Federal regulators handed out seven severe enforcement actions to U.S. banks and thrifts during the fourth quarter of 2019, a sharp decline from the 19 they issued in the final quarter of 2018. It is possible that additional December 2019 actions could yet be made public as both the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. release action reports on a one-month delay.
As of Jan. 10, 108 U.S. banks and thrifts were operating under a severe enforcement action.
The FDIC issued a prompt corrective action directive on Nov. 8, 2019 to Carnegie, Okla.-based Farmers Bank, classifying the company as "significantly undercapitalized." At the end of the third quarter of 2019, Farmers Bank reported a 2.22% leverage ratio, the lowest in the country among operating institutions.
Earlier in 2019, Farmers Bank received a cease and desist order. Former bank President and CEO Aaron Johnson received a "sanction against personnel" from the FDIC on Nov. 21, 2019 for "breaches of fiduciary duty" and other unsafe and unsound banking practices. According to the sanction, Johnson caused Farmers Bank to reimburse him for personal expenses on his credit card.
SunTrust Bank received a consent order on Nov. 19, 2019, before parent company SunTrust Banks Inc. closed its merger with BB&T Corp. and became Truist Financial Corp. The order was related to SunTrust's "marketing, enrollment, and billing practices related to deposit account add-on and similar products provided to business customers." Among other issues, SunTrust charged customers for add-on products even if they had not accepted the terms and conditions and were therefore unable to use the products.
On that same day in November 2019, the FDIC issued a cease and desist order to Quinter, Kan.-based KansasLand Bank requiring it to maintain a Tier 1 capital leverage ratio of at least 9% and a total capital ratio of at least 12%.
And Texas-based United Bank of El Paso del Norte and Joliet, Ill.-based PeopleFirst Bank received cease and desist orders relating to Bank Secrecy Act/anti-money laundering regulations during the fourth quarter.
Click here to view the map as a PDF. To view a refreshable spreadsheet of all operating banks and thrifts under a severe enforcement action as of Jan. 10, 2020, click here.