Allied Bank in Mulberry, Ark., has been ordered to immediately raise capital or find a buyer to address its precarious capital position.
The $66 million-asset bank entered into a prompt corrective action with the Federal Reserve Bank of St. Louis on Aug. 15. The Fed gave Allied 30 days to sell itself or raise capital through a share sale or other types of contributions.
Allied was also banned from accepting new deposit accounts and must follow restrictions on its management of time deposits. The Fed also placed Allied under restrictions related to its accounting practices and other management initiatives.
At June 30, Allied had a Tier 1 capital ratio of 2.71%, a Tier 1 leverage ratio of 1.8% and a total risk-based capital ratio of 4%, according to its quarterly call report. Allied's level of commercial real estate loans to total risk based capital was 676.34%, compared to a peer average of 66%, according to BankRegData.com.
Banks with leverage ratios of less than 2% are deemed by regulators to be critically undercapitalized and often face notices of prompt corrective action.
Allied reported a second-quarter loss of $3.7 million. It has not reported a quarterly profit in at least three years, according to BankReg Data.com.
Allied and its holding company, Acme Holding Co. Employee Stock Ownership Plan, remain subject to a May 2012 written agreement with the Fed that requires them to strengthen credit risk management practices, improve the management of asset concentrations and enhance interest rate risk management.