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FDIC Enforcement Decisions and Orders

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   [10,387A] In the Matter of The Washington Bank, Fairfax County, Virginia, Docket No. 91-376kk (11-26-91).

   FDIC issues order conditionally granting approval for exemption of liability.

   [.1] Exemption from Liability—Conditional on Control of Bank—Time Frame

   [.2] Exemption from Liability—Conditional on Increase in Stockholders' Equity

   [.3] Exemption from Liability—Distribution of Money from Stock

   [.4] Exemption from Liability—Review of Loans

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

In the Matter of
THE WASHINGTON BANK
FAIRFAX COUNTY, VIRGINIA
(Insured Depository Institution)
related to
THE NATIONAL BANK OF WASHINGTON
WASHINGTON, DISTRICT OF COLUMBIA
and
THE WASHINGTON BANK (OF MARYLAND)
BALTIMORE, MARYLAND
(Commonly Controlled Insured Depository Institutions)
ORDER CONDITIONALLY GRANTING APPROVAL FOR EXEMPTION FROM LIABILITY

FDIC-91-376kk

   WHEREAS, The Washington Bancorporation, Washington, District of Columbia ("WBC") is a bank holding company which owns 100 percent of the stock of The Washington Bank, Fairfax County, Virginia ("Bank"), an insured depository institution; and

   WHEREAS, The Washington Bank Acquisition Company, or persons who comprise The Washington Bank Acquisition Company, Fairfax County, Virginia ("Acquiring Party"), was organized by a majority of directors of the Bank to acquire the Bank from WBC; and

   WHEREAS, WBC, the Bank, and the Acquiring Party (collectively "Co-Applicants") have filed with the Federal Deposit Insurance Corporation ("FDIC") an application pursuant to section 5(e)(5)(A) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1815(e)(5)(A); and

   WHEREAS, the Acquiring Party has proposed to the FDIC that the Acquiring Party purchase and recapitalize the Bank by offering $100,000 for 100 percent of the stock of the Bank and providing at least $4,000,000 in cash to recapitalize the Bank; and

   WHEREAS, the Bank was affiliated with The National Bank of Washington, Washington, District of Columbia ("NBW"), which failed on August 10, 1990, and The Washington Bank (of Maryland), Baltimore, Maryland ("TWBM"), which failed on May 10, 1991, both of which were also owned by WBC; and

   WHEREAS, the Co-Applicants have requested that the FDIC grant an exemption from liability for any losses the FDIC may incur or reasonably anticipates incurring from the default of NBW and TWBM, such request being filed pursuant to the provisions of section 5(e)(5)(A) of the Act, 12 U.S.C. §1815(e)(5)(A); 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 losses, has concluded that an exemption is in the best interests of the Bank Insurance Fund and that approval of the application for exemption should be granted subject to the conditions and restrictions set forth below.

   IT IS THEREFORE ORDERED:

   [.1]1. This ORDER CONDITIONALLY GRANTING APPROVAL FOR EXEMPTION FROM LIABILITY ("ORDER") shall become effective upon the acquisition of control of the Bank by the Acquiring Party, provided the transaction is completed within six months from the date of issuance of this ORDER, unless a request for extension of time has been submitted and approved by the FDIC.

   [.2]2. Immediately upon the acquisition of the Bank by the Acquiring Party, the Bank's common stockholders' equity, as that term is defined in §325.2(d) of the FDIC's Rules and Regulations, 12 C.F.R. §325.2(d), shall be increased by no less than $4,000,000.

   [.3]3. Immediately upon the acquisition of the Bank by the Acquiring Party, the $100,000 offered for the stock of the Bank will be distributed in the following manner. After outside legal fees of no more than $7,500 have been paid, the WBC will receive 5 percent of the remainder and the FDIC will receive 95 percent of the remainder to offset a portion of the losses incurred by the FDIC due to the failure of both NBW and TWBM.

   [.4]4. Immediately upon the acquisition of the Bank by the Acquiring Party, the Bank will present for conveyance to the FDIC all loans that have been charged off at the Bank as of the date of this ORDER. The FDIC shall have the discretion to reject any such loan prior to conveyance by the Acquiring Party. Any and all recovery on the approved and conveyed charge-offs will be retained by the FDIC, to further offset a portion of the losses incurred due to the failure of NBW and TWBM.

   [.5]5. Should ownership or control of the Bank revert back to WBC at any time while this waiver is in effect, the ORDER shall be immediately null and void, without further hearing on the matter.

   6. Should the FDIC determine that any Co-Applicant has failed to complete the requirements of paragraph 1, the FDIC shall have the right to revoke this exemption after giving the Co-Applicants written notice of said revocation, and a reasonable opportunity to be heard on the matter. Should any Co-Applicant fail to comply with the provisions contained in paragraphs 2, 3, or 4 above, or violate the provision contained in paragraph 5, the ORDER shall be immediately null and void, without further hearing on the matter.

   By direction of the Board of Directors.

   Dated at Washington, D.C., this 26th day of November, 1991.

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