The Federal Reserve issued a consent order against First of Murphysboro Corp. (FMC) citing the bank holding company for operational deficiencies related to its oversight of the First Bank and Trust Company of Murphysboro.
The Federal Reserve Bank of St. Louis found FMC to be inadequately serving as a source of financial and managerial strength for its bank subsidiary. Specifically, the Fed’s consent order pointed to failures related to compliance with affiliate transaction rules under sections 23A and 23B of the Federal Reserve Act.
To remedy these deficiencies, the consent order outlines several mandatory steps for FMC, including:
- Developing a plan to ensure it serves as a financial and managerial resource for the bank, ensuring compliance with prior regulatory agreements.
- Adhering strictly to affiliate transaction rules and avoid causing the bank to violate these provisions.
- Submitting detailed annual cash flow projections and restricting capital distributions, such as dividends or share buybacks, without prior regulatory approval.
- Obtaining Fed approval for incurring or increasing debt and complying with restrictions on indemnification and severance payments.
- Reporting quarterly to the Federal Reserve on its progress in complying with the order’s terms.
These measures are intended to facilitate the bank’s operations to safe and sound levels while ensuring compliance with applicable laws. The company’s board must demonstrate proactive oversight and allocate resources effectively to meet regulatory standards.
Failure to comply with the terms could lead to additional penalties or enforcement actions. The order remains in effect until modified or lifted by the Federal Reserve, underscoring the seriousness of the deficiencies and the need for sustained improvements.