The regulator deemed the bank “adequately capitalized” last week after applying a more severe label in August. A special-purpose acquisition of the bank had fallen apart earlier this summer.

The Federal Deposit Insurance Corp. has amended its directive against Old Glory Bank, noting last week that the Elmore City, Oklahoma-based lender is now “adequately capitalized.”

The regulator in August labeled Old Glory “significantly undercapitalized” and ordered the bank to submit an updated capital restoration plan.

The order came less than two weeks after a merger agreement, struck in January between Old Glory’s holding company and special-purpose acquisition company Digital Asset Acquisition Corp., fell apart.

Old Glory had operated under an FDIC consent order since May 2024 due to insufficient capital, according to a prospectus filed by Digital Asset Acquisition Corp. in July. The bank said then it may have to pursue “a sale or organized wind-down” if the deal wasn’t consummated, because it lacked sufficient capital to satisfy regulators.

Old Glory had failed to maintain a Tier 1 leverage ratio of at least 14% as required by the 2024 order, but the merger was set to solve those requirements, the prospectus indicated. Bank executives at the time said they believed they could negotiate a “more reasonable” ratio with regulators, “such as 7 [% to] 9%.”

The FDIC’s amended directive, issued last Tuesday and published Friday, recognizes Old Glory’s improved capitalization but continues to restrict the bank in the short term.

The regulator permits Old Glory to sell common stock, noncumulative perpetual preferred stock or use direct contributions from the bank’s board or shareholders to boost Tier 1 capital, but any offering of securities would need to be reviewed by the FDIC, the agency said.

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