The Federal Deposit Insurance Corp. issued cease-desist-orders against eight state-chartered banks and thrifts in November, including one, the $5 billion-asset Franklin Bank in Houston, that has already failed.

Seven of the eight institutions were cited for failing to properly monitor their loan portfolios and were ordered to shrink classified assets, improve board and management oversight, and increase their loan-loss reserves.

The other, the $345 million-asset Mountain Commerce Bank in Erwin, Tenn., was singled out for violations related to the Bank Secrecy Act. Among other things, it was ordered to hire a BSA officer whose job is to ensure the bank properly complies with anti-money-laundering laws and regulations, including the timely filing of suspicious activity reports, and bring in an independent consultant to conduct a review detailing senior executives' BSA-related responsibilities. The review is expected to be completed by mid-January and a copy is to be submitted to a regional FDIC director.

The order against Franklin was dated Nov. 4. The thrift, battered by losses on loans to residential developers, failed three days later.

Two of the banks cited for credit quality problems are in California — the $147 million-asset Community Bank of San Joaquin in Stockton and the $193 million-asset Pacific Valley Bank in Salinas.

The others are First Tuskegee Bank in Alabama, with $83 million of assets; State Bank of Park Rapids in Minnesota, with $112 million of assets; the $298 million-asset Blue Ridge Savings Bank Inc. in Asheville, N.C.; and the $147 million-asset Silver Falls Bank in Silverton, Ore.

Asset quality is particularly weak at Silver Falls. The bank charged off more than 3.2% of its loans in the first nine months of the year, according to FDIC data, and at Sept. 30, 17.93% of its loans were noncurrent. A year earlier, less than 1% of its loans were past due.

Silver Falls lost $3 million in the first three quarters of the year.

Of the remaining banks, First Tuskegee had the highest level of past-due loans, at 6.39% on Sept. 30. That was down from 9.83% a year earlier, according to FDIC data.

The FDIC in November also fined eight institutions for various infractions and lifted four cease-and-desist orders.

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