The Federal Reserve Board of Governors has lifted an enforcement action against a small, formerly troubled bank holding company after nearly 14 years.
The Fed terminated its consent agreement with FMB Bancshares, Inc. — a Lakeland, Ga.-based company with $45 million of assets — on Tuesday, according to a statement released Thursday morning.
FMB owns six Farmers and Merchants Bank branches in Georgia. A company spokesperson at the bank's flagship location did not respond to a request for comment Thursday.
The Fed's announcement included no details about what FMB did to satisfy the terms of
Enforcement actions were issued against many banks following the collapse of the subprime mortgage industry in 2008, but it is unclear whether FMB's issues were related to that crisis.
The Fed's enforcement action followed a
The Fed called for the holding company to become a "source of strength" for the bank as it sought to address the issues raised by the FDIC and the Georgia Banking Commissioner. To do so, the Fed ordered FMB to conduct a compensation review and get written approval before issuing dividend payments or the fulfillment of stock and debt redemption requests, among other things.
The Fed also called for FMB to create new capital plans for the holding company as well as the bank in question. It also subjected the holding company to various reporting and oversight requirements.
For its part, the FDIC order also called for a litany of management changes and capital reforms. Its order cited "unsafe or unsound banking practices" as well as potential violations of laws and regulation by the bank.
Specifically, the FDIC accused the bank's board of directors of failing to adequately supervise the bank and establishing management practices that jeopardized the safety of bank deposits. The agency also said the bank had inadequate equity capital and liquidity, too many poor quality loans, and lackluster policies on loans and loan losses. Insufficient controls on insider transactions and conflicts of interest were also mentioned.
The FDIC's order called for a more hands-on board approach and significant balance sheet adjustments, including shedding of troubled assets, increased equity and liquidity, and reducing certain credit risk concentrations. The bank also had to rewrite numerous policies including those on lending and collection, loan loss allowances, liquidity and funds management, and ethics and conflicts of interest.
Farmers and Merchants Bank traces its history back to 1907, according to the bank's website. The FMB holding company was established in 1984 and acquired United Bankshares, Inc. of Nashville, GA in 1993.
In September 2007, the firm reclassified from a bank holding company to a domestic financial holding company, according to the Federal Financial Institutions Examination Council's online database. It changed back to a bank holding company in May 2009.
