Recap Financial Ventures closed its buyout of Lineage Financial Network in March, pumping more than $30 million into the holding company, including $15 million for preferred stock and a direct capital infusion into Lineage Bank. Four months later, Lineage Bank has a fresh problem: a consent order from the FDIC, dated June 24, linked at orders.fdic.gov.
The order appears in the FDIC’s July 31 press release rounding up that month’s enforcement actions FDIC-wide; the individual filing, linked above, is what names Lineage. The bank neither admitted nor denied unsafe or unsound banking practices, but the order binds it regardless: a three-year business plan, a profit-and-budget overhaul, a problem-credit reduction plan, and prior written consent from FDIC’s regional director before paying any dividend or management fee. Lineage also has to shrink its reliance on brokered deposits and file quarterly compliance reports.
This isn’t Lineage’s first order. It ate one in February 2024, right after Synapse, the banking-as-a-service middleman it partnered with, collapsed into bankruptcy after opening deposit accounts for roughly 100 fintech partner platforms.
Here’s the buyer math: Recap didn’t just acquire a community bank in Williamson County, Tennessee. It acquired one whose cash flow is now gated by the FDIC. Dividends, management fees, capital distributions, all of it needs a regulator’s sign-off first. That’s not what a $30 million check is supposed to buy.
The Federal Reserve approved Recap’s bank holding company application in late February, closing the deal weeks before regulators finalized the new order behind the scenes. The order stays in force until the FDIC decides otherwise. No end date on the calendar.
Diana Kowalski