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FDIC Enforcement Decisions and Orders

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   [10,007] In the Matter of bank of Coushatta, Coushatta, Louisiana, Docket No. FDIC-89-158d (9-22-89).

   Bank ordered to restore and maintain its primary capital. (This order was terminated by order of the FDIC dated 6-15-92; see ¶ 15,466.)

   [.1] Capital Directive—Restore and Maintain Primary Capital
   [.2] Capital Directive—Augment Primary Capital

In the Matter of
BANK OF COUSHATTA
COUSHATTA, LOUISIANA

(Insured State Nonmember Bank)
CAPITAL DIRECTIVE ISSUED
PURSUANT TO 12 U.S.C. § 3907

   The Federal Deposit Insurance Corporation ("FDIC") has determined that Bank of Coushatta, Coushatta, Louisiana ("Bank"), is engaging in an unsafe or unsound banking practice as defined at section 325.4 of the FDIC Rules and Regulations, 12 C.F.R. § 325.4, by virtue of the fact that as of April 28, 1989, the Bank has a ratio of total capital to total assets, as those terms are defined in section 325.2 of the FDIC Rules and Regulations, 12 C.F.R. § 325.2, of 3.76 percent, and a ratio of primary capital to total assets, as those terms are defined in section 325.2 of the FDIC Rules and Regulations, 12 C.F.R. § 325.2, of 3.76 percent. The FDIC hereby issues this CAPITAL DIRECTIVE pursuant to the provisions of section 908 of the International Lending Supervision Act of 1983, 12 U.S.C. § 3907, and section 325.6 of the FDIC Rules and Regulations, 12 C.F.R. § 325.6.
   Upon a review of the Bank's response to FDIC's NOTICE OF INTENT TO ISSUE DIRECTIVE TO RESTORE AND MAINTAIN CAPITAL and PRELIMINARY FINDINGS OF FACT AND CONCLUSIONS OF LAW and PROPOSAL TO ISSUE CAPITAL DIRECTIVE ("NOTICE OF INTENT TO ISSUE DIRECTIVE"), the FDIC finds and concludes as follows:

FINDINGS OF FACT AND
CONCLUSIONS OF LAW

   1. The Bank is a corporation existing and doing business under the laws of the State of Louisiana, having its principal place of business in Coushatta, Louisiana. The Bank is and has been, at all time pertinent to this action, an insured State nonmember bank, subject to the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. §§ 1811–1831d, amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub. L. No. 101–73, 103 Stat. 183, _____ (1989) (to be codified at 12 U.S.C. § 1811 et seq.) the Rules and Regulations of the FDIC, 12 C.F.R. Chapter III, the International Lending Supervision Act of 1983, 12 U.S.C. §§ 3901–3912, and the laws of the State of Louisiana.
   2. As of April 28, 1989:

       (a) The Bank's total assets, as defined in section 325.2(k) of the FDIC Rules and Regulations, 12 C.F.R. § 325.2(k), equal $39,413,000.
       (b) The Bank's total capital, as defined in section 325.2(l) of the FDIC Rules and Regulations, 12 C.F.R. § 325.2(a), equals $1,482,000, or 3.76 percent of total assets.
       (c) The Bank's primary capital, as defined in section 325.2(h) of the FDIC Rules and Regulations, 12 C.F.R. § 325.2(h), equals $1,482,000, or 3.76 percent of total assets.
       (d) The Bank's total deposits equal $37,209,000.
   3. The Bank is engaging in an unsafe or unsound banking practice within the mean- {{8-31-94 p.C-34}}ing of section 325.4(b) of the FDIC Rules and Regulations, 12 C.F.R. § 325.4(b), in that the Bank is operating with inadequate capital to support the quantity and quality of the assets in its portfolio, as demonstrated by the following data as of April 28, 1989:
       (a) The Bank holds adversely classified assets in the amount of $4,036,000, including $482,000 in assets classified "Loss," $164,000 in assets classified "Doubtful," and $3,390,000 in assets classified as "Substandard."
       (b) Total classified assets represent 205.50 percent of the Bank's total capital and reserves of $1,964,000.
       (c) Nonaccrual loans totaled $749,000, and represent 4.5 percent of the Bank's total loans.
       (d) The Bank's allowance for loan and lease losses is inadequate to protect its depositors and other creditors:
         (i) The Bank's allowance for loan and lease losses was $429,000; and
         (ii) The Bank's adversely classified loans of $3,126,000 represent 728.67 percent of its allowance for loan and lease losses.
   4. Upon consideration of the facts recited in the paragraphs above, the FDIC has determined that the Bank has failed to maintain adequate capital, as required by section 908 of the International Lending Supervision Act of 1983, 12 U.S.C. § 3907, and sections 325.3 and 325.4 of the FDIC Rules and Regulations, 12 C.F.R. §§ 325.3 and 325.4.

CAPITAL DIRECTIVE

   After taking into consideration the FINDINGS OF FACT AND CONCLUSIONS OF LAW stated herein and contained in preliminary form in the NOTICE OF INTENT TO ISSUE DIRECTIVE and the written response of the Bank to the NOTICE OF INTENT TO ISSUE DIRECTIVE, it is hereby:

   [.1] DIRECTED, that the Bank restore and thereafter maintain its ratio of primary capital to total assets at not less than 5.5 percent.

   [.2] FURTHER DIRECTED, that the Bank shall enhance and augment its primary capital by not less than $725,000.
   FURTHER DIRECTED, that the Bank shall complete the required capital augmentation and achieve the minimum ratio directed above by December 31, 1989.
   FURTHER DIRECTED, that within 30 days of the receipt of this CAPITAL DIRECTIVE, the Bank shall submit a plan acceptable to the FDIC describing the means and timing by which the Bank shall achieve the required capital level.
   FURTHER DIRECTED, that this CAPITAL DIRECTIVE shall become effective upon the date of its receipt by the Bank.
   Each provision of this CAPITAL DIRECTIVE shall be binding upon the Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the affairs of the Bank.
   Each provision of this CAPITAL DIRECTIVE shall remain effective and enforceable except to the extent that, and until such time as, any provision shall be modified, terminated, suspended, or set aside by the FDIC.
   Dated at Memphis, Tennessee this 22nd day of September, 1989.
   Pursuant to delegated authority.

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