Federal Reserve issues enforcement action against Illinois community bank

The Federal Reserve Board of Governors issued an enforcement action late last month against Illinois community bank Du Quoin State Bank and its holding company, Perry County Bancorp, Inc. 

The April 26 order requires the bank and holding company to address deficiencies identified in recent examinations by the Federal Reserve Bank of St. Louis and the Illinois Department of Financial and Professional Regulation. The deficiencies were not included in the 10-page order. 

Until the deficiencies are corrected, Du Quoin State Bank will need to secure written approval from federal and state banking regulators before selling any loan or asset that exceeds 5 percent of its total assets, redeeming its stock or paying out dividends or distributions, or incurring, increasing or guaranteeing its debt. The bank was ordered to submit an enhanced liquidity risk management program to the Fed and outline how it will meet current and future capital requirements within 60 days.

The order came after the failures of First Republic Bank, Silicon Valley Bank and Signature Bank within the last 60 days, collapses attributed to the banks’ liquidity management and interest rate risks. Still, the Federal Reserve’s most recent Financial Stability Report found that the banking sector remains resilient with a high capacity to absorb losses.