The Federal Reserve issued a cease-and-desist order against Frankewing Bancshares in Frankewing, Tenn., after an exam found deficiencies in its ability to serve as a source of strength to its bank.
The order requires the parent of the $508 million-asset Bank of Frankewing to take corrective measures that include capital conservation, debt restrictions, and enhanced regulatory oversight.
Under the order, Frankenwing must strengthen its financial and managerial resources to serve as a source of strength to its bank and comply with an October consent order issued by the Federal Deposit Insurance Corp.
The company is barred from paying dividends, buying back shares, or making any other capital distributions without Fed approval. It cannot incur, increase, or prepay any debt without regulatory consent.
To address concerns about liquidity and operational stability, the Fed ordered Frankewing to submit a detailed 2025 cash flow projection that outlines planned sources and uses of funds for debt service, operating expenses, and other financial obligations. Future annual projections must be submitted at least a month before the start of each calendar year.
The order includes stricter oversight of leadership changes, requiring regulatory approval for any new director or senior executive officer appointments.
The board must submit quarterly progress reports detailing efforts to comply with the order.