During January 2011, the FDIC issued another slew of enforcement actions against problem banks including 24 consent orders, 4 removal and prohibition orders, 20 civil money penalties, 2 prompt corrective actions and 11 orders terminating consent orders or prompt corrective directives.
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 fourth quarter 2010 FDIC Quarterly Banking Profile showed an increase in the number of Problem Banks from 860 to 884. The number of banks on the Problem Bank List now represents almost 12% of all FDIC insured institutions. Total assets of Problem Banks also increased for the quarter ending December 31, 2010 to $390 billion, up from $379.2 billion in the previous 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)
Saehan Bank, Los Angeles, CA; FDIC-10-849b; Issued 1/25/11 – PDF
Sunwest Bank, Tustin, CA; FDIC-10-663b; Issued 1/21/11 – PDF
Legacy Bank of Florida, Boca Raton, FL; FDIC-10-654b; Issued 1/4/11- PDF
Premier Community Bank of the Emerald Coast, Crestview, FL; FDIC-10-648b; Issued 1/28/11 – PDF
Georgia Primary Bank, Atlanta, GA; FDIC-10-824b; Issued 1/28/11 – PDF
PrimeSouth Bank, Blackshear, GA; FDIC-10-842b; Issued 1/31/11 – PDF
Citizens Community Bank of Illinois, Berwyn, IL; FDIC-10-676b; Issued 1/13/11 – PDF
Archer Bank, Chicago, IL; FDIC-10-657b; Issued 1/13/11 – PDF
Chicago Community Bank, Chicago, IL; FDIC-10-675b; Issued 1/13/11 – PDF
Metropolitan Bank and Trust Company, Chicago, IL; FDIC-10-680b; Issued 1/13/11 – PDF
The First Commercial Bank, Chicago, IL; FDIC-10-679b; Issued 1/13/11 – PDF
North Community Bank, Chicago, IL; FDIC-10-681b; Issued 1/13/11 – PDF
All American Bank, Des Plaines, IL; FDIC-11-020b; Issued 1/14/11 – PDF
Community Bank of DuPage, Downers Grove, IL; FDIC-10-677b; Issued 1/13/11 – PDF
Plaza Bank, Norridge, IL; FDIC-10-682b; Issued 1/13/11 – PDF
First Bank and Trust Company of Illinois, Palatine, IL; FDIC-10-875b; Issued 1/5/11 – PDF
Edens Bank, Wilmette, IL; FDIC-10-678b; Issued 1/13/11 – PDF
First Federal Savings Bank of Elizabethtown, Elizabethtown, KY; FDIC-10-817b; Issued 1/24/11 – PDF
Signature Bank, Bad Axe, MI; FDIC-10-913b; Issued 1/27/11 – PDF
Boundary Waters Bank, Ely, MN; FDIC-10-836b; Issued 1/27/11 – PDF
Holmes County Bank & Trust Co., Lexington, MS; FDIC-10-963b; Issued 1/20/11 – PDF
Heritage Bank & Trust, Columbia, TN; FDIC-10-484b; Issued 1/28/11- PDF
West Pointe Bank, Oshkosh, WI; FDIC-10-764b; Issued 1/13/11 – PDF
United Bank, Osseo, WI; FDIC-10-787b; Issued 1/10/11 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(e), 12 U.S.C. § 1818(e)
(Removal and Prohibition Orders)
Timberland Bank, El Dorado, AR; FDIC-10-590e; against Mark K. Turner; Issued 1/7/11 – PDF
Firstbank-West Michigan, Ionia, MI; FDIC-09-740e; against Michael J. Willett; Issued 1/31/11 – PDF
Bank of Castile, Castile, NY; FDIC-10-733e; against Tracy L Smith; Issued 1/7/11 – PDF
Arthur State Bank, Union, SC; FDIC-10-486e; against Kimberly O. McAbee; Issued 1/7/11 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 8(i), 12 U.S.C. § 1818(i)
(Civil Money Penalties)
Murphy Bank, Fresno, CA; FDIC-10-919k; in the amount of $11,000; Issued 1/11/11 – PDF
Mizrahi Tefahot Bank, Ltd., Los Angeles, CA; FDIC-10-549k; in the amount of $350,000; Issued 1/31/11 – PDF
AztecAmerica Bank, Berwyn, IL; FDIC-10-130k; Order to Pay in the amount of $4,500; Issued 1/21/11 – PDF
Brimfield Bank, Brimfield, IL; FDIC-10-954k; in the amount of $5,500; Issued 1/25/11 – PDF
Brimfield Bank, Brimfield, IL; FDIC-10-955k; in the amount of $1,050; Issued 1/25/11 – PDF
First Bank of Highland Park, Highland Park, IL; FDIC-10-643k; in the amount of $1,150; Issued 1/27/11 – PDF
First Bank of Highland Park, Highland Park, IL; FDIC-10-645k; in the amount of $1,150; Issued 1/27/11 – PDF
Heritage Bank of Central Illinois, Trivoli, IL; FDIC-10-620k; in the amount of 2,695; Issued 1/21/11 – PDF
Central Bank & Trust Co., Lexington, KY; FDIC-10-656k; in the amount of $3,150; Issued 1/6/11 – PDF
Tradition Capital Bank, Edina, MN; FDIC-10-782k; in the amount of $3,000; Issued 1/4/11 – PDF
BancorpSouth Bank, Tupelo, MS; FDIC-10-779k; in the amount of $46,500; Issued 1/31/11 – PDF
Great Southern Bank, Reeds Springs, MO; FDIC-10-634k; in the amount of $21,953; Issued 1/4/11 – PDF
First Madison Valley Bank, Ennis, MT; FDIC-10-933k; in the amount of $6,400; Issued 1/14/11 – PDF
Northwest Savings Bank, Warren, PA; in the amount of $10,000; FDIC-10-918k; Issued 1/3/11 – PDF
Berkshire Bank, Wyomissing, PA; FDIC-10-879k; in the amount of $7,000; Issued 1/3/11 – PDF
Treaty Oak Bank, Austin, TX; FDIC-10-863k; in the amount of $2,300; Issued 1/11/11 – PDF
Collins State Bank, Collins, WI; FDIC-10-618k; in the amount of $1,200; Issued 1/14/11 – PDF
Security Bank, New Auburn, WI; FDIC-10-619k; in the amount of $7,000; Issued 1/21/11 – PDF
United Bank, Osseo, WI; FDIC-10-786k; in the amount of $10,500; Issued 1/10/11 – PDF
FINAL ORDERS ISSUED PURSUANT TO SECTION 38, 12 U.S.C. § 1831o
(Prompt Corrective Actions)
First Peoples Bank, Port St. Lucie, FL; FDIC-11-004PCAS; Issued 1/28/11 – PDF
Seattle Bank, Seattle, WA; FDIC-11-006PCAS; Issued 1/10/11- PDF
TERMINATIONS
Orders Terminating Consent Orders and Cease and Desist Orders
Copper Star Bank, Scottsdale, AZ; FDIC-09-657b; Issued 1/27/11 – PDF
American Continental Bank, City of Industry, CA; FDIC-09-658b; Issued 1/7/11 – PDF
Saehan Bank, Los Angeles, CA; FDIC-09-557b; Issued 1/25/11 – PDF
Pacific Valley Bank, Salinas, CA; FDIC-09-556b; Issued 1/12/11 – PDF
Chestatee State Bank, Dawsonville, GA; FDIC-08-142b; Issued 1/28/11 – PDF
Lafayette Community Bank, Lafayette, IN; FDIC-06-238b; Issued 1/27/11 – PDF
K Bank, Randallstown, MD; FDIC-09-029b; Issued 1/14/11- PDF
USA Bank, Port Chester, NY; FDIC-07-206b; Issued 1/14/11 – PDF
Orders Terminating Supervisory Prompt Corrective Action Directive
Idaho First Bank, McCall, ID; FDIC-10-557PCAS; Issued 1/3/11 – PDF
LibertyPointe Bank, New York, NY; FDIC-09-554PCAS; Issued 1/14/11 – PDF
USA Bank, Port Chester, NY; FDIC-09-708PCAS; Issue 1/14/11 – PDF
ADMINISTRATIVE HEARING SCHEDULED FOR MARCH 2011
Synergy Bank, S.S.B., McKinney, TX; Section 8(b) Proceeding
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