The quote I read first was the bank's, not the regulator's. Asked by Banking Dive on Monday 28 September about the FDIC order, an Old Glory spokesperson said the bank is "doing again what we always do, which is raising capital from our great ownership group." The same email carried a second line: "The Fed knocked us down by not approving our deSPAC , but we are getting back up, and we will continue on our mission of providing all of America the freedom in banking they deserve."
I noticed the mood before the numbers. It is a cheerful tone for a bank in the fourth of five capital categories.
The FDIC issued a prompt corrective action directive to Old Glory Bank of Elmore City, Oklahoma, on 28 August and made it public on Friday 25 September. One ratio triggered all of it. At 30 June, according to the call report the FDIC cites, the bank's tier 1 capital stood at 2.69% of its average assets. The bank did not answer the regulator's notice of intent. I find that detail hard to read past.
The FDIC's own definition is blunt: "An insured depository institution is 'significantly undercapitalized' if it is significantly below the required minimum level for any relevant capital measure." Only critically undercapitalized sits below that.
Banking Dive points out that a directive, unlike a consent order , is not negotiated: it "doesn't feature a signature from a bank representative." I had not thought about that difference before.
The list of limits is long. Old Glory has two weeks for an updated capital restoration plan. Banking Dive's summary of the order says the bank must not "pay any management fees to those in control of the bank" if that would hurt capital further, and it also cannot take brokered deposits, has to cap what it pays on deposits and cannot pay a senior executive a bonus without the regulator's approval, which is an awkward set of rules for a bank that wants to raise money from its own owners.
Monthly reports go to the FDIC. The limits stay until the bank is adequately capitalized on average for four quarters in a row.
Here the history matters. Old Glory has been under an FDIC consent order since May 2024 for weak capital, the order asked for 14% of tier 1 capital against assets, and according to the prospectus Digital Asset Acquisition Corp. filed with the SEC in July the bank had failed to hold that level, which makes the directive the second capital order on the same bank in a little over two years. I took that from Banking Dive's reading of the prospectus and have not opened the filing myself.
Executives hoped to negotiate a "more reasonable" figure, "such as 7 [percent to] 9%", and the merger with Digital Asset Acquisition Corp. was meant to bring in the money.
The merger died in August. Old Glory says the Federal Reserve did not approve it. The Fed declined to comment at the time.
So I did the sum myself, roughly. I am holding assets at $279.4 million, while the actual ratio uses an average. At 2.69% the bank has about $7.5 million of tier 1 capital.
Reaching 4% needs about $11.2 million, a gap near $3.7 million. Reaching the 14% of the consent order needs about $39 million, a gap above $31 million. In August the spokesperson told Banking Dive the bank needed "a little capital" to clear 4% and was "currently engaged in those discussions." On my numbers that part is true. The 14% part is a different size of problem, and the bank lost roughly $8 million in the first half of the year, which pulls the other way.
For anyone who buys small banks, the July prospectus is the useful document, and it is more candid than the press line. Old Glory wrote that without the deal it might have to pursue "a sale or organized wind-down", because it lacked the capital regulators wanted. It went further: "If we take neither of these alternative actions, we would expect other regulatory actions to be taken, including actions to enjoin 'unsafe or unsound' practices."
A $279.4 million lender with a capital hole, a consent order and a regulator counting weeks is exactly the kind of bank a buyer can price hard. Nano Banc in California took a similar path this month and ended with the FDIC selling it to Sunwest Bank.
Banking Dive notes that the co-founders include former Housing Secretary Ben Carson and former White House press secretary Sean Spicer, and that the bank markets a "pro-America online banking platform." None of that changes the arithmetic. I would rather judge the bank by its capital. I mention it because the ownership group the spokesperson is counting on is the same circle, and I cannot tell from anything public how deep its pockets are. Two weeks from the order has already passed. I have not seen the restoration plan, and I do not know if the FDIC accepted it.