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FDIC Enforcement Decisions and Orders

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{{4-30-91 p.C-309}}
   [10,062] In the Matter of Tuscaloosa Commerce Bank, Denham Springs, Louisiana, Docket No. FDIC-90-62d (4-6-90).

   Bank ordered to enhance and augment its primary capital. (This order was terminated by order of the FDIC, dated 2-5-91; see15,226.)

   [.1] Capital Directive—Enhance Primary Capital

In the Matter of

TUSCALOOSA COMMERCE BANK
DENHAM SPRINGS, LOUISIANA
(Insured State Nonmember Bank)
CAPITAL DIRECTIVE ISSUED
PURSUANT TO 12 U.S.C. § 3907

   Tuscaloosa Commerce Bank, Denham Springs, Louisiana ("Bank"), having been advised of its right to receive a NOTICE OF INTENT TO ISSUE DIRECTIVE TO RESTORE AND MAINTAIN CAPITAL ("CAPITAL DIRECTIVE") detailing the unsafe or unsound banking practices of operating with inadequate capital and operating with a significant volume of classified assets alleged to have been committed by the Bank and of its right to file a response thereto, under sections 325.4 and 325.6 of the FDIC Rules and Regulations, 12 C.F.R. §§ 325.4 and 325.6, and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CAPITAL DIRECTIVE ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated April 6, 1990, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices, the Bank consented to the issuance of a CAPITAL DIRECTIVE ISSUED PURSUANT TO 12 U.S.C. § 3907 ("CAPITAL DIRECTIVE").
   The FDIC considered the matter and determined that the Bank had engaged in unsafe and unsound banking practices, as defined as section 325.4 of the FDIC Rules and Regulations, 12 C.F.R. § 325.4, by virtue of the fact that as of December 15, 1989, the Bank had 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 5.38 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 5.38 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
   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 Denham Springs, Louisiana. The bank is and has been, at all times pertinent to this action, an insured State nonmember bank, subject to the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §§ 1811-1831(k), the Rules and Regulations of the {{4-30-91 p.C-310}}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 December 15, 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), totaled $22,846,000.
       (b) The Bank's total capital, as defined in section 325.2(l) of the FDIC Rules and Regulations, 12 C.F.R. s 325.2(l), totaled $1,228,000, or 5.38 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), totaled $1,228,000, or 5.38 percent of total assets.
       (d) The Bank's total deposits totaled $19,268,000.
   3. The Bank is engaging in an unsafe or unsound banking practice within the meaning 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 quality and quality of the assets in its portfolio, as demonstrated by the following data as of December 15, 1989:
       (a) The Bank held adversely classified assets in the amount of $1,749,000, including $20,000 in assets classified "Loss", $200,000 in assets classified as "Doubtful" and $1,529,000 in assets classified as "Substandard".
       (b) Total classified assets represented 140.14 percent of the Bank's total equity capital and reserves of $1,248,000.
       (c) Nonaccrual loans equaled $434,000, and represented 3.3 percent of the Bank's total loans.
   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, it is hereby:

   [.1] DIRECTED, that the Bank shall enhance and augment its primary capital by not less than $750,000.
   FURTHER DIRECTED, that the Bank shall complete the required capital augmentation within one hundred eighty (180) days after the effective date of this CAPITAL DIRECTIVE.
   FURTHER DIRECTED, that this CAPITAL DIRECTIVE shall become effective ten (10) days after its issuance by the FDIC.
   Each provision of this CAPITAL DIRECTIVE shall be binding upon the Bank, its directors, officers, employees, agents, successors, assigns, and other institution-affiliated parties 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.
   Pursuant to delegated authority.
   Dated at Memphis, Tennessee, this 18th day of April, 1990.

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