The Federal Reserve Board has ordered two small bank holding companies to serve as sources of strength to their struggling bank units.
On Thursday, the Fed published written agreements struck earlier this month with the $119 million-asset Texas Bancshares Inc. in Snyder, Texas, and the $169 million-asset Flagship Financial Group Inc. in Eden Prairie, Minn.
In addition to ordering the companies to serve as sources of strength to their adequately capitalized banks, the companies were also ordered not to make any dividend payments or receive any from their bank units.
Bank units of both companies are also facing regulatory pressure. Texas Savings Bank received a consent order from the Federal Deposit Insurance Corp. in April, while Flagship Bank received an FDIC consent order in June.
At June 30, Texas Savings Bank's nonperforming loans made up 10.73% of total loans, compared to 4.10% of total loans a year earlier. At Flagship, nonperforming loans made up 6.7% at June 30, an improvement from a year earlier, but its total risk-based capital ratio was 8.17%, down from 10.29% at June 30, 2010.
