Federal regulators have cracked down on a family-owned bank in South Carolina that holds more than half of the deposits in the state's poorest county.

The Federal Deposit Insurance Corp. has issued a cease-and-desist order against Allendale County Bank, Fairfax, S.C., a $42 million-asset bank, that forces it to bring in outside directors, reduce its debt, and limit business entertainment expenses.

The April 11 FDIC order, which was made public May 29, also terminated the lending authority of Allendale chairman Walker R. Harter Sr. and his authority to uphold a tie vote or make entries in the bank's ledgers. Mr. Harter is one of five family members who own the bank.

Cease-and-desist orders are increasingly rare, thanks to a vibrant banking industry. The FDIC issued 19 such orders in 1996, down from 169 in 1992.

But Allendale, which lost $247,000 in the past two years and had a capital-to-assets ratio of less than 7% on Dec. 31, hasn't shared in the industry's good times. Bank officials blamed many of the problems on trying to serve a poor community and said the FDIC should give it more leeway.

Allendale County, which has a population of 11,000, is a depressed area where accounts with the city for water and sewer taps have a 30% delinquency rate and many people cannot read well enough to fill out loan applications, said Mr. Harter. The county has the lowest per-capita income in the state ($7,200) and the smallest percentage of ninth-grade graduates.

"The FDIC should take into account the depressed area and the minorities that live in Allendale County, which makes it extremely difficult to comply with the rules and regulations," he said. "I believe these rules and regulations are unfair to minorities."

But FDIC officials dispute that claim. "There are ways to make loans to low- to moderate-income families without taking undue risks," said FDIC spokesman David Barr. "This action by the FDIC is to help this institution get back on course so it can continue to meet the needs of the community."

Mr. Harter said the bank is working on improving its capital levels and loan-loss reserves.

But enlisting help from outside the bank is proving difficult, he said. Twenty invitations to serve on the board found no volunteers.

The bank's owners control four of the board seats and top management spots.

"We have a small pool of people to draw from," said Mr. Harter. "I don't see anybody we can approach now that will be approved by the FDIC."

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