FDIC Issues 45 Enforcement Actions In June Against Problem Banks

The number of enforcement actions by the FDIC against problem banks in June totaled 45, down from 57 in the previous month.

The FDIC’s enforcement actions included 10 civil money penalties, 14 consent orders and 3 prompt corrective actions.  In addition, the FDIC terminated 8 consent and cease and desist orders, in many cases due to the fact that the bank against which the orders were outstanding had already failed.

Enforcements action are issued when regulators have doubts that an institution is able to adequately address serious financial deficiencies and/or operating deficiencies.  If an institution is classified as “critically undercapitalized”, regulators are required to close such banks within 90 days.

Cease and desist orders are issued by regulators when they have “determined that it had reason to believe that the Bank engaged in unsafe or unsound banking practices and violations of law and/or regulations.”  Typically a Bank will accept the terms of a Cease and Desist Order by signing a “Consent Order” in which they agree to the regulatory orders contained in the Cease and Desist Order.  By signing the Consent Order, Banks accept regulatory orders “without admitting or denying any charges of unsafe or unsound banking practices.

A Prompt Corrective Action (PCA) is far more serious than a consent order.  A PCA is a final “formal action that requires an institution to take one or more specified actions to return to minimum capital standards”.  Many of the banks issued a Prompt Corrective Action are usually undercapitalized and unable to raise new capital due to their deteriorated financial condition.   It is common to see many of the Banks issued PCAs wind up on the Failed Bank List.

All three of the Banks issued a Prompt Corrective Action order in June have troubled asset ratios in excess of 150% compared to the national average of 15.  Most banks with a troubled asset ratio over 100% usually do not recover and wind up being seized by regulators.

The number of Problem Banks has increased steadily since 2007 and now totals 888 banks or almost 12% of all FDIC insured institutions.  With the economy weakening and property values declining, most Problem Banks find it impossible to raise the additional capital required to meet minimum regulatory capital ratios.  It would not be surprising to see the list of Problem Banks continue to expand in the future.

The full list of enforcement actions taken by the FDIC in June is listed below.

(Consent Orders)

Metro Phoenix Bank, Phoenix, AZ; FDIC-11-083b; Issued: 6/21/11 – PDF

First Bank, Clewiston, FL; FDIC-11-169b; Issued: 6/16/11 – PDF

U.S. Century Bank, Doral, FL; FDIC-11-174b; Issued: 6/7/11 – PDF

The Coastal Bank, Savannah, GA; FDIC-11-055b; Issued: 6/2/11 – PDF

Covenant Bank, Chicago, IL; FDIC-11-022b; Issued: 6/6/11 – PDF

Kenney Bank and Trust, Kenney, IL; FDIC-11-163b; Issued: 6/3/11 – PDF

Vermont State Bank, Vermont, IL; FDIC-11-133b; Issued: 6/6/11 – PDF

PBI Bank, Louisville, KY; FDIC-11-145b; Issued: 6/24/11 – PDF

Peoples State Bank of Madison Lake, Madison Lake, MN; FDIC-11-185b; Issued: 6/22/11 – PDF

Flagship Bank Minnesota, Wayzata MN; FDIC-11-121b; Issued: 6/8/11 – PDF

The Bank of Houston, Houston, MO; FDIC-11-237b; Issued: 6/8/11 – PDF

The Community Bank of Shell Knob, Shell Knob, MO; FDIC-11-211b; Issued: 6/17/11 – PDF

Community Trust & Banking Company, Ooltewah, TN; FDIC-11-085b; Issued: 6/15/11 – PDF

Texas Champion Bank, Alice, TX; FDIC-11-027b; Issued: 6/16/11 – PDF
(Removal and Prohibition Orders)

Citizens Business Bank, Ontario, CA; against Jeri Sell; FDIC-10-771e; Issued: 6/10/11 – PDF

The Farmers Bank, Nicholasville, KY; FDIC-10-188e; against Debra P. Bain; Issued: 6/10/11 – PDF

Southern Community Bank and Trust, Winston-Salem, NC; FDIC-10-231e; against Karen Floyd; Issued: 6/21/11 – PDF

First International Bank, Plano, TX; FDIC-10-228e; against Alexandro Sanchez; Issued: 6/10/11 – PDF
(Civil Money Penalties)

Century Bank of Georgia, Cartersville, GA; FDIC-11-253k; in the amount of $9,500.00; Issued: 6/3/11 – PDF

Polk County Bank, Johnston, IA; FDIC-11-256k; in the amount of $18,095.00; Issued: 6/16/11 – PDF

Signature Bank, Bad Axe, MI; FDIC-10-760k; in the amount of $15,000.00; Issued: 6/17/11 – PDF

Signature Bank, Bad Axe, MI; FDIC-10-911k; in the amount of $10,010.00; Issued: 6/17/11 – PDF

Citizens Bank & Trust Co., Marks, MS; in the amount of $2,000.00; FDIC-11-098k; Issued: 6/1/11 – PDF

KodaBank, Drayton, ND; FDIC-11-286k; in the amount of $2,310.00; Issued: 6/29/11 – PDF

Northwest Savings Bank, Warren, PA; FDIC-11-315k; in the amount of $78,155.00; Issued: 6/27/11 – PDF

Independence Bank, East Greenwich, RI; FDIC-11-193k; in the amount of $3,445.00; Issued: 6/20/11 – PDF

Carroll Bank and Trust, Huntingdon, TN; FDIC-11-082k; in the amount of $9,240.00; Issued: 6/1/11 – PDF

The Bank of Waynesboro, Waynesboro, TN; FDIC-11-066k; in the amount of $18,095.00; Issued: 6/9/11 – PDF

(Prompt Corrective Action)

Citizens Bank of Northern California, Nevada City, CA; FDIC-11-358PCAS; Issued: 6/28/11 – PDF

United American Bank, San Mateo, CA; FDIC-11-357PCAS; Issued: 6/28/11 – PDF

The Royal Palm Bank of Florida, Naples, FL; FDIC-11-331PCAS; Issued: 6/30/11 – PDF
(Section 19)

Jon Michael Miller; FDIC-11-223L; Order Granting Permission to File Application and Approving Application for Consent to Participate in the Affairs of any Insured Depository Institution; Issued: 6/22/11 – PDF

Tennessee State Bank, Pigeon Forge, TN; FDIC-96-105e; Order Modifying Order of Prohibition From Further Participation against Billy Proffitt; Issued: 6/21/11 – PDF


Orders Terminating Consent Orders and Cease and Desist Orders

Metro Phoenix Bank, Phoenix, AZ; FDIC-10-759b; Issued: 6/21/11 – PDF

First Commercial Bank of Tampa Bay, Tampa, FL; FDIC-08-347b; Issued: 6/24/11 – PDF

Atlantic Southern Bank, Macon, GA; FDIC-09-225b; Issued: 6/9/11 – PDF

State Bank of Paw Paw Illinois, Paw Paw, IL; FDIC-10-294b; Issued: 6/14/11 – PDF

The Bank of Commerce, Wood Dale, IL; FDIC-09-055b; Issued: 6/6/11 – PDF

Heartland Bank, Leawood, KS; FDIC-08-342b; Issued: 6/1/11 – PDF

The Hicksville Bank, Hicksville, OH; FDIC-09-045b; Issued: 6/17/11 – PDF

Allegiance Bank of North America, Bala Cynwyd, PA; FDIC-09-525b; Issued: 6/27/11 – PDF
(Note: A Notice is a proposal enforcement action and is not a final decision or order by the FDIC)

Notices of Charges and of Hearing

Freedom Bank of America, Saint Petersburg, FL; FDIC-11-072b; Notice of Charges; Issued: 6/6/11 – PDF

Bank of South Texas, McAllen, TX; FDIC-10-327e; FDIC-10-328k; Notice of Intention to Prohibit From Further Participation against Rogelio Ibanez, Jr. and Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing against Rogelio Ibanez, Jr. in the amount of $75,000.00; FDIC-10-327e; FDIC-10-328k; Issued: 6/3/11 – PDF

Notice of Intention to Prohibit From Further Participation

Westsound Bank (In Receivership), Bremerton, WA; FDIC-10-867e; Notice of Intention to Prohibit From Further Participation against Teresa M. Feller; Issued: 6/3/11 – PDF

Bank of Clark County (In Receivership), Vancouver, WA; FDIC-10-416e; Notice of Intention to Prohibition From Further Participation against David Kennelly; Issued: 6/10/11 – PDF


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