Two Middle Georgia banks under increased oversight by regulators

Two banks in Middle Georgia have joined the growing ranks of stressed banks that fall under greater scrutiny of state and federal regulators.

The Federal Deposit Insurance Corp. released Friday a list of orders of administrative enforcement actions taken against banks in February.

The Bank of Perry and Peoples State Bank in Jeffersonville each were issued a consent order, formerly called a cease and desist order.

Both banks signed the orders issued by the FDIC “without admitting or denying the charges of unsafe or unsound banking practices,” the documents state.

The strongest language was in the order for Peoples State Bank, which is part of Capitol Bancorp based in Lansing, Mich. — itself under a written agreement with the Federal Reserve Bank of Chicago.

The order states: “Within 30 days from the effective date of this order, the bank shall develop, adopt and implement a plan to sell itself or merge itself into an insured depository institution that is not controlled by Capitol Bancorp Limited, or otherwise recapitalize the bank so that the bank is no longer controlled by Capitol Bancorp Limited.”

The bank also must furnish written progress reports signed by the board of directors detailing its compliance with the order.

The Bank of Perry consent order sets out various measures the bank must take, including:

n The board must increase its participation in the affairs of the bank, including monthly meetings during which it should review and approve income and expense reports, all loans, investment activity and operating policies.

n The bank must achieve and maintain minimum capital levels as spelled out in the order.

n The bank “shall not declare or pay dividends or bonuses” without prior written approval of the FDIC regional office director.

n The bank is to submit a written plan to “reduce the bank’s risk position in each asset in excess of $250,000 which is classified ‘substandard’ or ‘doubtful’ on the bank’s internal watch list” dated Sept. 9, 2009.

n During the “effective life of this order, the bank shall not accept, renew or rollover any brokered deposits.”

The FDIC processed a total of 64 matters in February, which included 36 cease and desist consent orders, according to a news release.

A total of 234 banks have failed in the country since Oct. 1, 2000, including 39 in Georgia.

To contact writer Linda S. Morris, call 744-4223.