The Federal Reserve issued a cease-and-desist order this month to LaGrange, Georgia-based Community Bankshares related to the bank holding company’s government-guaranteed lending program.
Community Bankshares, the bank holding company for Community Bank & Trust – West Georgia, was ordered to bolster board oversight and senior management, and improve its capital position, according to the order, made public Thursday.
The $288 million-asset bank holding company had embarked on a growth strategy that involved purchasing and originating U.S. Department of Agriculture and Small Business Administration loans through nonbanks, which demanded “significant financial and managerial resources and support” from Community Bankshares, the Fed said in the April 14 order.
Community Bank & Trust closed nine SBA loans totaling $19.56 million in the first month of 2026, the bank said in a February news release. The bank, which has three branches, was “supported by its sister company,” Phoenix Lender Services; the bank launched that subsidiary in 2024, to originate and service SBA and USDA loans.
Phoenix facilitated about $325 million in SBA and USDA loan closings during its first full fiscal year in operation, the company said last November. By that point, the lender service provider already managed a $901 million servicing portfolio.
A January inspection by the Federal Reserve Bank of Atlanta revealed operational deficiencies with the holding company, including “with respect to pursuit of its growth strategy, related to board oversight, capital, and compliance with the rules related to affiliate transactions,” the Fed said.
Community Bankshares also faces a lawsuit filed by former CEO Chris Hurn, who left the company in October and sued his former employer a month later. Hurn – an SBA and USDA lending executive who’s now the CEO of fintech Lendesca – seeks the return of a $2 million investment plus other funds he contends Community Bankshares owes him after his ouster.
Under the Fed order, Community Bankshares was directed to immediately conserve capital, halting dividend payments, share repurchases and any other capital distribution without prior written approval from the Fed. The holding company was also told not to incur, increase, prepay or guarantee any debt without approval.
The company was also ordered to, within 30 days, submit a plan to strengthen board oversight of company management and operations, including an assessment of senior staffing needs; and submit a plan to maintain sufficient capital, including an assessment of the current and expected uses of capital, and an action plan to raise additional capital.
Under the order, Community Bankshares also must comply with requirements to notify regulators before appointing any new director or senior executive officer, or changing responsibilities of any senior executive, the Fed said.
The Fed directed the company to submit quarterly progress reports detailing actions taken to comply with the order, and adopt plans within 10 days of receiving supervisors’ approval.
Spokespeople for the bank didn’t immediately respond to a request for comment.
Community Bank & Trust’s profit last year totaled $4.5 million, and its common equity tier 1 capital ratio was 8.4%, according to financial data as of Dec. 31, 2025.
