The FDIC issued 60 enforcement actions against problem banks in February, down slightly from 61 in January. Among the more serious administrative enforcement actions processed were 22 consent orders, 13 civil money penalties and 7 prompt corrective actions.
The FDIC and other regulators use enforcement actions to address serious deficiencies and when there is regulatory doubt in an institution’s ability to implement required corrective actions. Critically undercapitalized institutions are generally required to be closed within 90 days.
A Cease and Desist Order, if accepted by the financial institution, is referred to as a “consent order”. A cease and desist order is issued when regulators 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.”
When a bank “consents” to a regulatory order, the bank will execute a “Stipulation to the Issuance of a Consent Order”. The consent agreement allows the bank to agree with regulatory stipulations “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 much more serious enforcement action is the prompt corrective action (PCA) directive which is a “formal action that requires an institution to take one or more specified actions to return to required minimum capital standards”. Often times, an institution cannot comply with the terms of a PCA and a high percentage of banks issued PCAs wind up failing.
The number of banks on the FDIC’s Problem Bank List represent over 12% of all FDIC insured institutions. The latest Quarterly Bank Profile revealed that the number of problem banks had increased from 860 to 884.
Given the serious deficiencies cited in the regulatory enforcement actions issued, many of the banks receiving consent orders or prompt corrective actions are likely to wind up on the failed bank list.
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(b), 12 U.S.C. § 1818(b)
(Consent Orders)
First Financial Bank, Bessemer, AL; FDIC-10-831b; Issued 2/17/11 – PDF
Home Bank of Arkansas, Portland, AR; FDIC-10-805b; Issued 2/22/11 – PDF
Open Bank, Los Angeles, CA; FDIC-11-062b; Issued 2/16/11 – PDF
Savings Bank of Mendocino County, Ukiah, CA; FDIC-10-887b; Issued 2/4/11 – PDF
Georgia Banking Company, Atlanta, GA; FDIC-10-490b; Issued 2/1/11 – PDF
F & M Bank and Trust Company, Manchester, GA; FDIC-10-873b; Issued 2/4/11 – PDF
Country Bank, Aledo, IL; FDIC-10-864b; Issued 2/3/11 – PDF
Bridgeview Bank Group, Bridgeview, IL; FDIC-10-853b; Issued 2/10/11 – PDF
New City Bank, Chicago, IL; FDIC-11-033b; Issued 2/24/11 – PDF
Community Bank-Wheaton/Glen Ellyn, Glen Ellyn, IL; FDIC-10-713b; Issued 2/7/11 – PDF
Bank of Palatine, Palatine, IL; FDIC-10-780b; Issued 2/10/11 – PDF
State Bank, Wonder Lake, IL; FDIC-10-821b; Issued 2/7/11 – PDF
Bluegrass Community Bank, Danville, KY; FDIC-10-279b; Issued 2/15/11 – PDF
Northern Star Bank, Mankato, MN; FDIC-10-738b; Issued 2/28/11 – PDF
Reliance Bank, Des Peres, MO; FDIC-10-947b; Issued 2/14/11 – PDF
Bank of George, Las Vegas, NV; FDIC-10-940b; Issued 2/1/11 – PDF
Southern Community Bank and Trust, Winston-Salem, NC; FDIC-10-823b; Issued 2/25/11 – PDF
Columbia Savings Bank, Cincinnati, OH; FDIC-10-958b; Issued 2/24/11 – PDF
Horry County State Bank, Loris, SC; FDIC-10-822b; Issued 2/10/11 – PDF
Brighton Bank, Brighton, TN; FDIC-10-515b; Issued 2/23/11 – PDF
Citizens Bank of Spencer, Tenn., Spencer, TN; FDIC-10-651b; Issued 1/28/11 – PDF
Citizens State Bank, Somerville, TX; FDIC-10-962b; Issued 2/15/11 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(i), 12 U.S.C. § 1818(i)
(Civil Money Penalties)
Bank of Cave City, Cave City, AR; FDIC-10-841k; in the amount of $2,310.00; Issued 2/17/11 – PDF
Diamond Bank, Murfreesboro, AR; FDIC-10-960k; in the amount of $7,000.00; Issued 2/24/11 – PDF
Suncrest Bank, Visalia, CA; FDIC-11-073k; in the amount of $3,400.00; Issued 2/23/11 – PDF
Artisans’ Bank, Wilmington, DE; FDIC-10-753k; in the amount of $4,000.00; Issued 2/7/11 – PDF
The Bank of Commerce, Ammon, ID; FDIC-10-726e; FDIC-10-727k; against Steven E. Worton in the amount of $10,000.00; Issued 2/17/11 – PDF
Farmers State Bank of Danforth, Danforth, IL; FDIC-10-886k; against Gerry L. Lunt in the amount of $5,000.00; Issued 2/24/11 – PDF
Excel Bank, Sedalia, MO; FDIC-10-881k; in the amount of $12,000.00; Issued 2/10/11 – PDF
Excel Bank, Sedalia, MO; FDIC-10-882k; in the amount of $7,500.00; Issued 2/9/11 – PDF
Integrity Bank, Camp Hill, PA; FDIC-10-755k; in the amount of $9,000.00; Issued 2/1/11 – PDF
VIST Bank, Wyomissing, PA; FDIC-10-754k; in the amount of $9,000.00; Issued 1/28/11 – PDF
Fox River State Bank, Burlington, WI; FDIC-10-761k; in the amount of $5,050.00; Issued 2/17/11 – PDF
Nekoosa Port Edwards State Bank, Nekoosa, WI; FDIC-10-920k; in the amount of $3,700.00; Issued 2/15/11 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 38, 12 U.S.C. § 1831o
(Prompt Corrective Actions)
Central Arizona Bank, Casa Grande, AZ; FDIC-11-011PCAS; Issued 2/22/11 – PDF
Sunrise Bank of Arizona, Phoenix, AZ; FDIC-11-010PCAS; Issued 2/22/11 – PDF
Summit Bank, Prescott, AZ; FDIC-11-063PCAS; Issued 2/10/11 – PDF
Michigan Commerce Bank, Ann Arbor, MI; FDIC-11-014PCAS; Issued 2/22/11 – PDF
Bank of Las Vegas, Las Vegas, NV; FDIC-11-015PCAS; Issued 2/22/11 – PDF
The Village Bank, Saint George, UT; FDIC-11-110PCAS; Issued 2/22/11 – PDF
First Heritage Bank, Snohomish, WA; FDIC-11-111PCAS; Issued 2/24/11 – PDF
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