The Federal Reserve Board has issued an enforcement order against Gold Canyon Bank that gives the Gold Canyon, Ariz., company 90 days to become adequately capitalized or to sell itself.

The Aug. 1 prompt corrective action stated that the bank was undercapitalized on Dec. 31. The order, which the Fed made public on Tuesday, also restricted the bonuses that the $60 million-asset bank can pay its executives. It also restricts asset and branch growth.

The Fed also said Tuesday that it had entered into a cease-and-desist order with Asian Financial that requires the Philadelphia company to serve as a source of strength to its Asian Bank. The company's board must submit a plan to strengthen its oversight of the bank's management and operations.

Asian Financial must revise its Bank Secrecy Act and anti-money laundering compliance program to improve internal controls. The order also requires the company to hire an independent consultant to review its account and transaction activity from Jan. 1, 2011, to March 1 to determine whether suspicious activity was properly identified and reported.

Asian Financial also has to maintain sufficient capital and improve its written internal audit program. The Fed also ordered the company to develop a plan to improve the bank's earnings and provide a revised budget for the rest of this year. The order also bars the $71 million-asset company from declaring and paying dividends or repurchasing stock without Fed approval.

The $1.3 billion-asset Spirit BankCorp in Bristow, Okla., and the $37 million-asset State Bank of Blue Mound in Illinois also entered into written agreements, the Fed said Tuesday.

Spirit's agreement required the company to serve as a source of strength for its bank. It also has to submit a written statement with planned sources and uses of cash for debt service and operating expenses.

The Fed's agreement with State Bank requires the bank's board to strengthen oversight and hire a consultant to review staffing needs and the performance of senior management. State Bank has to strengthen credit risk management practices and its lending and credit administration program. It also has to maintain an adequate allowance for loan and lease losses and provide a funding plan that identifies available sources of liquidity.

The agreements with Spirit and State Bank bar both parties from declaring or paying dividends without regulatory approval.

The Fed also lifted an August 2009 written agreement with the $1.6 billion-asset LegacyTexas Group and LegacyTexas Bank in Plano.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.