WASHINGTON - The Federal Deposit Insurance Corp. has issued cease-and-desist orders to two Midwest banks and lifted an earlier order against a third.
Documents made public by the agency last week said that $33 million-asset Peoples Bank of Fordland (Mo.) and $25 million-asset Farmers Exchange Bank, Antlers, Okla., consented to the orders in November. Significant lending problems were cited at both banks.
The FDIC said 85-year-old Farmers Exchange had credit-related problems including "hazardous" lending practices that violated its own policies, an excessive total of adversely classified assets, inadequate loan-loss reserves and capital, and concentrations in forestry and trucking loans despite a lack of expertise in those areas. In addition, the agency said, the one-office bank's call reports contained inaccuracies.
The 94-year-old Peoples Bank's problems included hazardous lending practices, excessive loan losses, and too many classified loans. Peoples Bank is a subsidiary of Peoples Banking Co. a in Springfield, Mo. Though both banks agreed to detailed plans for resolving the problems, neither admitted or denied wrongdoing.
The FDIC also said it had terminated a cease-and-desist order issued in September 1998 to $17 million-asset Pan American Bank of Chicago.
Separately, the Office of the Comptroller of the Currency announced last week that six former directors of the defunct East Texas National Bank of Marshall had agreed to pay civil penalties of $10,000 apiece. The OCC shut down $127 million-asset East Texas on July 9 at a projected cost to the Bank Insurance Fund of $6.2 million. Its three offices were reopened as part of $359 million-asset Fredonia State Bank of Nacogdoches, Tex.
- Scott Barancik