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{{5-31-02 p.C-1574}}

   [10,356A] In the Matter of South Shore Bank of Chicago, Chicago, Illinois, Docket No. 91-295kk (10-9-91).

   FDIC issues order conditionally granting approval for exemption of liability.

   [.1] Exemption from Liability—Expiration

   [.2] Exemption from Liability—Reasonable Losses

   [.3] Exemption from Liability—Revocation for Non-Compliance

In the Matter of
SOUTH SHORE BANK OF CHICAGO
CHICAGO, ILLINOIS
(Insured Depository Institution)
which may become related to
THE DOUGLASS BANK
KANSAS CITY, KANSAS
(Insured Depository Institution)
ORDER CONDITIONALLY GRANTING APPROVAL FOR EXEMPTION FROM LIABILITY

FDIC-91-295kk

   WHEREAS, The Hall Family Foundation of Kansas, a Kansas non-profit corporation, and various other investors have expressed a willingness to provide $2,000,000 in equity to The Douglass Bank, Kansas City, Kansas ("Douglass Bank"), a minority controlled insured depository institution, conditioned, among other things, upon execution of an approximately five-year advisory agreement among The Shorebank Corporation, Chicago, Illinois ("Shorebank"), Douglass Bank, and Douglass Bancorp, Inc., Kansas City, Kansas ("Bancorp"), a one-bank holding company which wholly owns Douglass Bank; and

   WHEREAS, Shorebank is a bank holding company which owns South Shore Bank of Chicago, Chicago, Illinois ("SSB"), an insured depository institution; and

   WHEREAS, consummation of the proposed transaction is further conditioned upon the Federal Deposit Insurance Corporation ("FDIC") providing an exemption to SSB, pursuant to section 5(e)(5)(A) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1815(e)(5)(A), from any liability under section 5(e) of the Act, 12 U.S.C. §1815(e), which might arise for SSB as the result of the advisory agreement, the loan of up to $300,000 to Bancorp by SSB's affiliate, The Neighborhood Fund, Inc., or otherwise; and

   WHEREAS, SSB has requested that the FDIC grant the exemption from liability described in the preceding paragraph; and

   WHEREAS, the State Bank Commissioner for the State of Kansas has written to advise the FDIC of his support for an expedited resolution of the problems of Douglass Bank, and such resolution would be consistent with FDIC Policy Statement on Encouragement and Preservation of Minority Ownership of Financial Institutions issued on April 3, 1990, 1 Federal Deposit Insurance Corporation (P-H) 5329 (April 3, 1990), and with section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. 101-73, 103 Stat. 353, (codified at 12 U.S.C. §1463 note (1991)); and

   WHEREAS, the Board of Directors ("Board") of the FDIC, having fully considered the facts and information relating to the foregoing request for exemption from liability, has concluded that an exemption is in the best interest of the Bank Insurance Fund, and that approval of the request should be granted, subject to the conditions and restrictions set forth below.

   IT IS THEREFORE ORDERED:

   1. This ORDER CONDITIONALLY GRANTING APPROVAL FOR EXEMPTION FROM LIABILITY ("ORDER") shall become effective upon issuance.

   [.1]2. Notwithstanding the foregoing, this exemption shall expire upon the earlier of: (i) the date on which SSB, or any affiliate of SSB, acquires ownership and control of 25 percent or more of any class of the voting securities of Douglass Bancorp, Inc., or 25 percent or more of any class of the voting securities of any insured depository institution subsidiary of Douglass Bancorp, Inc.; (ii) the termination of the advisory agreement among The Shorebank Corporation, Douglass Bancorp, Inc., and Douglass Bank; (iii) December 31, 1991, unless, prior to such date, the Part 325 Tier 1 capital, as that term is presently defined by section 325.2 of the FDIC's Rules and Regulations, 12 C.F.R. §325.2, of Douglass Bank shall have been increased, in a form acceptable to the Regional Director (Supervision) of the FDIC's Kansas City Regional Office ("Regional Director"), by a minimum of $2,000,000; or (iv) December 31, 1996, unless the FDIC has approved a request for an extension of the waiver. SSB shall promptly notify the Regional Director in writing upon the occurrence of an event which would trigger such expiration.

   [.2]3. The exemption granted by this ORDER will apply only to losses in connection with the default of, or FDIC assistance to, Douglass Bank which might be assessed against SSB pursuant to the provisions of section 5(e) of the Act, 12 U.S.C. §1815(e).

   [.3]4. Should the FDIC determine that Douglass Bank, SSB, or any insured depository institution affiliates controlled by SSB, fail to comply fully with the aforesaid restrictions, the FDIC shall have the right to revoke this exemption after giving SSB written notice of said revocation and a reasonable opportunity to be heard on the matter.

   By direction of the Board of Directors.

   Dated at Washington, D.C., this 9th day of October, 1991.

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