Nine banks that received TARP aid through the Capital Purchase Program were sanctioned by the Federal Deposit Insurance Corp. in July for violating bank standards, according to the agency's monthly release of enforcement actions today.
The banks include:
- CB&S Bank, Inc., Russellville, Ala. (CBS Banc-Corp)
- Metro United Bank, San Diego, Calif. (MetroCorp Bancshares Inc.)
- TIB Bank, Naples, Fla. (TIB Financial Corp)
- Pinnacle Bank, Orange City, Fla. (Pinnacle Bank Holding Co.)
- First Bank and Trust, New Orleans, La. (First Trust Corp.)
- Main Street Bank, Kingwood, Tex. (MS Financial Inc.)
- Cascade Bank, Everett, Wash. (Cascade Financial Corp)
- West Bank, West Des Moines, Iowa (West Bancorporation)
- Tri-State Bank of Memphis, Memphis, Tenn.
To see the full list of FDIC enforcement actions in July, and for links to copies of the action, click here.
Metro United Bank is a subsidiary of Texas-based MetroCorp Bancshares, which accepted $45 million in taxpayer aid in January 2009. That holding company accepted more aid than any other on the July enforcement list.
In terms of deposits, TIB Bank is the largest bank on the list, with $1.34 billion. In terms of assets, Cascade Bank is the largest, with $1.68 billion. TIB Bank got a $37 million TARP investment in December 2008; Cascade got $39 million in November of that year.
Earlier this summer, TIB Bank entered into a deal with North American Financial Holdings, Inc. which would give the company 99 percent ownership of TIB's common stock. That should aid its recapitalization efforts.
North American Financial, a new institution led by former Bank of America Corp. executives, earlier this year took over three failed banks in Florida, as BailoutSleuth has previously reported.
Two directors on the board of Cascade Bank's parent company resigned following the FDIC's cease and desist order. The directors cited irreconciable differences with the bank's chief executive officer and other board members, as well as the "unreasonable and untenable conditions" imposed by the order, as their reason for resigning.
The bank reported net operating losses of $55.6 million through June 30 of this year, compared to losses of $26.6 million at this point a year ago.
West Bank and Tri-State Bank of Memphis were given relatively small fines for violating banking standards and were not subject to heightened restrictions.
The other seven banks, however, werl issued cease-and-desist orders that called for them to make significant changes, such as getting their boards of directors more involved in company oversight; increasing capital ratios; restricting growth; addressing problem loans and developing liquidity plans.
The FDIC specifically said that two of the banks -- Metro United Bank and Main Street Bank -- must retain qualified CEOs.
A total of 30 banks received cease-and-desist orders in July.
BailoutSleuth reported earlier this year on the high rate of enforcement action against banks and bank holding companies that got taxpayer money through the Troubled Asset Relief Program.
Supporters of TARP say that the enforcement record does not necessarily mean that the banks were unhealthy at the time of the CPP loan, as enforcement action is just one component of determining a bank's viability, and a bank's condition may have deteriorated in the months since it received aid.
But critics say that the growing number of penalties against TARP banks may indicate that Treasury should have shown greater scrutiny when determining who would receive aid.
Three of the TARP banks on the latest enforcement list got their TARP aid in March 2009. CBS Banc-Corp received $24.3 million that month, while Main Street Bank's parent company got $7.72 million and Pinnacle Bank's parent got $4.39 million.
First Trust Corp., which owns First Bank and Trust in New Orleans, got $18 million in June 2009.