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FDIC Enforcement Decisions and Orders

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{{7-31-92 p.C-824}}
   [10,183] In the Matter of Southstate Bank for Savings, Brockton, Massachusetts, Docket No. FDIC-91-45b (2-15-91).

   Bank to cease and desist from operating with an excessive volume of adversely classified assets; engaging in hazardous lending and lax collection practices; operating with inadequate allowance for loan and lease losses; engaging in violations of law and regulations; engaging in management policies and practices that are detrimental to the Bank; underwriting loans with deficient documentation; engaging in practices which produce inadequate operating income and excessive loan losses; failing to provide adequate supervision over the Bank's affairs; and operating with inadequate liquidity and an excessive liability dependence ratio. (This order was terminated by order of the FDIC dated 5-13-92; see 15,447.)

   [.1] Management—Qualifications
   [.2] Management—Management Plan—Minimum Requirements—Review
   [.3] Board of Directors—Committee to Review Compliance with Cease and Desist Order
   [.4] Board of Directors—Election—Independent Directors
   [.5] Board of Directors—Meetings—Frequency—Written Records Required
   [.6] Assets—Adversely Classified—Reduce/Eliminate
{{4-30-91 p.C-825}}
   [.7] Capital—Capital Plan—Review
   [.8] Primary Capital—Increase/Maintain—Methods
   [.9] Allowance for Loan and Lease Losses—Maintain—Report
   [.10] Loans—Risk Position—Reduce—Written Plan Required
   [.11] Loans—Extensions of Credit—Existing Borrowers—Curtail
   [.12] Loan Policy—Written Revisions—Minimum Requirements—Review
   [.13] Business Plan—Minimum Requirements—Review
   [.14] Funds Management—Written Policy—Minimum Requirements— Review
   [.15] Dividends—Restricted
   [.16] Shareholders-Disclosure—Cease and Desist Order
   [.17] Technical Exceptions—Correct
   [.18] Violations of Law—Eliminate/Correct
   [.19] Brokered Deposits—Report to FDIC Required
   [.20] Compliance—Progress Reports—Frequency
In the Matter of

SOUTHSTATE BANK FOR SAVINGS
BROCKTON, MASSACHUSETTS
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

   Southstate Bank for Savings, Brockton, 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) ("Act"), 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 February 12, 1991, whereby solely for the purpose of settling this proceeding and without admitting or denying any allegations or implications of fact or the existence of any unsafe or unsound banking practices or violations of law and/or regulations or other ground for issuance of an order under section 8(b) of the Act, 12 U.S.C. § 1818(b), the Bank consented to the issuance of this 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 and its institution-affiliated parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), cease and desist from the following unsafe or unsound banking practices and violations of law and/or regulations:

       (a) operating with an excessive volume of adversely classified assets;
       (b) engaging in hazardous lending and lax collection practices, including, without limitation, failing to act to reduce the excessive volume of adversely classified loans;
       (c) operating with inadequate allowance for loan and lease losses for the kind and quality of assets held;
       (d) engaging in violations of applicable laws and regulations;
       (e) engaging in management policies and practices that are detrimental to the Bank;
       (f) underwriting loans with deficient or inadequate loan documentation, including but not limited to current appraisals, financial statements, cash flow and/or operating information;
       (g) engaging in practices which pro- {{4-30-91 p.C-826}}duce 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) operating with inadequate liquidity and an excessive liability dependence ratio.
   IT IS FURTHER ORDERED, that the Bank and its institution-affiliated parties take the following affirmative action. Solely for the purpose of enforcement of this ORDER by the FDIC pursuant to section 8(i) of the Act, 12 U.S.C. § 1818(i), the Bank and its institution-affiliated parties will not be deemed to be in violation of provisions (a) through (i) above, except to the extent that the Bank is not in compliance with the following provisions:

   [.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 one or more 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 take effective action toward the accomplishment of the following goals:

       (i) compliance with the requirements of this ORDER,
       (ii) operation of the Bank in a safe and sound manner,
       (iii) compliance with applicable laws and regulations, and
       (iv) restoration of 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, within ninety (90) days from the effective date of this ORDER, the Board of Directors 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 at the level of vice president or above 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 positions at the level of vice president or above consistent with the board's analysis, evaluation and assessment as provided in paragraphs 1(b)(i) and 1(b)(iii) of this ORDER.
   (c) 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 of the Commonwealth of Massachusetts ("Commissioner") for review and comment. No sooner than thirty (30) days, but under no circumstances more than 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, offi- {{4-30-91 p.C-827}}cers and employees shall implement and 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 which shall consist of not less than a majority of Board members who 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.

   [.4] (ii) At or before the next meeting of the shareholders of the Bank, and at or before each succeeding meeting of the shareholders at which Bank directors are to be elected, the members of the Board of Directors shall inform the directors of the bank holding company that they support the election of candidates to the Board of Directors who are independent with respect to the Bank, in such number as is necessary to cause a majority of the Board of Directors to remain independent with respect to the Bank.

   (iii) For purposes of this ORDER, an individual who is "independent with respect to the Bank" shall be any individual (1) who is not an officer of the Bank or any of its affiliated organizations and who does not own more than five (5.0) percent of the outstanding shares of the Bank, (2) who is not related by blood, marriage or common financial interest to an officer of the Bank or to any stockholder owning more than five (5.0) percent of the Bank's outstanding shares, and (3) who is not 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 (5.0) 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" as of May 28, 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, fifty (50.0) percent of those assets or portions of assets classified "Doubtful" as of May 28, 1990, which have not been previously collected, charged off, or otherwise eliminated by other proper entries. Reduction of these assets through use of proceeds of loans made by the Bank does not constitute "collection" or "elimination" for the purpose of this paragraph, provided that the foregoing shall not apply to loans made by the Bank in compliance with the terms of its lending policy to finance bona fide purchases of properties previously mortgaged to the Bank by third parties not related to or affiliated with the purchasing borrower.

   [.7,.8] 3. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall develop a capital plan which will be submitted to the Regional Director and Commissioner for approval. The Capital Plan should address both internal and external sources of capital augmentation, including capital infusions, retention of earnings, restrictions of asset growth, and asset sales, with a goal of increasing the Bank's ratio of primary capital to total assets to at least eight (8.0) percent ("primary capital ratio") as soon as practicable, but no later than thirty (30) months after submission of such Capital Plan, and for subsequently maintaining said ratio at or above such level. Upon approval by the Regional Director and the Commissioner, the Bank shall immediately implement the written plan. For 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, 12 C.F.R. Part 325, as in effect on the date of this ORDER ("Part 325"). Nothing in this {{4-30-91 p.C-828}}paragraph shall preclude the FDIC from bringing an action against the Bank for a violation of Part 325.
   (b) If during the period this ORDER is in effect the plan is met and the ratio specified in paragraph 3(a) subsequently declines below eight (8.0) percent, the Bank, within sixty (60) days after the end of the month during which the said ratio so declined, shall submit a written plan to the Regional Director and the Commissioner for increasing the ratio up to or in excess of eight (8.0) percent as soon as practicable after the written plan is implemented. Upon approval by the Regional Director and Commissioner, the Bank shall immediately implement the written plan.
   (c) Any increase in capital made by the Bank to meet the requirements of paragraph 3(a) or 3(b) of this ORDER may be accomplished by the following:

       (i) the sale of common stock and/or perpetual preferred stock, subject to applicable laws and regulations, including but not limited to Massachusetts General Laws, Chapter 172; or
       (ii) the issuance of subordinated debt;
    or
       (iii) the collection of assets previously charged off; or
       (iv) the reduction of the "Loss" assets specified in Paragraph 2 of this ORDER without loss or liability to the Bank; or
       (v) any other means acceptable to the Regional Director and the Commissioner; or
       (vi) any combination of the above means.
   (d) If all or part of any increase in capital required by Paragraph 3(a) or 3(b) of this ORDER is to be accomplished by the sale of securities, the Bank's Board of Directors shall forthwith take all necessary steps to adopt and implement a plan for the sale of such securities. Should the implementation of the plan involve a public distribution of the Bank's securities, the Bank shall prepare offering materials fully describing the securities being offered, including an accurate description of the financial condition of the Bank and the circumstances giving rise to the offering, and any other material disclosures necessary to comply with state and 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.
   (e) If all or any part of the increase in 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 the convertibility factor, shall be presented to the Regional Director and the Commissioner for approval.
   (f) In complying with the provisions of Paragraph 3 of this ORDER, the Bank shall provide to any person or entity to whom or which it furnished offering materials for such offering, written notice of any planned or existing development or other changes which are materially different from information reflected in the offering materials previously furnished. The written notice required by this paragraph 3(f) shall be furnished within ten (10) business days of the date such material development or change was planned or occurred, whichever is earlier. No sale of securities shall be consummated by the Bank unless the Bank has delivered to the purchaser the written notice(s) required by this paragraph 3(f); provided, however, that any material development or change which occurs after the date of purchase of Bank securities by any such purchaser shall not be required to be disclosed to such purchaser by reason of this paragraph 3(f).
   (g) 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(f) of this ORDER, including, at a minimum, any action to increase its primary capital by each of the methods specified in paragraphs 3(c)(i) through 3(c)(vi) of this ORDER.

   [.9] 4. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall make a provision that results in an increase in its allowance for loan and lease losses of three million five hundred thousand dollars ($3,500,000) over the level {{4-30-91 p.C-829}}existing as of May 28, 1990 and a chargedown of its other real estate owned of five hundred thousand dollars ($500,000). Thereafter, the Bank shall maintain an allowance for loan and lease losses in accordance with the prevailing requirements of the Instructions for the Reports of Condition and Income ("Instructions").
   (b) Reports of Condition and Income required to be submitted by the Bank as of each Report date, as that term is used in the Instructions, between and including March 31, 1990 and the effective date of this ORDER, shall, at a minimum, reflect an allowance for loan and lease losses that should have been maintained in accordance with the Instructions. If necessary to comply with this paragraph 4(b), the Bank shall file amended Reports of Condition and Income within ten (10) days from the effective date of this ORDER.
   (c) Prior to the submission of any Report of Condition and 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 Reports of Condition and Income. The minutes of the Board meeting at which such review is undertaken shall indicate the results of the review, including any increases in the allowance, and the basis for determining the amount of allowance provided.

   [.10] 5. (a) Within ninety (90) days form the effective date of this ORDER, the Board of Directors shall develop a written plan of action to lessen the Bank's risk position with respect to each borrower who or which had outstanding principal debt owing to the Bank in excess of two hundred thousand dollars ($200,000) which was classified "Substandard" or "Doubtful," in whole or in part, as of May 28, 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. Exhibit A provides the form for the progress report. 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 and the State banking department. Payment of loans with the proceeds of the other loans made by the Bank will not constitute "reduction" or "collection" for purpose of this ORDER, provided that the foregoing shall not apply to loans made by the Bank in compliance with the terms of its lending policy to finance bona fide purchases of properties previously mortgaged to the Bank by third parties not related to or affiliated with the purchasing borrower.
   (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. No sooner than thirty (3) days, but under no circumstances more than forty-five (45) days 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 written 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 min- {{4-30-91 p.C-830}}utes 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 sixty (60) 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 the same time frame. 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 monthly written 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.

   [.11] 6. The Bank shall not extend or renew, directly or indirectly, credit to, or for the benefit of, any borrower who has a loan or 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) the Bank is obligated to make the advance by a binding, enforceable contract that is in force on May 28, 1990, or (b) 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) gives approval for such advance individually or by approving a schedule or project budget with which the advance is consistent. 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.

   [.12] 7. (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. No sooner than thirty (30) days, but under no circumstances more than forty five (45) days 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 written 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; and,
       (iii) provisions for monitoring and documenting exceptions to the loan policy.

   [.13] 8. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall develop a written business plan consisting of goals and strategies for improving the earnings of the Bank, which written business 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 budges;
       (iii) a budget review process to monitor the income and expenses of the Bank to compare actual figures with budgetary projects; and,
       (iv) a description of the operating assumptions that form the basis for, and adequately support major projected income and expense components.
   (b) The written business plan shall be {{4-30-91 p.C-831}}submitted to the Regional Director and the Commissioner for review and comment. No sooner than thirty (3) days, but under no circumstances more than fortyfive (45) days after such submission, the Board of Directors shall approve the written business plan, taking into consideration any regulatory comments, and such approval shall be recorded in the minutes of the Board of Directors. Subsequent written modifications to the written business 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 business plan and/or any subsequent modification thereto.
   [.14] 9. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall amend its written funds management policy to include, at a minimum, provisions addressing:

       (i) the Bank's liquidity needs and plans for insuring that such needs are met on an ongoing basis;
       (ii) goals and strategies for managing and/or improving the Bank's interest rate risk exposure;
       (iii) the monitoring of the interest rate sensitivity of present investments and deposits and projections of the types of investments and deposits to improve such liquidity position; and,
       (iv) the coordination of the Bank's loan, investment, operating, and budget and business planning policies with the written funds management policy.
   (b) The written funds management policy shall be submitted to the Regional Director and the Commissioner for review and comment. Nor more than thirty (30) days after such submission, the Board of Directors shall approve the written funds management 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 written funds management 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 written funds management policy and/or any subsequent modification thereto.

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

   [.16] 11. Following the effective date of this ORDER, the Bank shall request its corporate parent to send, as part of its usual distribution of annual disclosure documents to its shareholders, a description of this ORDER in compliance with the requirements of section 12 of the Securities Exchange Act of 1934. 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.

   [.17] 12. Within sixty (60) days from the effective date of this ORDER, the Bank shall correct the remediable technical exceptions on loans noted on pages 2-d of the FDIC's Report of Examination of the Bank as of May 28, 1990.

   [.18] 13. Within sixty (60) days from the effective date of this ORDER, the Bank shall eliminate and/or correct all remediable violations of law and regulations committed by the Bank as described on pages 6-a of the FDIC's Report of Examination of the Bank as of May 28, 1990.

   [.19] 14. The Board will continue to report to the Regional Director regarding the use of brokered deposits as required by sec- {{4-30-91 p.C-832}}tion 304.6 of the FDIC Rules and Regulations, 12 C.F.R. § 304.6. The notification should indicate how the brokered funds are to be utilized with specific reference to the credit quality of investments/loans and the effect on the funds position of the bank and asset/liability matching. The Regional Director and the Commissioner shall have the right to reject Bank plans for utilizing brokered deposits.
   15. In accordance with the requirements of section 303.14 of the FDIC Rules and Regulations, 12 C.F.R. § 303.14, the Bank shall notify the Regional Director and the Commissioner at least thirty (30) days prior to the effective date thereto, of any addition or replacement to the Board of Directors or the employment or change in responsibility of any individual to a position as a senior executive officer. The term senior executive officer means any individual who exercises significant influence over, or participates in, major policy-making decisions of an insured nonmember bank, without regard to title, salary or compensation.

   [.20] 16. Within forty-five (45) days from the end of each calendar quarter, 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 an the results thereof. In addition, the Bank shall furnish such reports on 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 and its institution-affiliated parties.
   This ORDER has been reviewed and concurred in by the Commissioner of Banks for the Commonwealth of Massachusetts.
   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 Needham, Massachusetts this 15th day of February, 1991.

SOUTHSTATE BANK FOR SAVINGS
BROCKTON, MASSACHUSETTS

CRITICIZED ASSET REPORT AS OF: _____
__________
BORROWER(S):
__________
ASSET BALANCE(S) AND RATING CRITICISM (SPECIAL MENTION, SUBSTANDARD, DOUBTFUL OR LOSS):
CLASSIFIED ASSET BALANCE(S): $ _____
PRESENT ASSET 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:
{{9-30-93 p.C-833}}
__________
IDENTIFIED SOURCE OF REPAYMENT AND DEFINED REPAYMENT PROGRAM (Repayment program should coincide with source of repayment):
__________
Use this form for reporting each criticized asset as to each borrower to whom or which paragraph 5(a) of the Order to Cease and Desist applies, 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.


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

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