July 30, 2010 – The FDIC today released a list of orders of enforcement actions taken against banks and individuals. A total of 29 cease and desist consent orders and 3 prompt corrective actions orders were issued.
The Federal Deposit Insurance Corporation, the federal agency in charge of safeguarding the nation’s bank deposits, maintains a confidential Problem Bank List. This list contains the names of institutions that have weak capital positions caused by large loan losses or operational deficiencies that usually lead to failure. The FDIC does not publicize the list for fear of causing depositor withdrawals and bad publicity which would only serve to hasten the bank’s closing.
As of the latest report released by the FDIC there were 775 problem banks at March 31, 2010 up from 702 at the end of 2009. Total assets held by the troubled institutions is $431.2 billion, up from $402.8 billion at the end of 2009.
Although the FDIC does not publicize the Problem Bank List, there is another way to determine if a bank is potentially unsafe and subject to closing by regulators. The FDIC routinely releases a list of banks against which cease and desist and prompt corrective orders are issued.
A cease and desist order is issued when the FDIC has “determined that it had reason to believe that the Bank engaged in unsafe or unsound banking practices and violations of law and/or regulations.” A prompt corrective action directive by the FDIC is a “formal action that requires an institution to take one or more specified actions to return to required minimum capital standards”.
Although, the FDIC does not publicly disclose the Problem Bank List, it is highly likely that banks issued cease and desist or prompt corrective actions are on the Problem Bank List. Banking depositors with balances in excess of the FDIC deposit insurance limit should consider this list as “fair warning” from the FDIC and take their own “prompt corrective action” to avoid potential losses. Given the serious financial issues cited by the FDIC for the banks listed, expect many of these institutions to wind up on the Failed Bank List.
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(b), 12 U.S.C. §1818(b)
Community Bank and Trust – Alabama, Union Springs, AL; FDIC-09-722b; Issued 6/9/10 – PDF
GulfSouth Private Bank, Destin, FL; FDIC-10-026b; Issued 6/23/10 – PDF
First Community Bank of Southwest FL, Fort Myers, Florida; FDIC-10-180b; Issued 6/15/10 – PDF
Putnam State Bank, Palatka, FL; FDIC-09-542b; Issued 6/21/10 – PDF
Prosperity Bank, Saint Augustine, FL; FDIC-10-045b; Issued 6/28/10 – PDF
Community Bank of Pickens County, Jasper, GA; FDIC-09-565b; Issued 6/11/10 – PDF
AztecAmerica Bank, Berwyn, IL; FDIC-10-129b; Issued 6/16/10 – PDF
All American Bank, Des Plaines, IL; FDIC-10-158b; Issued 6/21/10 – PDF
Oxford Bank & Trust, Oak Brook, IL; FDIC-09-608b; Issued 6/22/10 – PDF
State Bank of Paw Paw, Illinois, Paw Paw, IL; FDIC-10-294b; Issued 6/24/10 – PDF
Community State Bank, Brook, IN; FDIC-10-353b; Issued 6/11/10 – PDF
Farmers & Merchants Bank & Trust, Burlington, IA; FDIC-10-251b; Issued 6/10/10 – PDF
State Bank of Cokato, Cokato, MN; FDIC-10-212b; Issued 6/1/10 – PDF
VisionBank, Saint Louis Park, MN; FDIC-10-186b; Issued 6/1/10 – PDF
Great Northern Bank, Saint Michael, MN; FDIC-10-213b; Issued 6/18/10 – PDF
Heritage Banking Group, Carthage, MS; FDIC-10-182b; Issued 6/4/10 – PDF
Jefferson Bank and Trust Company, Eureka, MO; FDIC-10-250b; Issued 6/16/10 – PDF
Beartooth Bank, Billings, MT; FDIC-10-351b; Issued 6/10/10 – PDF
Bank of Bozeman, Bozeman, MT; FDIC-10-386b; Issued 6/15/10 – PDF
Bank of North Las Vegas, Las Vegas, NV; FDIC-10-348b; Issued 6/15/10 – PDF
The State Exchange Bank, Lamont, OK; FDIC-10-324b; Issued 6/22/10 – PDF
Firstbank of Puerto Rico, Santurce, PR; FDIC-10-068b; Issued 6/2/10 – PDF
The Palmetto Bank, Laurens, SC; FDIC-10-077b; Issued 6/10/10 – PDF
The Bank of Texas, Devine, TX; FDIC-10-341b; Issued 6/4/10 – PDF
Lone Star Bank, Houston, TX; FDIC-10-259b; Issued 6/10/10 – PDF
Summit Bank, Burlington, WA; FDIC-10-178b; Issued 6/2/10 – PDF
West Pointe Bank, Oshkosh, WI, FDIC-09-512b; Issued 6/17/10 – PDF
Foundations Bank, Pewaukee, WI; FDIC-10-114b; Issued 6/1/10 – PDF
Community First Bank, Rosholt, WI; FDIC-10-272b; Issued 6/4/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 38, 12 U.S.C. § 1831o
(Prompt Corrective Actions)
Coastal Community Bank, Panama City Beach, FL; FDIC-10-467PCAS; Issued 6/24/10 – PDF
North County Bank, Arlington, WA; FDIC-10-431PCAS; Issued 6/24/10 – PDF
The Cowlitz Bank, Longview, WA; FDIC-10-430PCAS; Issued 6/15/10 – PDF
Coastal Community Bank
Consider as an example, the financial condition of Coastal Community Bank, one of the institutions listed above. Coastal Community Bank, Panama City Beach, Florida, was issued a prompt corrective action and described by the FDIC as being “significantly undercapitalized“. Coastal Community, a $373 million asset institution, has a troubled asset ratio of 401 compared to a national average of 15. The vast majority of the failed banks this year had troubled asset ratios of 100% or greater. Very few banks are able to recapitalize or recover once the level of loan defaults brings the troubled asset ratio over 100%.
Late Update: Coastal Community Bank of Florida was closed by regulators on July 30, 2010.