First Bancshares Inc. and its banking arm signed regulatory orders with the Office of Thrift Supervision to take certain measures to improve earnings and preserve the bank's capital resources, the company said in a release.

The cease and desist order also directs the Missouri-based savings and loan holding company and its bank to reduce classified assets and improve the assets classification policy, as well as reduce commercial real estate and other loan concentrations, discontinue stock repurchase programs and restrict dividend payments.

The number of failed banks has surged over the past two years, with 77 failing so far this year, and regulators have been blamed for not taking quick enough action and for allowing zombie banks to limp along. The OTS' order on Tuesday sought a business plan from First Bancshares to ensure broad regulatory compliance.

No fines or penalties were imposed as a result of the order, and the First Home Savings Bank will continue to make loans, establish lines of credit and process transactions.

The OTS order also states that the bank cannot renew, extend or revise any compensation or benefit agreements with directors or senior executive officers, increase total assets, or increase its brokered deposits and enter into any third party contracts without prior notification to the OTS.

It is also restricted in appointing any new directors or changing the responsibilities of any senior executive officers without notifying the OTS.

"We are working diligently to fully comply with the orders as quickly as possible," said President Lannie E. Crawford.

Crawford said despite the issues the company and bank are facing in the challenging economic environment, the bank's regulatory capital level remains in excess of "well-capitalized" as defined by its regulators.

The nearly 100-year-old company operates from its home office in Mountain Grove, Mo. and 10 full-service branch facilities in the state. It had $243.3 million in total assets as of March 31.

Shares were inactive in recent trading at $10. The stock is down 41% from its 52-week high last September.

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