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FDIC Enforcement Decisions and Orders

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{{10-31-93 p.C-318}}
   [10,065] In the Matter of United Valley Bank, Farmersville, California, Docket No. FDIC-90-60b (4-16-90).

   Bank to cease and desist from practices such as operating with hazardous lending and lax collection policies, inadequate equity capital and reserves, with a large volume of poor quality loans, with an inadequate valuation reserve and with inadequate liquidity and funds management, inadequate routine and controls policies and in such a manner as to produce operating losses; and violating applicable federal and state laws. (This order was terminated by order of the FDIC dated 8-16-93; see15, 715.)

   [.1] Management—Qualifications—Compliance
   [.2] Primary Capital—Increase—Methods
   [.3] Assets—Adversely Classified—Reduce
   [.4] Loans—Extension of Credit—Curtail
   [.5] Loans—Borrowers Outside Trade Area—Eliminate
   [.6] Loan Policy—Minimum Requirements—Review
   [.7] Loan Loss Reserve—Adequacy—Review
   [.8] Profit Plan—Minimum Requirements—Review
   [.9] Violations of Law—Eliminate/Correct
{{4-1-90 p.C-319}}
   [.10] Asset/Liability Management—Minimum Requirement—Review
   [.11] Bank Operation—Internal Routine and Controls—Review
   [.12] Reports on Financial Condition—Amendment—Filing
   [.13] Shareholders—Dividends—Approval
   [.14] Shareholders—Disclosure—Cease and Desist Order
   [.15] Real Estate Activities—State Law—Review
   [.16] Compliance—Progress Reports—Frequency

In the Matter of

UNITED VALLEY BANK
FARMERSVILLE, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

   United Valley Bank, Farmersville, California ("Insured Institution"), having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations of law and/or regulations alleged to have been committed by the Insured Institution and of its right to a hearing on the alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated April 4, 1990, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices and violations of law and/or regulations, the Insured Institution consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.
   The FDIC considered the matter and determined that it had reason to believe that the Insured Institution had engaged in un-safe or unsound banking practices and had committed violations of law and/or regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST
   IT IS HEREBY ORDERED that the Insured Institution, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of affairs of the Insured Institution, cease and desist from the following unsafe or unsound banking practices and violations:
   (a) operating with hazardous lending and lax collection practices;
   (b) operating with inadequate equity capital and reserves;
   (c) operating with a large volume of poor quality loans;
   (d) operating with an inadequate loan valuation reserve;
   (e) operating with inadequate provisions for liquidity and funds management;
   (f) operating with inadequate routine and controls policies;
   (g) operating in such a manner as to produce operating losses;
   (h) operating in violation of section 23A of the Federal Reserve Act, 12 U.S.C. §371c, made applicable to state nonmember insured institutions by section 18(j)(1) of the Act, 12 U.S.C. §1828(j)(1);
   (i) operating in violation of section 22(h) of the Federal Reserve Act, as amended, 12 U.S.C. §375b and sections 215.4(a), 215.4(b), and 215.4(d) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §§215.4(a), 215.4(b), and 215.4(d), made applicable to state nonmember institutions by section 18(j)(2) of the Act, 12 U.S.C. 1828(j)(2);
   (j) operating in violation of sections 325.3(b) and 325.4(c) of the FDIC Rules and Regulations, 12 C.F.R. §§325.3(b) and 325.4(c); and
   (k) operating in violation of section 3359(b) of the California Financial Code, Cal. Fin. Code §3359(b) (West 1989).
   IT IS FURTHER ORDERED that the Insured Institution take affirmative action as follows:

   [.1] 1. By June 15, 1990, the Insured Institution shall have and thereafter retain qualified management.
{{4-1-90 p.C-319}}
   [.10] Asset/Liability Management—Minimum Requirement—Review
   [.11] Bank Operation—Internal Routine and Controls—Review
   [.12] Reports on Financial Condition—Amendment—Filing
   [.13] Shareholders—Dividends—Approval
   [.14] Shareholders—Disclosure—Cease and Desist Order
   [.15] Real Estate Activities—State Law—Review
   [.16] Compliance—Progress Reports—Frequency

In the Matter of

UNITED VALLEY BANK
FARMERSVILLE, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

   United Valley Bank, Farmersville, California ("Insured Institution"), having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations of law and/or regulations alleged to have been committed by the Insured Institution and of its right to a hearing on the alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated April 4, 1990, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices and violations of law and/or regulations, the Insured Institution consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.
   The FDIC considered the matter and determined that it had reason to believe that the Insured Institution had engaged in unsafe or unsound banking practices and had committed violations of law and/or regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST
   IT IS HEREBY ORDERED that the Insured Institution, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of affairs of the Insured Institution, cease and desist from the following unsafe or unsound banking practices and violations:
   (a) operating with hazardous lending and lax collection practices;
   (b) operating with inadequate equity capital and reserves;
   (c) operating with a large volume of poor quality loans;
   (d) operating with an inadequate loan valuation reserve;
   (e) operating with inadequate provisions for liquidity and funds management;
   (f) operating with inadequate routine and controls policies;
   (g) operating in such a manner as to produce operating losses;
   (h) operating in violation of section 23A of the Federal Reserve Act, 12 U.S.C. §371c, made applicable to state nonmember insured institutions by section 18(j)(1) of the Act, 12 U.S.C. §1828(j)(1);
   (i) operating in violation of section 22(h) of the Federal Reserve Act, as amended, 12 U.S.C. §375b and sections 215.4(a), 215.4(b), and 215.4(d) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §§215.4(a), 215.4(b), and 215.4(d), made applicable to state nonmember institutions by section 18(j)(2) of the Act, 12 U.S.C. 1828(j)(2);
   (j) operating in violation of sections 325.3(b) and 325.4(c) of the FDIC Rules and Regulations, 12 C.F.R. §§325.3(b) and 325.4(c); and
   (k) operating in violation of section 3359(b) of the California Financial Code, Cal. Fin. Code §3359(b) (West 1989).
   IT IS FURTHER ORDERED that the Insured Institution take affirmative action as follows:

   [.1] 1. By June 15, 1990, the Insured Institution shall have and thereafter retain qualified management.
{{4-1-90 p.C-320}}
   (a) Each member of management shall have qualifications and experience commensurate with his or her duties and responsibilities at the Insured Institution. Management should include a chief executive officer with proven ability in managing an insured institution of comparable size and experience in upgrading a low quality loan portfolio and a senior lending officer with an appropriate level of lending, collection, and loan supervision experience for the type and quality of the Insured Institution's loans. Each member of management shall be provided appropriate written authority from the Insured Institution's board of directors to implement the provisions of this ORDER.
   (b) The qualifications of management shall be assessed on its ability to:

       (i) comply with the requirements of this ORDER;
       (ii) operate the Insured Institution in a safe and sound manner;
       (iii) comply with applicable laws and regulations; and
       (iv) restore all aspects of the Insured Institution to a safe and sound condition, including asset quality, capital adequacy, earnings, management effectiveness, and liquidity.
   (c) During the life of this ORDER, the Insured Institution shall notify the Regional Director of the FDIC's San Francisco Regional Office ("Regional Director") and the Superintendent of Banks, State of California ("Superintendent") in writing when it proposes to add any individual to the institution's board of directors or employ any individual as a senior executive officer. The notification must be received at least 30 days before such addition or employment is intended to become effective and should include a description of the background and experience of the individual or individuals to be added or employed.
   (d) The Insured Institution may not add any individual to its board of directors or employ any individual as a senior executive officer if the Regional Director issues a notice of disapproval pursuant to section 32 of the Act, 12 U.S.C. §1831(i).

   [.2] 2. (a) By June 15, 1990, the Insured Institution shall have increased its adjusted primary capital by such an amount so that its adjusted primary capital equals or exceeds seven and one-half (7.5) percent of the Insured Institution's adjusted Part 325 total assets. Thereafter, during the life of this ORDER, the Insured Institution shall maintain adjusted primary capital in such an amount as to equal or exceed seven and one-half (7.5) percent of the Insured Institution's adjusted Part 325 total assets. Primary capital and Part 325 total assets shall be calculated in accordance with prevailing instructions for the preparation of Reports of Condition. The computation of adjusted primary capital and the ratio of adjusted primary capital to adjusted Part 325 total assets shall be determined by using the procedures outlined in the "Analysis of Capital and Reserves" schedule in the FDIC Report of Examination.
   (b) Any increase in primary capital necessary to meet the requirements of Paragraph 2 of this ORDER may be accomplished by the following:

       (i) the sale of common stock; or
       (ii) the sale of perpetual preferred stock; or
       (iii) the direct contribution of cash by the board of directors, shareholders, and/or parent-bank holding company; or
       (iv) the collection of assets previously charged off; or
       (v) the reduction of the "Loss" and "Doubtful" assets specified in Paragraph 3 of this ORDER without loss or liability to the Insured Institution; or
       (vi) any other means acceptable to the Regional Director and the Superintendent; or
       (vii) any combination of the above means.
   (c) If all or part of the increase in primary capital required by Paragraph 2 of this ORDER is accomplished by the sale of new securities, the board of directors shall forthwith take all necessary steps to adopt and implement a plan for the sale of such additional securities, including the voting of any shares owned or proxies held or controlled by them in favor of the plan. Should the implementation of the plan involve a public distribution of the Insured Institution's securities (including a distribution limited only to the Insured Institution's existing shareholders), the Insured Institution shall prepare offering materials fully describing the securities being offered, including an accurate description of the financial condition of the Insured Institution and the circumstances giving rise to the offering, and {{4-1-90 p.C-321}}any other material disclosures necessary to comply with California securities laws. Prior to the implementation of the plan and, in any event, not less than fifteen (15) days prior to the dissemination of such materials, the plan and any materials used in the sale of the securities shall be submitted to the FDIC, Registration and Disclosure Unit, Washington, D.C. 20429, for review. Any changes requested to be made in the plan or materials by the FDIC shall be made prior to their dissemination. If the increase in primary capital is provided by the sale of preferred stock, then all terms and conditions of the issue, including but not limited to those terms and conditions relative to interest rate and convertibility factor, shall be presented to the Regional Director and the Superintendent for prior approval.
   (d) In complying with the provisions of Paragraph 2 of this ORDER, the Insured Institution shall provide to any subscriber and/or purchaser of the Insured Institution's securities, a written notice of any planned or existing development or other changes which are materially different from the information reflected in any offering materials used in connection with the sale of Insured Institution securities. The written notice required by this paragraph shall be furnished within ten (10) days from the date such material development or change was planned or occurred, whichever is earlier, and shall be furnished to every subscriber and/or purchaser of the Insured Institution's securities who received or was tendered the information contained in the Insured Institution's original offering materials.
   (e) For the purposes of this ORDER, the terms "primary capital" and "total assets" shall have the meanings ascribed to them in Part 325 of the FDIC Rules and Regulations, respectively subsections 325.2(h) and 325.2(k), 12 C.F.R. §§325.2(h) and 325.2(k).

   [.3] 3. (a) Within 10 days from the effective date of this ORDER, the Insured Institution shall eliminate from its books, by charge-off or collection, all assets classified "Loss" and one-half of the assets classified "Doubtful" as of October 31, 1989, that have not been previously collected or charged off. Elimination of these assets through proceeds of other loans made by the Insured Institution is not considered collection for the purpose of this paragraph.
   (b) By July 31, 1990, the Insured Institution shall have reduced the assets classified "Substandard" and those assets classified "Doubtful" as of October 31, 1989 that have not previously been charged off to not more than $4,500,000.
   (c) By November 30, 1990, the Insured Institution shall have reduced the assets classified "Substandard" and those assets classified "Doubtful" as of October 31, 1989 that have not previously been charged off to not more than $3,000,000.
   (d) By March 31, 1991, the Insured Institution shall have reduced the assets classified "Substandard" and those assets classified "Doubtful" as of October 31, 1989 that have not previously been charged off to not more than $2,500,000.
   (e) By July 31, 1991, the Insured Institution shall have reduced the assets classified "Substandard" and those assets classified "Doubtful" as of October 31, 1989 that have not previously been charged off to not more than $2,000,000.
   (f) By November 30, 1991, the Insured Institution shall have reduced the assets classified "Substandard" and those assets classified "Doubtful" as of October 31, 1989 that have not previously been charged off to not more than $1,200,000.
   (g) The requirements of subparagraphs 3(a), 3(b), 3(c), 3(d), and 3(e) of this ORDER are not to be construed as standards for future operations and, in addition to the foregoing, the Insured Institution shall eventually reduce the total of all adversely classified assets. Reduction of these assets through proceeds of other loans made by the Insured Institution is not considered collection for the purpose of this paragraph. As used in subparagraphs 3(b), 3(c), 3(d), 3(e), and 3(f) the word "reduce" means:

       (i) to collect;
       (ii) to charge-off; or
       (iii) to sufficiently improve the quality of assets adversely classified to warrant removing any adverse classification, as determined by the FDIC.

   [.4] 4. (a) Beginning with the effective date of this ORDER, the Insured Institution shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who has a loan or other {{4-1-90 p.C-322}}extension of credit from the Insured Institution that has been charged off or classified, in whole or in part, "Loss" or "Doubtful" and is uncollected. The requirements of this paragraph shall not prohibit the Insured Institution from renewing (after collection in cash of interest due from the borrower) any credit already extended to any borrower.
   (b) Additionally, during the life of this ORDER, the Insured Institution shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who has a loan or other extension of credit from the Insured Institution that has been classified, in whole or part, "Substandard" and is uncollected.
   (c) Paragraph 4(b) shall not apply if the Insured Institution's failure to extend further credit to a particular borrower would be detrimental to the best interests of the Insured Institution. Prior to the extending of any additional credit pursuant to this paragraph, either in the form of a renewal, extension, or further advance of funds, such additional credit shall be approved by a majority of the board of directors, or a designated committee thereof, who shall certify, in writing:
       (i) why the failure of the Insured Institution to extend such credit would be detrimental to the best interests of the Insured Institution;
       (ii) that the Insured Institution's position would be improved thereby; and
       (iii) how the Insured Institution's position would be improved.
The signed certification shall be made a part of the minutes of the board of directors or designated committee, and a copy of the signed certification shall be retained in the borrower's credit file.

   [.5] 5. Within 180 days from the effective date of this ORDER (unless an alternative timetable or proposal is submitted by the Insured Institution and approved by the Regional Director and the Superintendent within 60 days), the Insured Institution shall eliminate loans to borrowers outside its designated trade area.

   [.6] 6. (a) Within 60 days from the effective date of this ORDER, the Insured Institution shall revise, adopt, and implement written lending and collection policies to provide effective guidance and control over the Insured Institution's lending function, which policies shall include specific guidelines for placing loans on a non-accrual basis. In addition as to all loans secured by real estate appraised by Robin Keene, the Insured Institution shall obtain new independent appraisals of the collateral properties.

   (b) The Insured Institution's written lending and collection policies and their implementation shall be in a form and manner acceptable to the Regional Director and the Superintendent as determined at subsequent examinations and/or visitations. The initial revisions to the Insured Institution's loan policy and practices, required by this paragraph, at a minimum, shall include the following:

       (i) provisions which prohibit the capitalization of interest on loans related expense unless the board of directors supports in writing and records in the minutes of the corresponding board of directors meeting why an exception thereto is in the best interests of the Insured Institution;
       (ii) provisions which require complete loan documentation, realistic repayment terms and current credit information adequate to support the outstanding indebtedness of the borrower. Such documentation shall include current financial information, profit and loss statements or copies of tax returns and cash flow projections;
       (iii) provisions which incorporate limitations on the amount that can be loaned in relation to established collateral values, and repayment capacity of borrowers;
       (iv) provisions which specify the circumstances and conditions under which real estate appraisals must be conducted by an independent third party including: guidelines for obtaining and reviewing appraisals, the establishment of criteria for selecting appraisers, and the maintenance of a listing of approved appraisers;
       (v) provisions that require extensions of credit to any of the Insured Institution's executive officers, directors, or principal shareholders, or to any related interest of such persons, to be approved in advance by a majority of the entire board of directors in accordance with section 215.4(b) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §215.4(b);
{{4-1-90 p.C-323}}
       (vi) provisions that directors first determine that the lending staff has the expertise necessary to properly supervise construction loans and that adequate procedures are in place to monitor any construction involved before funds are disbursed;
       (vii) provisions which prohibit concentrations of credit in excess of 25 percent of the Insured Institution's total equity capital and reserves to any borrower and that borrower's related interests;
       (viii) provisions which require the preparation of a loan "watch list" which shall include relevant information on all loans in excess of $20,000 which are classified "Substandard" or "Doubtful" as of October 31, 1989 or by the FDIC or the California State Banking Department in subsequent Reports of Examination and all other loans in excess of $20,000 which warrant individual review and consideration by the board of directors as determined by the loan committee or active management. The loan "watch list" shall be presented to the board of directors for review at least monthly with such review noted in the minutes; and
       (ix) the board of directors shall adopt procedures whereby officer compliance with the revised loan policy is monitored and responsibility for exceptions thereto assigned. The procedures adopted shall be reflected in minutes of a board of directors meeting at which all members are present and the vote of each is noted.

   [.7] 7. Within 30 days from the effective date of this ORDER, the board of directors shall review the adequacy of the reserve for loan losses and establish a comprehensive policy for determining the adequacy of the reserve for loan losses. For the purpose of this determination, the adequacy of the reserve shall be determined after the charge-off of all loans classified "Loss" or otherwise determined to be "Loss" items. The policy shall provide for a review of the reserve at least once each calendar quarter. Said review should be completed at least ten (10) days prior to the end of each quarter, in order that the findings of the board of directors with respect to the loan loss reserve may be properly reported in the quarterly Reports of Condition and Income. The review should focus on the results of the Insured Institution's internal loan review, loan loss experience, trends of delinquent and non-accrual loans, an estimate of potential loss exposure of significant credits, concentrations of credit, and present and prospective economic conditions. A deficiency in the reserve shall be remedied in the calendar quarter it is discovered, prior to submitting the Report of Condition, by a charge to current operating earnings. The minutes of the board of directors meeting at which such review is undertaken shall indicate the results of the review. Upon completion of the review, the Insured Institution shall increase and maintain its loan loss reserve consistent with the loan loss reserve policy established. Such policy and its implementation shall be satisfactory to the Regional Director and the Superintendent as determined at subsequent examinations and/or visitations.

   [.8] 8. Within 60 days from the effective date of this ORDER, the Insured Institution shall formulate and implement a written profit plan. This plan shall be forwarded to the Regional Director and to the Superintendent for review and comment and shall address, at a minimum, the following:
   (a) goals and strategies for improving and sustaining the earnings of the Insured Institution, including:

       (i) an identification of the major areas in, and means by which, the board of directors will seek to improve the Insured Institution's operating performance:
       (ii) realistic and comprehensive budgets;
       (iii) a budget review process to monitor the income and expenses of the Insured Institution to compare actual figures with budgetary projections; and
       (iv) a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components.
   (b) coordination of the Insured Institution's loan, investment, and operating policies, and budget and profit planning, with the funds management policy.

   [.9] 9. Within 60 days from the effective date of this ORDER, the Insured Institution shall eliminate and/or correct all violations of law which are more fully set out on pages 6-b, 6-b-1 and 6-b-2 of the Report of {{4-1-90 p.C-324}}Examination of the Insured Institution as of October 31, 1989. In addition, the Insured Institution shall take all necessary steps to ensure future compliance with all applicable laws and regulations.

   [.10] 10. (a) Within 60 days from the effective date of this ORDER, the board of directors shall revise, adopt, and implement a comprehensive asset/liability management policy. The policy shall establish standards consistent with generally accepted prudent banking operations by giving specific consideration to:

       (i) establishing a range for the Insured Institution's volatile liability dependency ratio, as computed by the FDIC in its Reports of Examination, and which ratio shall, within 180 days from the effective date of this ORDER, be reduced to not more than ten (10.0) percent; and within 360 days from the effective date of this ORDER, be reduced to not more than zero (0.0) percent. The requirements of this paragraph shall not be construed as standards for future operations, and the Bank's volatile liability dependency ratio shall be maintained at a level consistent with prudent banking practices;
       (ii) establishing a range for short-term investments to potentially volatile liabilities, as those terms are defined by the FDIC in its current edition of "A Users Guide for the Uniform Bank Performance Report";
       (iii) establishing acceptable ranges for the Insured Institution's rate sensitivity and gap ratios; and
       (iv) the establishing of an asset/liability committee, including a description of its responsibilities, how often it will meet, how it will obtain information and guidance from the board of directors, and how its activities will be reported to the board of directors.

   [.11] 11. Within 60 days from the effective date of this ORDER, the Insured Institution shall develop, adopt, and implement a policy for the operation of the Insured Institution in such a manner as to provide adequate internal routine and controls consistent with safe and sound banking practices, to include, at a minimum, procedures to correct deficiencies noted on pages 6-c, 6-c-1 and 6-c-2 of the Report of Examination as of October 31, 1989. Such policy and its implementation shall be satisfactory to the Regional Director and the Superintendent as determined at subsequent examinations and/or visitations.

   [.12] 12. Within 10 days after eliminating from its books any asset in compliance with Paragraph 3 of this ORDER, the Insured Institution shall file with the FDIC amended Consolidated Reports of Condition and Income which shall accurately reflect the financial condition of the Insured Institution as of December 31, 1989. Thereafter, during the life of this ORDER, the Insured Institution shall file with the FDIC Consolidated Reports of Condition and Income which accurately reflect the financial condition of the Insured Institution as of the end of the period for which the Reports are filed, including any adjustment in the Insured Institution's books made necessary or appropriate as a consequence of any examination of the Insured Institution during that reporting period.

   [.13] 13. The Insured Institution shall not pay cash dividends in any amount except as follows:
   (a) such declarations and payments are made in accordance with applicable State and Federal laws and regulations;
   (b) that after payment of such dividends, the ratio of adjusted primary capital to total assets of the Insured Institution will be not less than seven and one-half (7.5) percent;
   (c) that such declaration and payment of dividends shall be approved in advance by the board of directors; and
   (d) that such declaration and payment of dividends shall be approved in advance, in writing, by the Regional Director and the Superintendent.

   [.14] 14. Following the effective date of this ORDER, the Insured Institution shall send to its shareholders or otherwise furnish a description of this ORDER in conjunction with the Insured Institution's next shareholder communication and also in conjunction with its notice or proxy statement preceding the Insured Institution's next shareholder meeting. The description shall fully describe the ORDER in all material respects. The description and any accompanying communication, statement, or notice shall be sent to the FDIC, Registration and Disclosure Unit. Washington, D.C. 20429, at least fifteen (15) days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the {{4-1-90 p.C-325}}description, communication, notice, or statement.

   [.15] 15. During the life of this ORDER, the Insured Institution shall furnish to the Regional Director a copy of any application to the Superintendent filed pursuant to section 751.3 of the California Financial Code, Cal. Fin. Code §751.3 (West 1989) to engage in real estate activities. This copy of such application shall be furnished to the Regional Director on or before the date of its filing with the Superintendent. In no event shall the Insured Institution engage in real estate activities which are the subject of any such application filed pursuant to section 751.3 of the California Financial Code without the prior written consent of the Regional Director.

   [.16] 16. Within 30 days of the end of the first quarter following the effective date of this ORDER, and within thirty (30) days of the end of each quarter thereafter, the Insured Institution shall furnish written progress reports to the Regional Director and the Superintendent detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports shall include a copy of the Insured Institution's Report of Condition and the Insured Institution's Report of Income. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director and the Superintendent have released the Insured Institution in writing from making further reports.
   The provisions of this ORDER shall be binding upon the Insured Institution, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Insured Institution.
   This ORDER shall become effective ten (10) days from the date of its issuance.
   The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   Pursuant to delegated authority.
   Dated at San Francisco, California, this 16th day of April, 1990.

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