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Severe enforcement actions slow to a trickle in 2017

So far this year, only 11 severe enforcement actions have been issued to banks and thrifts, continuing a yearslong downward trend. Eight were issued in the first quarter of 2017, down from 11 in the first quarter of 2016 and 221 at the peak in the second quarter of 2010.

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Of the recipients of the regulatory orders, two have already failed. New Orleans-based First NBC Bank and Milwaukee-based Guaranty Bank (MHC) received prompt corrective action directives Feb. 24 and Feb. 28, respectively, then failed April 28 and May 5, respectively.

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Five of the remaining nine banks received severe enforcement actions with specific minimum capital requirements. Most recently, Eden Prairie, Minn.-based American Investors Bank and Mortgage received an agreement from the Office of the Comptroller of the Currency on April 17, requiring the bank to maintain a leverage ratio of at least 9%, a common equity Tier 1 ratio of at least 12% and a total capital ratio of at least 14%. At the close of the first quarter, American Investors reported a leverage ratio of 10.08%, a common equity Tier 1 capital ratio of 14.57% and a total capital ratio of 15.82%.

Meanwhile, Memphis-based First Tennessee Bank NA, a unit of First Horizon National Corp., was one of four banks to receive a severe enforcement action without specific capital requirements this year. First Tennessee's Feb. 8 consent order pertained to the bank's billing practices for an identity protection product. The bank also agreed to pay a $1 million civil money penalty.

New York-based Deutsche Bank Trust Co. Americas received a cease-and-desist order from the Federal Reserve Board on May 26, regarding risks related to its anti-money-laundering and Bank Secrecy Act policies. The bank and two other U.S.-based affiliate companies, all subsidiaries of Germany's Deutsche Bank AG, were also charged a combined $41 million civil money penalty by the Fed.

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S&P Global Market Intelligence defines severe enforcement actions as cease-and-desist orders, prompt corrective action directives, and formal agreements/consent orders handed to a bank or thrift by a federal regulator. This analysis does not include severe enforcement actions issued to holding companies or credit unions.

It is important to note that certain cease-and-desist orders issued by federal regulators in the recent past may be referred to as consent agreements on regulatory websites due to a change in language. However, a cease-and-desist order and a consent order are derived from the 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 these recent actions as cease-and-desist orders.

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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 June 7, 2017, click here.

For a spreadsheet listing the five most recent enforcement actions for an individual bank or thrift, click here. Click here to visit SNL's enforcement actions page.