The FDIC had an extremely busy December, issuing 76 enforcement actions against banks and individuals.
The list of administrative enforcement actions taken included 20 consent orders, 1 cease and desist order, 3 prompt corrective actions and 24 civil money penalties.
Formal enforcement actions are publicly disclosed by regulators and used to address severe deficiencies or when regulators have limited confidence in an institution’s ability to implement required changes. Under Section 38 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) regulators must take increasingly severe supervisory actions as capital levels deteriorate. Generally, regulators are required to close critically undercapitalized institutions within 90 days.
A cease and desist order is imposed in an involuntary manner 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.” Under recent enforcement action nomenclature changes, if the financial institution accepts the FDIC cease and desist order, it is now issued as a “consent order”.
Under a consent order, a bank executes a “Stipulation to the Issuance of a Consent Order” under which a bank has consented to the issuance of the Consent Order “without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulations relating to weaknesses in asset quality, capital adequacy, earnings, management effectiveness, liquidity, and sensitivity to market risk”.
A prompt corrective action (PCA) directive by the FDIC is a more serious “formal action that requires an institution to take one or more specified actions to return to required minimum capital standards”. Many of the financial institutions that receive a PCA are unable to comply with the directive and are shortly thereafter closed by regulators.
It is highly likely that banks issued consent orders, cease and desist orders or prompt corrective actions are on the Problem Bank List. The Problem Bank 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.
The third quarter 2010 FDIC Quarterly Banking Profile showed an increase in the number of Problem Banks from 829 to 860. The number of banks on the Problem Bank List now represents 11% of all FDIC insured institutions. Total assets of Problem Banks decreased slightly from $403 billion to $379 billion in the quarter.
Given the serious financial issues cited by the FDIC for the banks listed below, expect many of these institutions to wind up on the Failed 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 appropriate action to avoid potential losses.
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(b), 12 U.S.C. § 1818(b)
(Cease-and-Desist)
Woodlands Commercial Bank (f/k/a Lehman Brothers Commercial Bank), Salt Lake City, UT; FDIC-08-242b; Issued 11/30/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(b), 12 U.S.C. § 1818(b)
(Consent Orders)
First Southern Bank, Batesville, AR; FDIC-10-884b; Issued 12/7/10 – PDF
Premier Service Bank, Riverside, CA; FDIC-10-746b; Issued 12/1/10 – PDF
Professional Bank, Coral Gables , FL; FDIC-10-803b; Issued 12/21/10 – PDF
Transcapital Bank, Hallandale Beach, FL; FDIC-10-586b; Issued 12/3/10 – PDF
Heritage Bank of Florida, Lutz, FL; FDIC-10-687b; Issued 12/14/10 – PDF
First Bank of the Palm Beaches, West Palm Beaches, FL; FDIC-10-703b; Issued 12/21/10 – PDF
The Heritage Bank, Hinesville, GA; FDIC-10-816b; Issued 12/27/10 – PDF
First Bank of Highland Park, Highland Park, IL; FDIC-10-644b; Issued 12/22/10 – PDF
McHenry Savings Bank, McHenry, IL; FDIC-10-832b; Issued 12/14/10 – PDF
First State Bank and Trust, Tonganoxie, KS; FDIC-10-752b; Issued 12/3/10 – PDF
Park State Bank, Duluth, MN; FDIC-10-737b; Issued 12/17/10 – PDF
First American International Bank, Brooklyn, NY; FDIC-10-646b; Issued 12/14/10 – PDF
The First State Bank, Camargo, OK; FDIC-10-908b; Issued 12/21/10 – PDF
Independence Bank, East Greenwich, RI; FDIC-10-811b; Issued 12/14/10 – PDF
Tidelands Bank, Mount Pleasant, SC; FDIC-10-626b; Issued 12/28/10 – PDF
Plains Commerce Bank, Hoven, SD; FDIC-09-620b; FDIC-09-621k; Issued 12/30/10 – PDF
First State Bank, Mesquite, TX; FDIC-10-814b; Issued 12/15/10 – PDF
WebBank, Salt Lake City, UT; FDIC-10-792b; FDIC-10-793k; Issued 12/29/10 – PDF
Collins State Bank, Collins, WI; FDIC-10-716b; Issued 12/15/10 – PDF
Mitchell Bank, Milwaukee, WI; FDIC-10-715b; Issued 12/23/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(i), 12 U.S.C. § 1818(i)
(Civil Money Penalties)
Greater Rome Bank, Rome, GA; FDIC-10-647k; in the amount of $8,000.00; Issued 12/6/10 – PDF
Finance Factors, Ltd., Honolulu, HI; FDIC-10-835k; in the amount of $8,450.00; Issued 12/8/10 – PDF
State Bank of Lizton, Lizton, IN; FDIC-10-579k; in the amount of $3,700.00; Issued 12/21/10 – PDF
Community Bank, Alton, IA; FDIC-10-720k; against Thomas E. Kiernan in the amount of $10,000.00; Issued 12/21/10 – PDF
Community Bank, Alton, IA; FDIC-10-721k; against Loren J. Veldhuizen in the amount of $5,000.00; Issued 12/21/10 – PDF
Community Bank, Alton, IA; FDIC-10-722k; against Gerald G. Langel in the amount of $5,000.00; Issued 12/21/10 – PDF
Community Bank, Alton, IA; FDIC-10-723k; against Roger F. Cambier in the amount of $5,000.00; Issued 12/21/10 – PDF
Community Bank, Alton, IA; FDIC-10-724k; against Donald W. Theharne in the amount of $10,000.00; Issued 12/21/10 – PDF
Community Bank, Alton, IA; FDIC-10-725k; against Jacalyn J. Fedders in the amount of $10,000.00; Issued 12/21/10 – PDF
Clinton Savings Bank, Clinton, MA; FDIC-10-812k; in the amount of $9,740.00; Issued 12/15/10 – PDF
Central Co-operative Bank, Somerville, MA; FDIC-10-819k; in the amount of $9,500.00; Issued 12/9/10 – PDF
Highland Bank, Saint Michael, MN; FDIC-10-606k; in the amount of $13,000.00; Issued 12/2/10 – PDF
Merchants and Planters Bank, Raymond, MS; FDIC-10-617k; in the amount of $5,000.00; Issued 12/30/10 – PDF
Community First Bank, Butler, MO; FDIC-10-689k; in the amount of $1,500.00; Issued 12/2/10 – PDF
Citizens Community Bank, Ridgewood, NJ; FDIC-09-480k; against Richard C. Lanza in the amount of $2,000.00; Issued 12/13/10 – PDF
Citizens Community Bank; Ridgewood, NJ; FDIC-09-481k; against James J. Bovino in the amount of $5,000.00; Issued 12/13/10 – PDF
Citizens Community Bank, Ridgewood, NJ; FDIC-09-482k; against Patrick A. Sanzari in the amount of $5,000.00; Issued 12/13/10 – PDF
Citizens Community Bank, Ridgewood, NJ; FDIC-09-483k; against Joel H. Belgard in the amount of $5,000.00; Issued 12/13/10 – PDF
Citizens Community Bank, Ridgewood, NJ; FDIC-09-484k; against John L. Vaughan in the amount of $5,000.00; Issued 12/13/10 – PDF
Plains Commerce Bank, Hoven, SD; FDIC-09-620b; FDIC-09-621k; in the amount of $850,000.00;
Issued 12/29/10 – PDF
Community Bank of the Cumberlands, Jamestown, TN; FDIC-10-693k; in the amount of $4,410.00; Issued 12/3/10 – PDF
Citizens Savings Bank and Trust Company, Nashville, TN; FDIC-10-611k; in the amount of $15,000.00; Issued 12/9/10 – PDF
Bank of South Texas, McAllen, TX; FDIC-10-751k; against Darryl Lemke in the amount of $5,000.00; Issued 12/1/10 – PDF
WebBank, Salt Lake City, UT; FDIC-10-792b; FDIC-10-793k; Consent Order, Order for Restitution, and Order to Pay Civil Money Penalty in the amount of $300,000.00; Issued 12/30/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 38, 12 U.S.C. § 1831o
(Prompt Corrective Actions)
First Southern Bank, Batesville, AR; FDIC-10-901PCAS; Issued 12/7/10 – PDF
The Bank of Commerce, Wood Dale, IL; FDIC-10-767PCAS; Issued 12/2/10 – PDF
Evergreen State Bank, Stoughton, W I; FDIC-10-859PCAS; Issued 12/10/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(p), 12 U.S.C. § 1818(p)
(Voluntary Termination of Insurance)
Pyramis Global Advisors Trust Company, Merrimack, NH; FDIC-10-897p; Issued 12/22/10 – PDF
Guardian Trust Company, FSB, New York, NY; FDIC-10-448p; Issued 12/30/10 – PDF
NOTICES ISSUED
(Note: A Notice is a proposal enforcement action and is not a final decision or order by the FDIC)
Notices of Intention to Prohibit From Further Participation, Notice of Assessment of Civil Money Penalty, Findings of Fact, and Conclusions of Law, Order to Pay, and Notice of Hearing
Yampa Valley Bank, Steamboat Springs, CO; FDIC-10-366e; FDIC-10-368k; Notice of Intention to Prohibit From Further Participation, Notice of Assessment of Civil Money Penalty, Findings of Fact, and Conclusions of Law, Order to Pay, and Notice of Hearing against Lucy A. Middleton, Issued 12/14/10 – PDF
Farmers and Merchants Bank, Monticello, FL; FDIC-10-516e; FDIC-10-686k; Notice of Intention to Prohibit From Further Participation, and Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing against Ronald Darrin McGlamry; Issued 12/14/10 – PDF
Central Progressive Bank, Lacombe, LA; FDIC-10-605e; FDIC-10-604k; Notice of Intention to Prohibit From Further Participation, and Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing against Richard S. Blossman, Jr.; Issued 12/16/10 – PDF
Notices of Intention to Prohibit From Further Participation, Notice of Assessment of Civil Money Penalties, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing
Silver State Bank, Henderson, NV; FDIC-10-894e; FDIC-10-895k; Notice of Intention to Prohibit From Further Participation, Notice of Assessment of Civil Money Penalties, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing against Douglas E. French; Issued 12/17/10 – PDF
Notice of Intention to Remove From Office and Prohibit From Further Participation and Notice of Assessment of a Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay and Notice of Hearing
Central Bank of Georgia, Ellaville, GA; FDIC-10-625e; FDIC-10-624k; Notice of Intention to Remove From Office and Prohibit From Further Participation and Notice of Assessment of a Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay and Notice of Hearing against William Ben Dupree, III; Issued 12/16/10 – PDF
Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing
State Bank of Park Rapids, Park Rapids, MN; FDIC-09-149k; Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing against Jon P. Smythe; Issued 12/16/10 – PDF
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