A small Florida bank has refused to sign an enforcement order that would require it to beef up its capital reserves and reduce its risk, and now its state regulator is asking the courts to step in.

Freedom Bank of America in St. Petersburg signed a consent order with the Florida Office of Financial Regulation and the Federal Deposit Insurance Corp. in early 2010 that required it to improve its capital ratios and reduce its concentration of commercial real estate loans. The bank's board, however, has refused to go along with two follow-up consent orders, prompting the state regulator to file complaint with the Division of Administrative Hearings last week, according to the Tampa Bay Business Journal.

In the complaint, the regulator said that the $84 million-asset bank has breached its 2010 written agreement and is asking an administrative law judge to order the bank to get back into compliance.

The FDIC filed a similar complaint in March and is awaiting a judge's ruling, the Tampa Bay Business Journal reported,

It is rare for banks to challenge proposed enforcement orders, but not unprecedented. Republic Bank & Trust in Louisville sued the FDIC last year over a directive ordering the bank to exit the tax-refund-anticipation loan business. Also, Marine Bank & Trust in Vero Beach, Fla., has objected to a proposed order from state and federal regulators that would require it to improve its capital ratios.

Like many Florida banks, Freedom Bank was hit with a wave of delinquencies on loans following the real estate bust. At March 31, 3.76% of its loans were at least 90 days past due, according to FDIC data, and the company has lost money in 11 of the last 12 quarters.

The bank was considered to be adequately capitalized at March 31.

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