28 severe enforcement actions issued in 2022; Herring Bank gets 2 in 15 months

U.S. federal banking regulators issued only 28 severe enforcement actions in 2022, a new post-Great Recession low, as credit quality remained largely benign.

By comparison, banking regulators handed out 767 severe enforcement actions in 2010 and 643 in 2009, a period when the fallout from the housing market collapse was at its peak.

As of Jan. 31, 90 U.S. banks or thrifts were operating under a severe enforcement action issued since the start of 2010, down from 92 at the time of S&P Global Market Intelligence's last analysis in November 2022.

S&P Global Market Intelligence defines severe enforcement actions as cease and desist orders, prompt corrective action directives, and formal agreements/consent orders handed to a bank or thrift by a federal regulator. This analysis does not include severe enforcement actions issued to holding companies or credit unions.

Regulatory websites may refer to certain cease and desist orders issued by federal regulators as consent agreements. However, cease and desist and consent orders are derived from the same section of law 12 U.S.C. 1818(b) and have the same structure, articulating both the areas of concern and the corrective actions. To maintain consistency with previous years, this analysis refers to these actions as cease and desist orders.

December 2022 severe enforcement actions

On Dec. 22, 2022, Amarillo, Texas-based Herring Bank received a cease and desist order from the Federal Deposit Insurance Corp. related to weaknesses in the company's information technology management. This was Herring Bank's second severe enforcement action in 15 months.

An October 2021 action required the bank to add additional external board members, develop a policy for dealing with affiliated parties and maintain elevated capital levels, among other provisions.

Earlier, on Dec. 14, 2022, Chevy Chase, Md.-based Forbright Bank received its own cease and desist order from the FDIC tied to issues with the bank's anti-money laundering/countering the financing of terrorism compliance.

* Access an Excel file containing every bank or thrift operating under a severe enforcement action issued since 2010. * Access severe enforcement action issuance data under the "Industries" tab at the top of the S&P Capital IQ Pro website.

November 2022 severe enforcement actions

Elizabeth, N.J.-based Union County Savings Bank received a cease and desist order Nov. 30, 2022, from the FDIC that required the bank to develop a strategic plan, profit plan and capital plan, among other provisions. Earlier in 2022, Union County also received a "needs to improve" rating on Community Reinvestment Act compliance.

Nashville, Tenn.-based Citizens Savings Bank and Trust Co.'s Nov. 9, 2022, cease and desist order required the bank to maintain a Tier 1 leverage ratio of at least 8.50% and a total capital ratio of 11.50% or more. At the end of 2022, both the capital ratios were above the required minimum.

Citizens Savings Bank and Trust is one of only 20 Black, African American minority depository institutions left in the U.S., according to FDIC data.