Mr. Falvey said he plans to move to the Vineyard with his family to start the job sometime in November. He is married with three children, aged 19, 18 and 15. A graduate of Hamilton College with an MBA from Rennselaer Polytechnic Institute, he began his career as a management trainee at the Bank of New England. He took over as CEO and president in Holbrook in 2009, and among other things presided over the restructuring of the $140 million cooperative bank.

Including Mr. Norton, the bank board is made up of 15 trustees; the others are: Frank Fenner, Kenneth Galley, Edward Belisle, Donna Cummens, Antonio daRosa, Julianna Flanders, Laurence Mercier, Robert Murphy, Glenn Provost, Ronald Rappaport, George Santos Jr., Alison Shaw, Robert Tankard and Ann Tyra. Mr. Falvey will also become a trustee when he joins the bank.

Mr. Sharkey said he expects to return to his role as chief financial officer.

“As an interim, you can’t think too far ahead,” he said. “I think now Paul can cast his marker and can begin to think far ahead. That is very positive for the bank.”