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{{10-14-05 p.C-5676}}

   [12,013A] In the Matter of Farmers Bank, Hamburg, Arkansas, Docket No. 03-013bb (1-28-03).

   A capital directive was issued, based on findings by the FDIC that the bank failed to maintain adequate capital. (This order was terminated by order of the FDIC dated 10-25-05; see ¶16,442).

In the Matter of
FARMERS BANK
HAMBURG, ARKANSAS
(Insured State Nonmember Bank)
CAPITAL DIRECTIVE

FDIC 03-013bb
{{6-30-03 p.C-5676.1}}

   The Federal Deposit Insurance Corporation ("FDIC") has determined that Farmers Bank, Hamburg, Arkansas ("Bank"), is engaging in 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 December 31, 2001, the Bank had a ratio of Tier I capital to total assets, as those terms are defined in sections 325.2(v) and 325.2(x) of the FDIC Rules and Regulations, 12 C.F.R. §§ 325.2(t) and 325.2(v) of 5.58 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 analysis and review of information made available to the FDIC, 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 Arkansas, having its principal place of business in Hamburg, Arkansas. 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. §§ 1811–1831y, the Rules and Regulations of the FDIC, 12 C.F.R. Chapter III, the International Lending Supervision Act of 1983, 12 U.S.C. §§ 3901–3911, and the laws of the State of Arkansas.

   2. As of December 31, 2001:

       (a) The Bank's total assets, as defined in section 325.2(x) of the FDIC Rules and Regulations, 12 C.F.R. §325.2(x), totaled $51,035,000.

       (b) The Bank's Tier I capital, as defined in section 325.2(v) of the FDIC Rules and Regulations, 12 C.F.R. §325.2(v), totaled $2,846,000, or 5.58 percent of total assets.

       (c) The Bank's total deposits totaled $44,859,000.

       (d) The Bank held a concentration of credit which represented 252.0 percent of the Bank's Tier I capital.

       (e) The Bank's total classified assets represented 25.80 percent of total loans and 264.18 percent of Tier I capital plus that portion of the Bank's allowance for loan and lease losses which are not eligible for inclusion in the calculation of Tier I capital.

   Upon consideration of the facts cited 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:

   DIRECTED, that the Bank restore and thereafter maintain its ratio of Tier I capital to total assets at not less than 7.0 percent.

   FURTHER DIRECTED, that the Bank shall achieve the minimum ratio directed above within 30 days of its receipt of this CAPITAL DIRECTIVE.

   FURTHER DIRECTED, that within 15 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 ensure the maintenance of the Tier I capital to total assets ratio required by this Capital Directive. The plan required herein shall be delivered to the Regional Director of the Dallas Region, Memphis Area Office, at 5100 Poplar Avenue, Suite 1900, Memphis, Tennessee 38137.

   FURTHER DIRECTED, that this CAPITAL DIRECTIVE shall become effective upon the date of its Issuance to the Bank.

   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 28 day of January, 2003.



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