Each depositor insured to at least $250,000 per insured bank



Home > Regulation & Examinations > Bank Examinations > FDIC Enforcement Decisions and Orders




FDIC Enforcement Decisions and Orders

ED&O Home | Search Form | Text Search | ED&O Help


{{3-31-95 p.C-561}}

   [10,118] In the Matter of The Farmers State Bank, Offerle, Kansas, Docket No. FDIC-90-192b (9-21-90).

   Bank to cease and desist from such practices as failing to adequately supervise and direct the affairs of the Bank in connection with transactions with Institution-Affiliated Parties and their related interests; engaging in hazardous lending and lax collection practices in connection with Institution-Affiliated Parties and their related interests; operating with inadequate internal controls and procedures to detect and prevent abusive activity by Institution-Affiliated Parties; and extending unsecured credit to Institution-Affiliated Parties without first obtaining adequate financial information. (This order was terminated by order of the FDIC and 1-27-95; see ¶15,959.)

   [.1] Institution-Affiliated Parties—Depositary Relationship—Extension of Credit—Restricted
   [.2] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

THE FARMERS STATE BANK
OFFERLE, KANSAS
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-90-192b

   The Farmers State Bank, Offerle, Kansas, ("Bank"), having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices alleged to have been committed by the Bank and of its right to a hearing on such alleged charges under section 8(b) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(b), 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 September 13, 1990, whereby solely for the purpose of this proceeding and without admitting or denying any unsafe or unsound banking practices, the Bank 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 Bank had engaged in unsafe or unsound banking practices. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED, that the Bank, its Institution-Affiliated Parties, as that term is defined in Section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns cease and desist from the following unsafe and unsound banking practices:
   A. failing to provide adequate supervision and direction over the affairs of the Bank to prevent unsafe or unsound practices in connection with transactions with Institution-Affiliated Parties and/or the related interests of Institution-Affiliated Parties;
   B. engaging in hazardous lending and lax collection practices in connection with transactions with Institution-Affiliated Parties and/or the related interests of Institution-Affiliated Parties;
   C. operating with inadequate internal controls and procedures to detect and prevent abusive activity by Institution-Affiliated Parties; and
{{3-31-95 p.C-562}}
   D. extending unsecured credit to Institution-Affiliated Parties without first obtaining adequate financial information on all obligors.
   IT IS FURTHER ORDERED, that the Bank, its Institution-Affiliated Parties, and its successors and assigns, take affirmative action as follows:

   [.1] 1. (a) Effective the date of this ORDER, the Bank shall not, directly or indirectly:

       (i) Enter into or maintain any depositary relationship with or for the benefit of William J. Camuti or any related interest of William J. Camuti, or
       (ii) Extend credit to William J. Camuti or any related interest of William J. Camuti; provided that nothing herein shall prohibit the Bank from purchasing a participation in any extension of credit originated by Bucklin State Bank, Bucklin, Kansas, except an extension of credit to William J. Camuti or any related interest of William J. Camuti.
   (b) For the purposes of this ORDER, the following terms have the meaning indicated:
       (i) "Depositary relationship" means any agreement by which a transaction account, as defined in section 204.2(e) of Regulation D of the Board of Governors of the Federal Reserve System ("Regulation D"), 12 C.F.R. § 204.2(e), or a savings deposit from which transfers or withdrawals are permitted as described in section 204.2(d)(2)(ii) of Regulation D, 12 C.F.R. § 204.2(d)(2)(ii), including an account commonly known as a "money market deposit account," is established or maintained at the Bank.
       (ii) To "extend credit" means to enter into any transaction which would constitute an extension of credit as defined in section 215.3 of Regulation O of the Board of Governors of the Federal Reserve System ("Regulation O"), 12 C.F.R. § 215.3.
       (iii) "Related interest" has the meaning set forth in section 215.2 of Regulation O, 12 C.F.R. § 215.2.

   [.2] 2. Following the effective date of this ORDER, the Bank shall send to its shareholders a description of this ORDER, (a) in conjunction with the Bank's next shareholder communication, and also (b) in conjunction with its notice or proxy statement preceding the Bank'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, for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice, or statement.
   This ORDER shall become effective 10 days from the date of its issuance.
   The provisions of this ORDER shall be binding upon the Bank, its Institution-Affiliated Parties, and its successors and assigns.
   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.
   Dated with 21st day of September, 1990.
   Pursuant to delegated authority.

ED&O Home | Search Form | Text Search | ED&O Help

Last Updated 6/6/2003 legal@fdic.gov