Quick Facts
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Fine Amount: No monetary fine
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Primary Violation: Unsafe or unsound practices related to capital, strategic planning, liquidity, and contingency funding.
- Regulator: Office of the Comptroller of the Currency (OCC)
- Fine Date: 16-July-25
Overview
The Office of the Comptroller of the Currency (OCC) entered into a formal agreement with First National Bank & Trust Company, Clinton, Illinois, to address unsafe or unsound practices concerning capital adequacy, strategic planning, liquidity risk management, and contingency funding.
Effective July 16, 2025, the agreement imposes no monetary penalty but requires the bank to implement specific corrective actions, including achieving higher capital ratios by September 30, 2025, and submitting plans for OCC review, designating the bank as in "troubled condition".
Details of the Case
The OCC identified deficiencies in the bank's practices related to capital levels, strategic and capital planning, liquidity management, and contingency funding, prompting this enforcement action under 12 U.S.C. § 1818. The bank acknowledged these concerns and agreed to operate in compliance with outlined articles.
Key requirements include submitting progress reports, maintaining elevated capital ratios, developing and implementing capital and strategic plans covering at least three years, adopting a liquidity risk management program, and revising its contingency funding plan. The bank must obtain OCC approval for significant deviations from its pre-agreement operations or approved plans.
Failure to comply could result in the bank being deemed undercapitalized, triggering additional OCC directives. The agreement also restricts dividends, capital distributions, and brokered deposits, and mandates quarterly reviews and reporting to ensure ongoing adherence.
WORKED EXAMPLES
CAPITAL RATION REQUIREMENTS
By September 30, 2025, the bank must achieve and maintain a leverage ratio of at least 9% and a total capital ratio of at least 12%, calculated per 12 C.F.R. Part 3; these levels exceed standard minimums, and the bank must demonstrate compliance even if electing the community bank leverage ratio framework by completing additional regulatory reports.
CAPITAL PLAN SUBMISSION DEADLINE
Within 90 days of the agreement's effective date (by 14-Oct-25), the board must submit a three-year capital plan to the Assistant Deputy Comptroller for no supervisory objection; the plan must include quarterly financial projections, material risk evaluations, and contingency strategies, with quarterly board reviews documenting performance against projections and actions to address deficiencies.
LIQUIDITY PLAN ADOPTION
Within 90 days, the board must adopt a liquidity risk management program emphasizing cash flow projections and stress testing; it must include limits on funding concentrations, minimum highly liquid asset levels, and monthly reports projecting liquidity needs for the next 90 days and 12 months, forwarded to the OCC within 15 days of each month.
CONTINGENCY FUNDING PLAN REVISIONS
Within 90 days, the board must revise the contingency funding plan to define liquidity crises, identify stress events, and outline early warning triggers; it requires monthly crisis reports on funding capacity, uninsured deposit trends, and cash flow projections, with annual reviews and amendments submitted to the OCC within 10 days of adoption.
Fines and Penalties
The enforcement action instead requires corrective measures, designates the bank as in "troubled condition," and subjects it to restrictions on brokered deposits, dividends, and significant operational changes.
Key Quotes
"The Comptroller of the Currency has found unsafe or unsound practices, including those relating to capital, strategic planning, liquidity, and contingency funding planning."
"The Bank shall achieve by September 30, 2025, and thereafter maintain the following minimum capital ratios... a leverage ratio at least equal to nine percent (9%); and a total capital ratio at least equal to twelve percent (12%)."
"As a result of this Agreement, pursuant to 12 C.F.R. § 5.51(c)(7)(ii), the Bank is in 'troubled condition,' and is not an 'eligible bank' for purposes of 12 C.F.R. § 5.3 or 12 C.F.R. § 24.2(e), unless otherwise informed in writing by the OCC."
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