The Federal Reserve has dropped an enforcement action against Perry County Bancorp and its subsidiary, Du Quoin State Bank.
The termination, made public Tuesday, came roughly two years after the Fed issued an enforcement action against the Du Quoin, Illinois-based lender in April 2023.
At the end of 2022, Du Quoin was one of 18 U.S. banks to post a negative tangible common equity ratio because of unrealized losses in its available-for-sale securities portfolio, according to S&P Global. The lender’s TCE ratio improved to 1.10% by March 2023, from negative 0.41% at the end of 2022; that was due to its accumulated other comprehensive income improving to negative $11.1 million, from negative $12.8 million, as interest rates dipped in the first quarter of 2023.
Under the agreement, Du Quoin was required to submit a written plan to maintain sufficient capital and the adequacy of the bank’s capital, taking into account the volume of adversely classified assets, concentrations of credit and anticipated and contingency funding needs. The lender was told to notify regulators within 30 days if the bank’s capital ratios fall below the approved plan’s minimum ratios.
Du Quoin must submit an enhanced liquidity risk management program, including an analysis of sources and uses of funding, enhanced liquidity stress test scenarios, and a plan to bolster its interest rate risk management practices appropriate for the bank's size and complexity.
The Federal Reserve Bank of St. Louis and the Illinois Department of Financial and Professional Regulation said Du Quoin and Perry County Bancorp had started taking corrective action to address the deficiencies identified during examinations. Further, the bank and its holding company had adopted interim contingency funding measures and agreed to comply with provisions within the agreement, the 2023 enforcement action noted.
The Fed has terminated a number of enforcement actions against lenders this year — notably dropping two enforcement actions against Wells Fargo in February related to the bank’s mortgage business. The Fed also terminated an enforcement action in March against Dunkrik, New York-based Lake Shore Savings Bank.
