On March 3, the FDIC’s OIG released a review of a failed state-chartered mutual savings bank, detailing the causes of its collapse and assessing the FDIC’s supervision under the FDI Act’s “Prompt Corrective Action” provision. The report concluded the failure occurred primarily due to impaired capital after examiners identified at least $20.7 million in certificate-of‑deposit liabilities missing from the bank’s core financial system, with no corresponding assets. Recording these liabilities exceeded equity capital, rendering the bank critically undercapitalized, according to the report. The OIG outlined a Prompt Corrective Action timeline, noting that on December 23, 2024, the FDIC learned of $6.9 million in unresolved transactions and subsequently issued a notice requiring capital restoration actions. The bank was not able to meet the requirement of the Prompt Corrective Action and regulators took possession of the bank on January 17, 2025. The OIG estimated the loss to the Deposit Insurance Fund was $28.4 million, or roughly 62 percent of the bank’s total assets.

The OIG found that the eight joint safety-and-soundness examinations conducted by the FDIC and state regulators since 2017 repeatedly identified weaknesses in management, inadequate board oversight, and high key person risk concentrated in the CEO’s multiple roles. While examiners recommended succession planning and other corrective measures, they did not designate the CEO as a dominant official, citing a lack of material influence; supervisory personnel later claimed the designation was appropriate in hindsight but would not have changed regulatory actions.