Only 294 banks and thrifts were operating under a severe enforcementaction at the end of April, down from 304 as of SNL's previous analysis and 468 at the end of 2014.
S&P Global Market Intelligencedefines severe enforcement actions as cease and desist orders, prompt correctiveaction directives, and formal agreements/consent orders handed to a bank or thriftby a federal regulator. This analysis does not include severe enforcement actionsissued to holding companies or credit unions.
It is important to notethat certain cease and desist orders issued by federal regulators in the recentpast may be referred to as consent agreements on regulatory websites due to a changein language. However, a cease and desist order and a consent order are derived fromthe same section of law 12 U.S.C. 1818(b). Both orders are structured the same,outlining areas of concern and the corrective actions that an institution must take.In order to maintain consistency with previous years, this analysis refers to theserecent actions as cease and desist orders.
Cottonwood Heights, Utah-based Proficio Bank received a prompt corrective action directive from the FDIC on March31, which labeled the bank "undercapitalized." Proficio's leverage ratiofell to 2.40% as of March 31 from 4.14% at the end of 2015, and the bank has notposted positive net income since the second quarter of 2013. Also of note, 96.91%of Proficio's deposits were obtained via listingservices as of March 31, the highest ratio among any bank or thriftin the country.
HSBC Bank USA NAreceived a cease and desist orderfrom the OCC on April 12 tied to the company's billing practices for CreditKeeper,a credit monitoring service. The order states that HSBC Bank USA charged CreditKeepercustomers the full price for the service even though some customers did not provideenough information to actually receive the credit monitoring services. Among otherprovisions, the bank is required to provide reimbursement to all eligible customersand create a third-party risk management plan. It has also been charged a separate$35 million civil money penalty.HSBC Bank USA is currently operating under five severe enforcement actions.
Improving credit quality as well as mergers and failures havehelped make 12 states free of severe enforcement actions.
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 May 3, click here.