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.
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(b), 12 U.S.C. § 1818(b)
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
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(e), 12 U.S.C. § 1818(e)
(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
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(i), 12 U.S.C. § 1818(i)
(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
FINAL ORDERS ISSUED PURSUANT TO SECTION 38, 12 U.S.C. § 1831o
(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
FINAL ORDERS ISSUED PURSUANT TO SECTION 19, 12 U.S.C. § 1829
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