Fed ends 13-year enforcement action against small Georgia bank

The Federal Reserve Board of Governors has lifted an enforcement motion towards a small, previously troubled financial institution holding firm after practically 14 years.

The Fed terminated its consent settlement with FMB Bancshares, Inc. — a Lakeland, Ga.-based firm with $45 million of property — on Tuesday, in response to an announcement launched Thursday morning.

FMB owns six Farmers and Retailers Financial institution branches in Georgia. An organization spokesperson on the financial institution’s flagship location didn’t reply to a request for remark Thursday.

The Fed’s announcement included no particulars about what FMB did to fulfill the phrases of the consent settlement, which went into impact on Nov. 11, 2009, as is customary for such enforcement actions. The small print of those instances are typically handled as confidential supervisory data.

Enforcement actions have been issued towards many banks following the collapse of the subprime mortgage trade in 2008, however it’s unclear whether or not FMB’s points have been associated to that disaster.

The Fed’s enforcement motion adopted a stop and desist order issued by the Federal Deposit Insurance coverage Corp. towards Farmers and Retailers Financial institution, Lakeland, Georgia in Might 2009. 

The Fed known as for the holding firm to develop into a “supply of energy” for the financial institution because it sought to handle the problems raised by the FDIC and the Georgia Banking Commissioner. To take action, the Fed ordered FMB to conduct a compensation evaluate and get written approval earlier than issuing dividend funds or the success of inventory and debt redemption requests, amongst different issues.

The Fed additionally known as for FMB to create new capital plans for the holding firm in addition to the financial institution in query. It additionally subjected the holding firm to varied reporting and oversight necessities.

For its half, the FDIC order additionally known as for a litany of administration adjustments and capital reforms. Its order cited “unsafe or unsound banking practices” in addition to potential violations of legal guidelines and regulation by the financial institution.

Particularly, the FDIC accused the financial institution’s board of administrators of failing to adequately supervise the financial institution and establishing administration practices that jeopardized the protection of financial institution deposits. The company additionally mentioned the financial institution had insufficient fairness capital and liquidity, too many poor high quality loans, and lackluster insurance policies on loans and mortgage losses. Inadequate controls on insider transactions and conflicts of curiosity have been additionally talked about.

The FDIC’s order known as for a extra hands-on board method and important steadiness sheet changes, together with shedding of troubled property, elevated fairness and liquidity, and decreasing sure credit score threat concentrations. The financial institution additionally needed to rewrite quite a few insurance policies together with these on lending and assortment, mortgage loss allowances, liquidity and funds administration, and ethics and conflicts of curiosity. 

Farmers and Retailers Financial institution traces its historical past again to 1907, in response to a short historical past on the financial institution’s web site. The FMB holding firm was established in 1984 and bought United Bankshares, Inc. of Nashville, GA in 1993. 

In September 2007, the agency reclassified from a financial institution holding firm to a home monetary holding firm, in response to the Federal Monetary Establishments Examination Council’s on-line database. It modified again to a financial institution holding firm in Might 2009.