FDIC Issues 61 January Enforcement Actions On Problem Banks

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.

(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

(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

(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

(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


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


Synergy Bank, S.S.B., McKinney, TX; Section 8(b) Proceeding

Speak Your Mind