The Federal Deposit Insurance Corp. has ordered seven ailing community banks to raise fresh capital and directed three others with elevated loan losses to submit written plans for raising capital should credit quality weaken further.

In the enforcement orders issued in November and made public Dec. 30, the FDIC also is requiring most of the banks to strengthen management, improve board oversight and reduce concentrations in risk in their loan portfolios.

The seven banks ordered to increase Tier 1 and total risk-based capital ratios from current levels are Decatur State Bank in Arkansas; FirstSecure Bank and Trust in Palos Hills, Ill.; Prairie Mountain Bank in Great Falls, Mont.; Farmers Bank of Lynchburg in Tennessee; Peoples State Bank of Commerce in Nolensville, Tenn.; Southport Bank in Kenosha, Wis.; and First Capital Bank in Kingfisher, Okla.

The $55 million-asset First Capital was placed under a Prompt Corrective Action directive — the most severe of all enforcement orders — and has been given until the end of January to achieve "adequately capitalized" status. At Sep. 30, its total risk-based capital-to-assets ratio was 5.36% and nearly 30% of its loans were at least 90 days past due.

Most of the other banks were given 60 days to reach the required capital levels, while Farmers Bank and Peoples State Bank of Commerce — both owned by the same holding company that itself is past due on a large loan to another — were given 180 days to boost total risk-based capital ratios to at least 11%. At Sept. 30, Farmers had a ratio of 5.83% and Peoples' ratio was 9.89%.

Others that are currently well capitalized but are under orders to improve overall credit quality are Peoples Bank in Lyons, Ga., Kaw Valley Bank in Topeka, Kan.; and International Bank in Raton, N.M.

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