Indiana’s Farmers and Mechanics Federal Savings Bank Under Regulatory Scrutiny
The Farmers and Mechanics Federal Savings Bank, based in Bloomfield, Indiana, has recently become the subject of a federal enforcement action. This action comes in response to the bank’s continued financial struggles, with the institution not recording a profit since 2023. The bank, which currently manages assets worth $116 million, has neither admitted nor denied the alleged violations but has consented to the issuance of an order by the Federal Deposit Insurance Corp. (FDIC) and the Indiana Department of Financial Institutions.
Details of the Enforcement Action
The order was announced on a recent Friday and requires the bank to develop a strategic plan outlining its road to profitability. The plan should include strategies to improve and sustain the bank’s financial health. Moreover, the bank is also required to maintain a total risk-based capital ratio of at least 12%. In 2024, this ratio was 11.67%, and in 2025, it was 11.03%.
Additionally, the bank must recruit qualified management and secure written approval from regulators before hiring senior executive officers and appointing directors. The bank’s president, Joshua Riggins, has been in office since 2019 but did not immediately respond to requests for comment on the enforcement action.
Bank’s History and Challenges
Farmers and Mechanics Federal Savings Bank has a rich history dating back to 1892 when it was established as a savings and loan institution. It became an Office of the Comptroller of the Currency-regulated bank in 2011 and switched to a state charter in 2017.
However, since 2020, the bank’s financial performance has been underwhelming, with net losses exceeding $4 million. This economic struggle is not uncommon among U.S. banks, as FDIC data shows that 5.1% of all institutions were unprofitable in 2025, with a higher percentage (13.29%) among banks with assets less than $100 million.
Industry-Wide Challenges
Banks specializing in mortgages, like Farmers and Mechanics, face a higher risk of unprofitability. In 2025, 15.11% of mortgage lenders were unprofitable. These lenders are defined as institutions where residential mortgage loans, plus mortgage-backed securities, exceed 50% of their total assets.
For Farmers and Mechanics, one-to-four family residential real estate loans made up 62% of all net loans and leases in 2025, significantly above the industry average. This heavy reliance on mortgage lending may have contributed to the bank’s current financial difficulties.
Next Steps for Farmers and Mechanics
In the consent order, regulators alleged that the bank engaged in unsafe or unsound banking practices. They pointed to weaknesses in capital, earnings, management, and sensitivity to market risk. The bank is now required to address these issues to ensure its future stability and profitability.
The order also mandates the bank to address “liquidity issues” identified in a September 2025 examination report. Additionally, the bank must review its staffing to ensure it has the necessary personnel for accounting compliance. These measures are crucial for the bank’s recovery and its commitment to providing reliable banking services to the Bloomfield community.
As the bank navigates these challenges, the broader banking industry will be watching closely, given the potential implications for other small, community-focused banks, particularly those heavily invested in mortgage lending.
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