FDIC clamps down on ‘significantly undercapitalized’ Old Glory Bank

The FDIC has issued a 'prompt corrective action' directive against Old Glory Bank after the institution’s capital levels fell below critical regulatory thresholds. As of late 2024, the bank reported a leverage ratio of just 2.69%, categorizing it as 'significantly undercapitalized.' This regulatory crackdown means the bank is now restricted from making new loans, paying dividends, or increasing executive pay without federal approval. It must also submit a comprehensive plan to raise capital or face potential sale or merger. For retailers and operators, this serves as a major warning sign regarding the stability of their financing partners. Old Glory Bank has been marketed as a 'pro-America' alternative to big banks, aiming to serve businesses and consumers who feel marginalized by mainstream finance. However, if you rely on Old Glory for merchant processing, business accounts, or facilitating customer loans, you need to prepare for potential service disruptions. When a bank falls this far below capital requirements, federal regulators often move toward a forced sale if new investment isn't secured quickly. This can lead to frozen credit lines, changes in lending criteria, or the sudden termination of merchant agreements. It is time to review your backup financing options to ensure your cash flow and customer payment options aren't tied to a single, struggling institution.

Source: Banking Dive

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