Fed Orders Mercantile of Boston to Adopt Capital Restoration Plan

The Federal Reserve Board has ordered Mercantile Capital Corp. of Boston to implement a capital restoration plan.

The plan must specify how the holding company will handle liquidity problems at its subsidiary, Mercantile Bank and Trust Co.

In its Jan. 30 enforcement action, the Fed also said Mercantile Capital cannot declare a dividend, increase its debt, or lend more than $10,000 in a single transaction without prior approval from the Federal Reserve Bank of Boston.

Finally, the Fed said the holding company must report quarterly on its compliance with the agreement, review internal audit functions, and assess the qualifications of its senior officers.

The holding company agreed to the order without admitting wrongdoing. Mercantile Bank president Neal Hunt did not return a call for comment.

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