MIDDLETOWN, Conn.-- Farmers and Mechanics Bank said a cease-and-desist order under which it has operated since November 1991 was terminated by the Federal Deposit Insurance Corp. on July 8.

In its place, the bank, FDIC, and the Connecticut Department of Banking have signed a memorandum of understanding. The agreement requires the bank to achieve and maintain a minimum Tier 1 leverage capital ratio of 5.5% until Dec. 31, 1995 and 6.0% thereafter The bank's March 31, 1994 ratio of 6.2% exceeded the required capital level.

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