FRB and GA DBF Joint Enforcement Against Georgia Bank Holding Company

The Federal Reserve Board (FRB) and the Georgia Department of Banking and Finance recently issued a joint cease and desist order upon consent against a Georgia bank holding company, arising from supervisory concerns identified in a recent FRB inspection.

Specifically, the regulators identified deficiencies in the bank holding company’s growth strategy regarding purchasing and originating USDA and SBA loans through certain nonbank subsidiaries, including apparent concerns regarding “affiliate and related intercompany service or management agreements.”  The order requires the bank holding company to take a number of corrective actions, including:

• submitting a written plan to strengthen its board’s oversight of management and operations;
• submitting a written plan to maintain sufficient capital;
• taking necessary action to ensure compliance with Sections 23A and 23B of the Federal Reserve Act and Regulation W;
• conserving capital by not paying dividends, engaging in share repurchases, or making any other capital contributions; and
• submitting quarterly progress reports.

The order was issued upon the consent of the bank holding company and does not make any findings of fact or law.