The Office of the Comptroller of the Currency has issued cease-and-desist orders against Intercredit Bank in Miami and Border Capital Bank in McAllen, Tex., citing credit and capital concerns.

Though both banks are currently well-capitalized, the OCC expressed concern that problem loans could threaten capital levels. At June 30, 5.4% of Intercredit's loans and 8.1% of Border's loans were at least 90 days past due, according to Federal Deposit Insurance Corp. data.

Under the order signed in August and made public Thursday, the $256 million-asset Intercredit must reduce its high level of credit risk by developing procedures to strengthen timely valuation of loan collateral on problem loans, to ensure the timely identification and rating of loans and to guarantee that loans are supported by proper documentation.

The bank also must develop and implement a three-year program that maintains adequate capital, projects for capital and liquidity and determines sources and timing of additional capital.

The order requires Intercredit to maintain a total risk-based capital-to-assets ratio of at least 13%. Its ratio at June 30 was 16.5%.

Under its order signed in June and made public Thursday, the $171 million-asset Border Capital must implement a program to reduce its credit risk, which should include procedures to strengthen credit underwriting, particularly in the real estate portfolio. Border must also establish a loan workout department to ensure classified assets are consistent with regulations, maintain proper documentation on all loans, and reverse or charge off all interest that has been accrued contrary to the requirements governing nonaccrual loans.

Border was also ordered to maintain a total risk-based capital-to-assets ratio of at least 13%. Its ratio at June 30 was 18.7%.

On Thursday, the OCC also made public formal agreements with Fidelity National Bank in West Memphis, Ark.; The First National Bank of Kemp in Texas; Citizens National Bank of Texas in Waxahachie; and Grayson National Bank in Independence, Va. The OCC reported a variety of unsound banking practices at the banks, including high levels of credit risk and problems with loan and credit administration.

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