The Federal Reserve Board has entered into written agreements requiring two holding companies to serve as sources of strength for their community banks.
The agreement with the $175 million-asset ACME Holding Company requires the Mulberry, Ark., company to submit plans to strengthen its credit risk management practices, to better manage its asset concentrations and to enhance interest rate risk management practices.
The bank has to provide a lending and credit administration program that will include an analysis of the borrower's and guarantor's repayment sources and creditworthiness. The agreement dated May 2 also said that the parent company of Allied Bank could not extend credit to any borrower whose loans were criticized in September.
ACME also has to maintain an adequate allowance for loan and lease losses and develop a plan to maintain sufficient capital. At Dec. 31, Allied Bank's core capital leverage ratio was 7.66%, down 46 basis points from a year earlier and it reported a net operating loss of $491,000 for 2011, according to the Federal Deposit Insurance Corp.
ACME also could not declare or pay any dividends or redeem any shares of its stock without prior approval from the Federal Reserve.
In a separate agreement dated May 7 with the Federal Reserve, the $225 million-asset AB&T Financial could also not declare or pay dividends redeem its shares without prior permission from the Federal Reserve. At Dec. 31, the Gastonia, N.C., company's leverage ratio of 7.87% was down 338 basis points from a year earlier, according to the FDIC.
The company reported a net operating loss of $2.4 million in 2011 as its noncurrent loans totaled 7.49%, according to the FDIC.
The Federal Reserve made the agreements public on Thursday.