December, 2010 – The FDIC recently released a list of orders of administrative enforcement actions taken against banks in November, including 28 consent orders (formerly called “cease and desist consent orders”), 28 civil money penalties and 2 prompt corrective actions. All categories of enforcement actions rose significantly from October when 16 consent orders, 18 civil money penalties and 1 prompt corrective action were filed.
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)
(Consent Orders)
Metro Phoenix Bank, Phoenix, AZ; FDIC-10-759b; Issued 11/10/10 – PDF
Signature Bank of Arkansas, Fayetteville, AR; FDIC-10-602b; Issued 11/4/10 – PDF
Pan American Bank, Los Angeles, CA; FDIC-10-718b; Issued 11/5/1 – PDF
United American Bank, San Mateo, CA; FDIC-10-424b; Issued 11/2/10 – PDF
Regent Bank, Davie, FL; FDIC-10-609b; Issued 11//24/10 – PDF
First Capital Bank, Marianna, FL; FDIC-10-537b; Issued 11/15/10 – PDF
First Home Bank, Seminole, FL; FDIC-10-673b; Issued 11/18/10 – PDF
Grand Bank & Trust of Florida, West Palm Beach, FL; FDIC-10-692b; Issued 11/19/10 – PDF
First Intercontinental Bank, Doraville, GA; FDIC-10-464b; Issued 11/23/10 – PDF
Fairview State Banking Company, Fairview, IL; FDIC-10-536b; Issued 11/19/10 – PDF
The Leaders Bank, Oak Brook, IL; FDIC-10-511b; Issued 11//3/10 – PDF
Community Bank of Oak Park River Forest, Oak Park, IL; FDIC-10-500b; Issued 11/10/10 – PDF
The Tampa State Bank, Tampa, KS; FDIC-10-743b; Issued 11/23/10 – PDF
Community Central Bank, Mount Clemens, MI; FDIC-10-561b; Issued 11/1/10 – PDF
New Market Bank, Elko-New Market, MN; FDIC-10-608b; Issued 11/23/10 – PDF
Lake Region Bank, New London, MN; FDIC-10-532b; Issued 11/17/10 – PDF
State Bank of Taunton, Taunton, MN; FDIC-10-776b; Issued 11/8/1 – PDF
New Millennium Bank, New Brunswick, NJ; FDIC-10-837b; Issued 11/16/10 – PDF
NewDominion Bank, Charlotte, NC; FDIC-10-553b; Issued 11//9/1 – PDF
One World Bank, Dallas, TX; FDIC-10-505b; Issued 11/1/10 – PDF
Access 1st Capital Bank, Denton, TX; FDIC-10-697b; Issued 11/1/10 – PDF
Westbound Bank, Katy, TX; FDIC-10-668b; Issued 11/12/10 – PDF
SunFirst Bank, St. George, UT; FDIC-10-845b; Issued 11/9/10 – PDF
Seattle Bank, Seattle, WA; FDIC-10-830b; Issued 11/30/10 – PDF
Fox River State Bank, Burlington, WI; FDIC-10-658b; Issued 11/4/10 – PDF
Mid-Wisconsin Bank, Medford, WI; FDIC-10-807b; Issued 11/9/10 – PDF
Bank of Wausau, Wausau, WI; FDIC-10-488b; Issued 11/17/10 – PDF
Integrity First Bank, Wausau, WI; FDIC-10-395b; Issued 11/3/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(i), 12 U.S.C. § 1818(i)
(Civil Money Penalties)
United Bank, Atmore, AL; FDIC-10-265e; FDIC-10-446k; Order of Prohibition From Further Participation and Order to Pay a Civil Money Penalty against George L. Price, Jr. in the amount of $5,000.00; Issued 11/10/10 – PDF
EvaBank, Eva, AL; FDIC-10-607k; in the amount of $10,000.00; Issued 11/23/10 – PDF
California Pacific Bank, San Francisco, CA; FDIC-10-808k; in the amount of $1,925.00; Issued 11/8/10 – PDF
FirstBank of Colorado, Lakewood, CO; FDIC-10-480k; in the amount of $50,000.00; Issued 11/10/10 – PDF
Peach State Bank & Trust, Gainesville, GA; FDIC-10-783k; in the amount of $4,000.00; Issued 11/18/10 – PDF
Century Bank and Trust, Milledgeville, GA; FDIC-10-650k; in the amount of $2,250.00; Issued 11/9/10 – PDF
Exchange Bank, Milledgeville, GA; FDIC-10-685k; in the amount of $5,250.00; Issued 11/18/10 – PDF
Northwest Georgia Bank, Ringgold, GA; FDIC-10-684k; in the amount of $23,485.00; Issued 11/18/10 – PDF
First Security Trust and Savings Bank, Elmwood Park, IL; FDIC-10-458k; in the amount of $4,250.00; Issued 11/3/10 – PDF
Lisle Savings Bank, Lisle, IL; FDIC-09-157k; in the amount of $5,500.00; Issued 11/3/10 – PDF
Citizens Union Bank of Shelbyville, Shelbyville, KY and Century Bank of Kentucky; Lawrenceburg, KY; FDIC-10-479k; in the amount of $1,000.00; Issued 11/17/10 – PDF
Omni Bank, Metairie, LA; FDIC-09-604k; against Lynne Fruchtnicht in the amount of $5,000.00; Issued 11/9/10 – PDF
Merrimac Savings Bank, Merrimac, MA; FDIC-10-810k; in the amount of $5,000.00; Issued 11/2/10 – PDF
Riverland Bank, Jordan, MN; FDIC-10-006k; against Ronald E. Shealer in the amount of $6,500.00; Issued 11/9/10 – PDF
Alliance Bank, Lake City, MN; FDIC-10-583k; in the amount of $7,190.00; Issued 11/3/10 – PDF
Mid America Bank, Linn, MO; FDIC-10-717k; in the amount of $23,000.00; Issued 11/22/10 – PDF
Regional Missouri Bank, Marceline, MO; FDIC-10-732k; in the amount of $17,325.00; Issued 11/12/10 – PDF
First State Bank of Forsyth, Forsyth, MT; FDIC-10-729k; in the amount of $2,640.00; Issued 11/16/10 – PDF
The Peoples Bank; IVA, SC; FDIC-10-758k; in the amount of $5,500.00; Issued 11/18/10 – PDF
Chester County Bank, Henderson, TN; FDIC-10-710k; in the amount of 4,000.00; Issued 11/30/10 – PDF
Citizens State Bank, Miles, TX; in the amount of $10,500.00; Issued 11/22/10 – PDF
Foundation Bank, Bellevue, WA; FDIC-10-734k; in the amount of $5,000.00; Issued 11/15/10 – PDF
Blackhawk State Bank, Beloit, WI; FDIC-10-298k; in the amount of $4,500.00; Issued 11/12/10 – PDF
First State Bank, New London, WI; FDIC-10-623k; in the amount of $16,300.00; Issued 11/12/10 – PDF
Oostburg State Bank, Oostburg, WI; FDIC-10-412k; in the amount of $5,500.00; Issued 11/12/10 – PDF
Farmers & Merchants State Bank, Waterloo, WI, FDIC-10-408k, in the amount of $5,535.00; Issued 11/12/10 – PDF
Farmers & Merchants State Bank, Waterloo, WI; FDIC-10-409k; in the amount of $3,000.00; Issued 11/12/10 – PDF
Waterstone Bank, SSB, Wauwatosa, WI; FDIC-10-485k; in the amount of $5,775.00; Issued 11/19/10 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 38, 12 U.S.C. § 1831o
(Prompt Corrective Actions)
MBank, Gresham, OR; FDIC-10-829PCAS; Issued 11/2/10 – PDF
Albina Community Bank, Portland, OR; FDIC-10-860PCAS; Issued 11/17/10 – PDF
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