FDIC Takes Actions Against Nine Banks in Six States

Regulators took a slew of enforcement actions against banks last month in connection with consumer protection, capital adequacy and other matters.

Nine banks in six states have agreed to take steps to bolster their compliance with various laws and regulations, according to a series of orders the Federal Deposit Insurance Corp. released late Friday. The orders covered American Express Centurion Bank of Salt Lake City, Utah; University Bank in Ann Arbor, Mich.; Security Bank of California in Riverside, Calif.; Southcrest Bank in Thomaston, Ga.; Talbot State Bank in Woodland, Ga.; Signature Bank of Georgia in Sandy Springs; Golden Eagle Community Bank in Woodstock, Ill.; First State Financial of Pineville, Ky.; and Peoples Exchange Bank of Stanton, Ky.

The FDIC ordered the $136 million-asset University Bank, the $456 million-asset Security Bank and the $320 million-asset Southcrest Bank to document their adherence to laws that aim to prevent money laundering. As part of the orders, all three banks agreed to strengthen procedures for monitoring cash transactions, to record plans for compliance and to audit their activities.

The $72 million-asset Talbot Bank, the $136 million-asset Signature Bank, the $152 million-asset Golden Eagle, and the $395 million-asset First State Financial agreed to detail their capital plans in writing, to eliminate loans they cannot collect from their books, to shore up regulatory capital and to refrain from paying dividends or taking actions that would reduce capital without permission from regulators, as part of a set of actions to reinforce their balance sheets.

The $337 million-asset Peoples Exchange agreed to develop a system for managing compliance, including hiring a compliance officer, detailing plans for monitoring transactions, training personnel and auditing its activities.

The orders also included the FDIC's part of a previously reported action by regulators against American Express (AMEX) for allegedly violations of consumer protection laws. The FDIC, which oversees the $34 billion-asset Centurion Bank, joined the Consumer Financial Protection Bureau in ordering American Express to refund at least $75 million to cardholders for the alleged practices, which included advising consumers that settling debt the company had charged off could improve their credit scores and engaging in deceptive marketing practices.