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FDIC Enforcement Decisions and Orders

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{{12-31-91 p.C-608}}
   [10,127] In the Matter of Midcounty Bank and Trust Company, Norwood, Massachusetts, Docket No. FDIC-90-232b (11-1-90).

   Bank ordered to cease and desist from such practices as operating with an excessive volume of adversely classified assets; engaging in hazardous lending and lax collection practices; operating with inadequate equity capital; engaging in violations of law and regulations; engaging in management policies which are detrimental to the bank; operating with inadequate loan documentation; engaging in practices which produce inadequate income and excessive loan losses; failing to provide adequate supervision' paying excessive bonuses and inadequately controlling expenses; operating with inadequate loan and lease loss allowances; and failing to submit proper Reports of Condition and Income. (This order was terminated by order of the FDIC dated 10-8-91; see15,335.)

   [.1] Management—Qualifications—Compliance
   [.2] Management—Management Plan—Requirements
   [.3] Board of Directors—Election—Independent Directors
   [.4] Definition—`Independent with Respect to the Bank'
   [.5] Board of Directors—Meetings—Frequency
   [.6] Loans—Adversely Classified—Reduce/Eliminate
   [.7] Capital—Capital Structure—Written Plan Required
   [.8] Capital—Primary Capital—Increase Required—Methods
   [.9] Capital—Primary Capital—Maintain—Reports Required
   [.10] Loan Valuation Reserve—Correction—Review
   [.11] Loans—Risk Position—Reduce—Written Plan
   [.12] Loans—Extensions of Credit—Existing Borrowers—Curtail
   [.13] Loans—Accrual of Interest—Overdue
   [.14] Loan Policy—Minimum Requirements—Review
   [.15] Profit Plan—Minimum Requirements—Review
   [.16] Compensation—Management—Employees—Limitations
   [.17] Dividends—Restricted
   [.18] Shareholders—Disclosure—Cease and Desist Order
   [.19] Technical Exceptions—Correct
   [.20] Loans—Concentrations of Credit—Reduce
   [.21] Violations of Law—Eliminate/Correct
   [.22] Compliance—Progress Reports—Frequency

{{4-30-91 p.C-609}}
In the Matter of

MIDCOUNTY BANK AND TRUST
COMPANY

NORWOOD, MASSACHUSETTS
(Insured State Nonmember Bank)
ORDER TO CEASE
AND DESIST

   Midcounty Bank and Trust Company, Norwood, Massachusetts ("Bank"), 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 Bank and of its right to a hearing on such alleged charges under section 8(b)(1) of the Federal Deposit Insurance 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 October 31, 1990, whereby solely for the purpose of this proceeding and without admitting or denying any unsafe or unsound banking practices or violations of law and/or regulations, 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 and had violated laws 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 Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Bank, cease and desist from the following unsafe and unsound banking practices and violations of law and regulations:

       (a) operating with an excessive volume of adversely classified assets;
       (b) engaging in hazardous lending and lax collection practices, including maintaining an excessive volume of adversely classified loans;
       (c) operating with inadequate equity capital for the kind and quality of assets held;
       (d) engaging in violations of applicable laws and regulations;
       (e) engaging in management policies and practices which are detrimental to the Bank;
       (f) operating with deficient or inadequate loan documentation, including but not limited to current financial statements, appraisals, insurance coverage, title searches or legal opinions, and cash flow and/or operating information;
       (g) engaging in practices which produce inadequate operating income and excessive loan losses;
       (h) failing to provide adequate supervision and direction over the affairs of the Bank to prevent unsafe or unsound practices and violations of law and/or regulations;
       (i) paying excessive cash bonuses and otherwise inadequately controlling overhead expenses in relation to the bank's net income and/or capital position;
       (j) operating with an inadequate allowance for loan and lease losses for the volume, kind and quality of loans held; and
       (k) failing to submit Reports of Condition and Income in accordance with prevailing instructions.
   IT IS FURTHER ORDERED, that the Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Bank, take affirmative action as follows:

   [.1] 1. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall have, and thereafter continue to retain, qualified management. Such management shall include the retention of qualified individuals to serve as chief executive officer ("CEO"), and chief operating officer ("COO"). The CEO and COO shall be given stated written authority by the Bank's Board of Directors, including responsibility for implementing and maintaining lending, investment and operating policies in accord with sound banking practices. The qualifications of management shall be assessed on its ability to:
{{4-30-91 p.C-610}}

       (i) comply with the requirements of this ORDER;
       (ii) operate the Bank in a safe and sound manner;
       (iii) comply with applicable laws and regulations; and
       (iv) restore all aspects of the Bank to a safe and sound condition, including asset quality, capital adequacy, earnings, management effectiveness and liquidity.

   [.2] (b) Toward this end, the Board of Directors, within thirty (30) days from the effective date of this ORDER, shall develop a written analysis and assessment of the Bank's management and staffing needs ("management plan"), which shall include, at a minimum:
       (i) identification of both the type and number of officer positions needed to manage and supervise properly the affairs of the Bank;
       (ii) identification and establishment of such Bank committees as are needed to provide guidance and oversight to active management;
       (iii) evaluation of each Bank officer and staff member to determine whether these individuals possess the ability, experience and other qualifications required to perform present and anticipated duties, including adherence to the Bank's established policies and practices, and maintenance of the Bank in a safe and sound condition; and
       (iv) a plan of action to recruit and hire any additional or replacement personnel with the requisite ability, experience and other qualifications, which the Board of Directors determines are necessary to fill Bank officer or staff member positions consistent with the Board's analysis, evaluation and assessment as provided in paragraphs 1(b)(i) and 1(b)(iii) of this ORDER.
   (c) When completed, the written management plan shall be submitted to the Regional Director of the FDIC's Boston Regional Office ("Regional Director") and the Commissioner of Banks for the Commonwealth of Massachusetts ("Commissioner") for review and comment within thirty (30) days from their receipt of the proposed plan. Within sixty (60) days after such submission, the Board of Directors shall approve the written management plan, taking into consideration any regulatory comments, and such approval shall be recorded in the minutes of the Board of Directors. Subsequent modifications to the written management plan may be made only after giving the Regional Director and the Commissioner written notice of the proposed modification, and after consideration of any responsive comments submitted by the Regional Director and/or the Commissioner within thirty (30) days from their receipt of the notice of proposed modification. No such modification shall become effective until approved by the Board of Directors, and such approval shall be recorded in the minutes of the Board of Directors. The Bank, its directors, officers, and employees shall follow the written management plan and/or any subsequent modification thereto.

   [.3] (d) (i) The written management plan shall also include the requirement that the Board of Directors of the Bank, or a committee thereof, a majority of whose members are independent with respect to the Bank, provide supervision over lending, investment and operating policies of the Bank sufficient to ensure that the Bank complies with the provisions of this ORDER.
   (ii) At the next meeting of the shareholders of the Bank, and at each succeeding meeting of the shareholders at which Bank directors are to be elected, the members of the Board of Directors who are also shareholders shall nominate and support the election of candidates to the Board of Directors who are independent with respect to the Bank, in such number as are necessary to cause a majority of the Board of Directors to be and to remain independent with respect to the Bank.

   [.4] (iii) For purposes of this ORDER, an individual who is "independent with respect to the Bank" shall be any individual who is neither (1) an officer of the Bank, other than Chairman of the Board, Vice-Chairman of the Board, or any other officer position related solely to the functioning of the Board of Directors of the Bank or a committee thereof, or a person owning more than five (5) percent of the {{4-30-91 p.C-611}}outstanding shares of common stock of the Bank, nor (2) related by blood, marriage or common financial interest to an officer of the Bank or to any person owning more than five (5) percent of the Bank's outstanding shares of common stock, nor (3) indebted to the Bank, directly or indirectly (including the indebtedness of any entity in which the individual has a substantial financial interest), in an amount exceeding five (5) percent of the Bank's total equity capital and allowance for loan and lease losses.

   [.5] (e) The Bank's Board of Directors shall meet at least monthly. The Board shall prepare in advance and shall follow a detailed written agenda at each meeting, which shall include consideration of actions of any committees. Nothing in the foregoing sentence shall preclude the board from considering matters other than those contained in the agenda. Detailed written minutes of all board meetings shall be maintained and recorded on a timely basis.

   [.6] 2. Within ten (10) days from the effective date of this ORDER, the Bank: (1) shall eliminate from its books, by charge-off, collection, or other proper entries, all assets or portions of assets classified "Loss" in the FDIC Report of Examination of the Bank as of March 23, 1990; and (2) shall either (A) eliminate from its books by charge-off, collection, or other proper entries, or (B) if the asset is an extension of credit or lease, increase its allowance for loan and lease losses by an amount equal to, 50 percent of those assets or portions of assets classified "Doubtful" as of March 23, 1990, which have not been previously collected, charged off, or otherwise eliminated by other proper entries. Consistent with prevailing requirements of the instructions for the FDIC Reports of Condition and Income, these eliminations should be made through appropriate loss reserve charges and bad debt provisions for loan classifications, reversal of income for designated uncollectible accrued interest receivable, and via direct write downs to operating expenses for other real estate holdings (ORE) and other assets classifications. Reduction of these assets through use of proceeds of loans made by the Bank does not constitute collection for the purpose of this paragraph.

   [.7, .8] 3. (a) The Bank shall operate with a capital structure sufficient in relation to the composition and quality of its assets and funding liabilities, and in accordance with Part 325 of the FDIC's Rules and Regulations. Toward this end, the Bank will develop a capital plan which will be submitted to the Regional Director and Commissioner for approval within ninety (90) days from the effective date of this ORDER. The Capital Plan should address both internal and external sources of capital augmentation, including capital infusions, retention of earnings, restriction of asset growth, and asset sales to produce a ratio of primary capital to total assets of at least ten (10.0) percent, with stated timetables in which to attain this goal. For purposes of this ORDER, the terms "primary capital" and "total assets" are as defined in Part 325 of the FDIC's Rules and Regulations. Any increase in primary capital may be accomplished by the following:

       (i) the sale of new offerings of common stock or perpetual preferred stock;
       (ii) the sale or transfer of existing shares by the Bank's shareholders to individuals who will contribute the required increase in equity capital to the Bank;
       (iii) the direct contribution of cash by the shareholders and/or directors of the Bank;
       (iv) the collection of all or part of assets classified: (A) "Loss" as of March 23, 1990, without loss or liability to the Bank, or (B) "Doubtful" as of March 23, 1990, without loss or liability to the Bank, provided any collection on such assets shall first be applied to that portion of the asset which was not charged off pursuant to paragraph 2 of this ORDER. Reductions to loans and leases classified "Loss" and "Doubtful" shall first be credited to the Bank's allowance for loan and lease losses ("allowance") and, if the Board of Directors' review of the adequacy of the allowance required by paragraph 4(a) of this ORDER indicates that such allowance has a balance in excess of that required for adequacy, any such excess may be transferred to primary capital through {{4-30-91 p.C-612}}a negative provision for loan and lease losses;
       (v) the collection in cash of assets previously charged off;
       (vi) any combination of the above means; or
       (vii) any other means acceptable to the Regional Director and the Commissioner.
   (b) If all or part of any increase in primary capital made by the Bank under paragraph 3(a) of this ORDER involves an offering, other than an offering deemed not to be a public securities offering pursuant to 17 C.F.R. § 230.506 as now in effect or as hereafter amended, of the Bank's securities (including a distribution limited only to the Bank's existing shareholders), the Bank shall prepare detailed offering materials fully describing the securities being offered, including an accurate description of the financial condition of the Bank and of this ORDER as well as the circumstances giving rise to the offering, and any other material disclosures necessary to comply with the Federal securities laws. Prior to the sale of the securities, and, in any event not less than twenty (20) days prior to the dissemination of such materials, the materials used in the sale of the securities shall be submitted to the FDIC, Registration and Disclosure Section, Washington, D.C. 20429, for review. Any changes requested to be made in the materials by the FDIC shall be made prior to their dissemination.
   (c) In complying with the provisions of paragraph 3(b) of this ORDER, the Bank shall provide to any subscriber and/or purchaser of Bank stock, written notice of any planned or existing development or other change which is materially different from the information reflected in any offering materials used in connection with the sale of Bank securities. The written notice required by this paragraph 3(c) shall be furnished within ten (10) calendar days from the date such material development or change was planned or occurred, whichever is earlier, to every purchaser and/or subscriber of Bank stock who received or was tendered the information contained in the Bank's original offering materials.

   [.9] (d) If, during the period this ORDER is in effect, the primary capital ratio declines below ten (10.0) percent, the Bank, within thirty (30) days after the date on which the said ratio so declined, shall develop and implement a written plan to increase such ratio up to or in excess of ten (10.0) percent. The written plan shall be submitted to the Regional Director and the Commissioner for review and comment within thirty (30) days from their receipt of the proposed plan. Within sixty (60) days after such submission, the Board of Directors shall approve the written plan, taking into consideration any regulatory comments, and such approval shall be recorded in the minutes of the Board. Subsequent modifications to the written plan may be made only after giving the Regional Director and the Commissioner written notice of the proposed modification, and after consideration of any responsive comments submitted by the Regional Director and/or the Commissioner within thirty (30) days from their receipt of the notice of proposed modification. No such modification shall become effective until approved by the Board of Directors, and such approval shall be recorded in the minutes of the Board of Directors. The Bank, its directors, officers and employees shall follow the written plan and/or any subsequent modification thereto.
   (e) The Bank's Board of Directors shall maintain in its minutes a written record of all actions taken by the Bank to comply with the capital requirements of paragraphs 3(a) through 3(d) of this ORDER, including, at a minimum, any action to increase its primary capital by each of the methods specified in paragraphs 3(a)(i) through 3(a)(vii) of this ORDER.

   [.10] 4. (a) Within thirty (30) days from the effective date of this ORDER and after complying with Paragraph 2 of this ORDER, and if not previously provided, the Bank's Board of Directors shall increase the general valuation reserve for loans by an additional $750,000 at a minimum, and thereafter require that the reserve be maintained at an adequate level by periodic adjustments to operating revenue. Within sixty (60) days from the effective date of this ORDER, the Bank's Board of Directors shall establish a comprehensive policy for determining the adequacy of the valuation reserve. Thereafter, on a quarterly basis, the {{4-30-91 p.C-613}}adequacy of the reserve in relation to the loss potential in the loan portfolio will be reviewed by the Board of Directors and adjustments to the reserve will be made accordingly. Details of these reviews will be incorporated into the minutes of the Board of Directors, including the methodology used to determine the adjustments made.

       (b) Prior to the submission of any Report of Condition or Report of Income required to be filed by the Bank after the effective date of this ORDER, the Board of Directors of the Bank shall: (1) review the adequacy of the Bank's allowance for loan and lease losses, (2) provide for an adequate allowance, and (3) accurately report the allowance in any such Report.

   [.11] 5. (a) Within thirty (30) days from the effective date of this ORDER, the Board of Directors shall develop a written plan of action to lessen the Bank's risk position in each line of credit aggregating $300,000 or more which was classified "Substandard" or "Doubtful" in whole or in part as of March 23, 1990. In developing such plan, the Bank shall, at a minimum:
       (i) review the financial position of each such borrower, including source of repayment, repayment ability, and alternative repayment sources; and
       (ii) evaluate the available collateral for each such credit, including possible actions to improve the Bank's collateral position.
   Based upon such review and evaluation, the written plan of action shall: (A) establish target dollar levels to which the Bank shall reduce the aggregate dollar volume of "Substandard" or "Doubtful" classifications within six (6) and twelve (12) months from the effective date of this ORDER; and (B) provide for the submission of written monthly progress reports to the Bank's Board of Directors for review and notation in the Board minutes and (C) provide for the submission of quarterly progress reports to the Corporation and Commissioner (Exhibit A to this ORDER provides the form for the quarterly progress reports). As used in this paragraph 5, "reduce" means to (1) collect, (2) charge off, or (3) improve the quality of such assets so as to warrant removal of any adverse classification by the FDIC. Payment of loans with the proceeds from other loans made by the Bank will not constitute "reduction" or "collection" for purposes of this ORDER.
       (b) The written plan of action described by paragraph 5(a) shall be submitted to the Regional Director and the Commissioner for review and comment within thirty (30) days from their receipt of the proposed plan. Within sixty (60) after such submission, the Board of Directors shall approve the written plan of action, taking into consideration any regulatory comments, and such approval shall be recorded in the minutes of the Board of Directors. Subsequent modifications to the written plan may be made only after giving the Regional Director and the Commissioner written notice of the proposed modification, and after consideration of any responsive comments submitted by the Regional Director and/or the Commissioner within thirty (30) days from their receipt of the notice of proposed modification. No such modification shall become effective until approved by the Board of Directors, and such approval shall be recorded in the minutes of the Board of Directors. The Bank, its directors, officers and employees shall follow the written plan of action and/or any subsequent modification.
       (c) In addition to the written plan of action outlined in paragraph 5(a), within thirty (30) days from the effective date of this ORDER, the Bank's Board of Directors shall establish a program to improve and strengthen collection efforts within six (6) and twelve (12) months from the effective date of this ORDER. The program shall include specific plans to (1) reduce delinquent loan volume to less than five (5.0) percent of gross outstanding loans; (2) improve recoveries of charged off assets; and (3) provide for the submission of written monthly progress reports to the Bank's Board of Directors for review and notation in the Board minutes. For the purpose of this paragraph 5(c), a "delinquent loan" is any loan which is thirty (30) days past its maturity or for which either interest or principal is due and unpaid for a period of thirty (30) days or more.

   [.12] 6. The Bank shall not extend, directly or indirectly, credit to, or for the benefit of, any borrower who has a loan or {{4-30-91 p.C-614}}other extension of credit with the Bank that has been charged off or classified, in whole or in part, "Loss", "Doubtful", or "Substandard", and is uncollected, unless a majority of the Bank's Board of Directors first (1) determines that such advance is in the best interest of the Bank, (2) determines that the Bank has satisfied the requirements set out in paragraph 5 of this ORDER as to such borrower, and (3) approves such advance. A written record of the Board of Directors' determination and approval of any advance under the terms of this paragraph 6 shall be maintained in the credit file of the affected borrower(s) as well as the minutes of the Board of Directors.

   [.13] 7. The Bank shall not accrue interest on any loan that is, or becomes, ninety (90) days or more delinquent as to principal or interest, unless the loan is both well secured and in the process of collection; "well secured" and "in the process of collection" shall have the same meaning as those terms have in the prevailing Instructions for the Reports of Condition and Income. The Bank shall reverse on its books all previously accrued but uncollected interest on any loan that has ceased to accrue interest pursuant to this provision.

   [.14] 8. (a) Within thirty (30) days from the effective date of this ORDER, the Bank shall revise its written loan policy. The revised written loan policy shall be submitted to the Regional Director and the Commissioner for review and comment within thirty (30) days from their receipt of the proposed policy. Within sixty (60) after such submission, the Board of Directors shall approve the revised written loan policy, taking into consideration any regulatory comments, and such approval shall be recorded in the minutes of the Board of Directors. Subsequent modifications to the revised written loan policy may be made only after giving the Regional Director and the Commissioner written notice of the proposed modification, and after consideration of any responsive comments submitted by the Regional Director and/or the Commissioner within thirty (30) days from their receipt of the notice of proposed modification. No such modification shall become effective until approved by the Board of Directors, and such approval shall be recorded in the minutes of the Board of Directors. The Bank, its directors, officers, and employees shall follow the revised written loan policies and/or any subsequent modification thereto.
   (b) The initial revisions to the Bank's loan policy required by this paragraph shall include, at a minimum, the following:

       (i) a provision establishing a limit on maximum aggregate extensions of credit per borrower, for all new credit relationships;
       (ii) provisions which promote loan diversification;
       (iii) a provision establishing a loan review process, which at a minimum establishes a "watch list" which (A) identifies each appropriate loan with a statement why the loan merits special attention and (B) provides for at least a monthly reporting to the Board of Directors with actions taken by management clearly detailed;
       (iv) provisions for monitoring and documenting exceptions to the loan policy specifically as regards loans granted outside the Bank's delineated trade area; and,
       (v) procedures for identifying, supervising and collecting problem loans.

   [.15] 9. (a) Within thirty (30) days from the effective date of this ORDER, the Bank shall develop a written profit plan consisting of goals and strategies for improving the earnings of the Bank, which written profit plan shall include, at a minimum:
       (i) identification of the major areas in, and means by, which the Board of Directors will seek to improve the Bank's operating performance;
       (ii) realistic and comprehensive budgets;
       (iii) a budget review process to monitor the income and expense of the Bank 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.
   The written profit plan shall be submitted to the Regional Director and the Commissioner for review and comment within thirty (30) days from their receipt of the proposed plan. Within sixty (60) days after such submission, the Board of Directors {{4-30-91 p.C-615}}shall approve the written profit plan, taking into consideration any regulatory comments, and such approval shall be recorded in the minutes of the Board of Directors. Subsequent modifications to the written profit plan may be made only after giving the Regional Director and the Commissioner written notice of the proposed modification, and after consideration of any responsive comments submitted by the Regional Director and/or the Commissioner within thirty (30) days from their receipt of the notice of proposed modification. No such modification shall become effective until approved by the Board of Directors, and such approval shall be recorded in the minutes of the Board of Directors. The Bank, its directors, officers, and employees shall follow the written profit plan and/or any subsequent modification thereto.

   [.16] 10. The Bank shall not pay a bonus in addition to stipulated wages to or for the benefit of, any officer, director, employee or related organization without providing thirty (30) days written notice of such proposed action to the Regional Director and the Commissioner. In addition, within thirty (30) days from the effective date of this ORDER, the Board shall undertake a review of current salary levels and other discretionary expenditures in order to determine their appropriateness in view of the Bank's current and projected levels of earnings. The results of said review will be forwarded to the Regional Director and Commissioner within sixty (60) days from the effective date of this ORDER.

   [.17] 11. The Bank shall not pay or declare any cash dividends without the prior written consent of the Regional Director and the Commissioner.

   [.18] 12. The Bank shall send to its shareholders a description of this ORDER, (1) in conjunction with the Bank's next shareholder communication, and also (2) 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 Section, Washington, D.C. 20429, for review at least twenty (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.

   [.19] 13. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall correct all remediable technical exceptions on loans noted on pages 2-d of the FDIC Report of Examination of the Bank as of March 23, 1990.

   [.20] (b) Within sixty (60) days from the effective date of this ORDER, the Bank shall formulate and implement a plan to substantially reduce the industry concentration noted in the FDIC Report of Examination of the Bank as of March 23, 1990 and to reduce each individual borrower asset concentrations scheduled on page 2-b in the FDIC Report of Examination as of March 23, 1990, to less than twenty-five (25.0) percent of total capital.

   [.21] 14. Within sixty (60) days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law and regulations committed by the Bank as described on pages 6-b of the FDIC Report of Examination of the Bank as of March 23, 1990.

   [.22] 15. The Bank shall furnish written progress reports to the Regional Director and the Commissioner detailing the form and manner of any action taken to secure compliance with this ORDER and the results thereof every ninety (90) days, beginning ninety (90) days from the effective date of the ORDER. In addition, the Bank shall furnish such reports at any other time upon request of either the Regional Director or the Commissioner. All progress reports and other written responses to this ORDER shall be reviewed by the Board of Directors of the Bank and made a part of the minutes of the Board meeting.
   This ORDER shall become effective ten (10) days from the date of its issuance.
   The provisions of this ORDER shall be binding upon the Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Bank.
   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.
{{4-30-91 p.C-616}}
   Dated at Needham, Massachusetts this 1st day of November, 1990.

MIDCOUNTY BANK AND TRUST COMPANY
NORWOOD, MASSACHUSETTS

CRITICIZED ASSET REPORT AS OF:_____

______________________________________________________________________
BORROWER(S):
_______________
LOAN BALANCE(S) AND RATING CRITICISM (SPECIAL MENTION, SUBSTANDARD, DOUBTFUL OR LOSS);
CLASSIFIED LOAN BALANCE(S) $_____
PRESENT LOAN BALANCE(S) $_____
CRITICISM_____
AMOUNT CHARGED OFF TO DATE_____
FUTURE POTENTIAL CHARGE-OFF_____
_______________________________________________________________________
PRESENT STATUS*(Include past due status, nonaccrual, significant progress of collection, deterioration, etc.):
_______________________________________________________________________
FINANCIAL AND/OR COLLATERAL SUPPORT (Include brief summary of most current financial info, appraised value of collateral and/or estimated value and date thereof, bank's lien position and amount of available equity, if any, guarantor(s) info, etc.):
_______________________________________________________________________
PROPOSED PLAN OF ACTION TO ELIMINATE ASSET CRITICISM(S) AND TIME-FRAME FOR ITS ACCOMPLISHMENT:
_______________________________________________________________________
IDENTIFIED SOURCE OF REPAYMENT AND DEFINED REPAYMENT PROGRAM (Repayment program should coincide with source of repayment):
_______________________________________________________________________
Use this form for reporting each criticized asset which exceeds fifty-thousand dollars ($50,000) and retain the original in the credit file for review by the examiners. Submit your reports quarterly, in writing, until notified otherwise by the FDIC Regional Director and the Commissioner of Banks for the Commonwealth of Massachusetts.


*Any increase in the loans should be fully explained in the PRESENT STATUS section.
EXHIBIT A

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