FDIC Order Forces Lineage to Rebuild Capital and Earnings

Lineage Bank, which was a partner bank for Synapse, the banking-as-a-service (BaaS) provider that went bankrupt in 2024, has reached a consent order with the Federal Deposit Insurance Corporation (FDIC).

According to the consent order dated June 24 and announced by the FDIC in a Friday (July 31) press release, Lineage Bank “has consented, without admitting or denying any charges of unsafe or unsound banking practices, to the issuance” of the consent order by the FDIC.

The consent order requires Lineage Bank to provide a business plan covering a three-year period; develop a written profit plan and budget to improve earnings; formulate a problem credit reduction plan to improve loan relationships noted in an earlier FDIC examination; ensure that the allowance for credit losses is appropriately funded; maintain a specified capital plan; get prior written consent of the regional director before declaring or paying any dividend or management fees; formulate a brokered deposit plan to manage and reduce the volume of traditional brokered deposits; and formulate an interest rate risk mitigation plan.

The order also requires Lineage Bank to provide quarterly progress reports to the regional director, detailing what it has done to comply with the order, and to send a copy of the order to its parent holding company.

The order remains in effect and enforceable until the FDIC decides otherwise.

“The provisions of this ORDER shall not bar, estop, or otherwise prevent the FDIC or any other federal or state agency or department, from taking any other action against the Bank or any of the Bank’s current or former institution-affiliated parties,” the order said.

PYMNTS reported in June 2024 that Lineage Bank was one of four partner banks at which Synapse had opened demand deposit accounts on behalf of 100 FinTech partner platforms over the previous decade.

Later in June 2024, PYMNTS reported that Lineage Bank had a consent order from the FDIC in February 2024.

In March, an investor group, Recap Financial Ventures, completed its acquisition of a majority interest in Lineage Bank’s holding company, Lineage Financial Network, according to a press release posted by Lineage Bank.