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FDIC Enforcement Decisions and Orders

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   [10,404] In the Matter of Planters Bank of Maury City, Maury City, Tennessee, Docket No. FDIC-91-169b (12-10-91).

(This order was terminated by order of the FDIC dated 9-19-03; see ¶16,354.)    Bank to cease and desist from such unsafe or unsound practices as operating in violation of laws or regulations, including the Truth in Lending Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, the Equal Credit Opportunity Act, the Expedited Funds Availability Act, and regulations on currency and foreign transactions; and operating with management which has inadequate policies and practices.

   [.1] Violations of Law—Eliminate/Correct
   [.2] Regulation Z—Compliance Required
   [.3] Compliance Program—Minimum Requirements
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   [.4] Consumer Laws—Compliance Officer Required
   [.5] Consumer Laws—Compliance Audit Required
   [.6] Loans—Consumer Loans—Review System Required
   [.7] Compliance Reports—Frequency

In the Matter of

PLANTERS BANK OF MAURY CITY
MAURY CITY, TENNESSEE
(Insured State Nonmember Bank)
ORDER TO
CEASE AND DESIST

   The Federal Deposit Insurance Corporation ("FDIC") on June 25, 1991 issued to Planters Bank of Maury City, Maury City, Tennessee ("Bank"), a NOTICE OF CHARGES AND OF HEARING ("NOTICE") pursuant to section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1). The NOTICE charges the Bank with having engaged in unsafe or unsound banking practices and violations of law and/or regulations. The Bank and counsel for the FDIC thereafter executed 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 20, 1991, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices and 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 committed violations of law and/or regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT, and issued the following ORDER.

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED, that the Bank, its directors, officers, employees, agents, successors, assigns and other institution-affiliated parties of the Bank cease and desist from the following unsafe or unsound banking practices and violations:
   1. Operating in violation of the following laws and regulations:
   a. The Truth in Lending Act. 15 U.S.C. §§ 1601 et seq., and Regulation Z of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 226 ("Regulation Z"), promulgated thereunder by:

       (i) Failing to properly determine and disclose accurate annual percentage rates to its customers;
       (ii) Failing to include the loan fee in the finance charge;
       (iii) Failing to properly determine and accurately disclose the proper "amount financed" to borrowers due to the Bank's inclusion of loan fees in the "amount financed" rather than in the "finance charge";
       (iv) Failing to accurately disclose the number, amounts and timing of payments required of loan customers;
       (v) Failing to prepare and/or provide customers with a copy of a truth-in-lending disclosure statement;
       (vi) Failing to prepare and/or provide customers the variable rate disclosure statement required by this section;
       (vii) Failing to disclose to its customers either the dollar amount or percentage which the Bank may impose on the customers as a late payment fee and/or other deferred or extension charge;
       (viii) Failing to prepare and/or provide residential customers a written statement as to whether a subsequent purchaser of a customer's dwelling may assume the obligation on its original terms;
       (ix) Failing to either prepare and/or provide customers, involved in a rescission transaction, two copies of the notice of the right to rescind; and
       (x) Failing to obtain a written waiver of the three-day rescission period prior to the disbursement of loan proceeds.
   b. Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681t by failing to inform loan applicants that credit was denied and/or costs increased based upon information obtained from a consumer reporting
{{2-29-92 p.C-1756}}agency and supply the loan applicant the name and address of the reporting agency.
   c. The Real Estate Settlement Procedures Act of 1974, 12 U.S.C. §§ 2601- 2617, and Regulation X of the Secretary of the Department of Housing and Urban Development, 24 C.F.R. Part 3500, promulgated thereunder by failing to provide loan applicants with a copy of the "Special Information Booklet", and/or a Good Faith Estimate of closing costs and/or by failing to use the Uniform Settlement Statement (HUD-1) as a settlement statement as required by the regulation.
   d. Part 339 of the FDIC Rules and Regulations, 12 C.F.R. Part 339, by failing to maintain maps for areas where extensions of credit secured by improved real estate have been made in order to determine whether the properties are located in designated flood hazard areas.
   e. The Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f, and Regulation B of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 202, promulgated thereunder by failing to take written applications for loans to purchase and/or refinance dwellings occupied or to be occupied by an applicant as a principal residence, where the extension of credit will be secured by the dwelling.
   f. Part 338 of the FDIC Rules and Regulations, 12 C.F.R. Part 338, by failing to request and/or retain the required informational data on all home loan applicants.
   g. Part 345 of the FDIC Rules and Regulations, 12 C.F.R. Part 345, promulgated thereunder by:
       (i) Failing to adopt an adequate CRA statement containing each of the required components prescribed by the regulation;
       (ii) Failing to make readily available for public inspection a complete CRA statement containing all of the required components as described above;
       (iii) Failing to maintain and/or provide for the maintenance of a public file of any signed, written comments from the public within the last two years that specifically relates to any CRA statement or to the Bank's performance in helping to meet the credit needs of its community or communities;
       (iv) Failing to make reference in the Bank's CRA Notice to the FDIC home office in Washington, D.C. and its address as well as reference to the FDIC Regional Office and its address as required by the regulation.
   h. Part 103 of the Secretary of the Treasury's Regulations on Financial Recordkeeping and Reporting of Currency and Foreign Transactions, 31 C.F.R. Part 103, by failing to maintain a record of each exemption granted under Section 103.22(b) and to maintain the prescribed exempt customer information on a centralized list.
   i. The Expedited Funds Availability Act, 12 U.S.C. §§ 4001-4010, and Regulation CC of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 229, promulgated thereunder by failing to modify its delayed availability of funds notice to reflect the permanent availability schedule effective September 1, 1990.
   j. Part 329 of the FDIC Rules and Regulations, 12 C.F.R. Part 329, by maintaining interest bearing demand accounts for unqualified entities.
   2. Operating with management which has inadequate policies and practices.
   IT IS FURTHER ORDERED, that the Bank take affirmative action as follows:

   [.1] 4. Within 90 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law and/ or regulations which are set forth in paragraphs 4 through 27 of the Notice of Charges and Hearing issued to the Bank on June 25, 1991 which is based on findings set forth in the Compliance Reports of Examination as of February 16, 1988, and October 29, 1990. In addition, the Bank shall henceforth comply with all applicable laws and regulations.

   [.2] 5. The Bank, its employees, officers or other institution-affiliated parties of the Bank shall discontinue the practice of advising and/or requiring customers to make monthly payments on consumer loans disclosed as a single-payment loan. In instances where management considers monthly payments necessary or desireable, the Bank shall write the loan in such a manner as to properly disclose to the customer the monthly payment schedule, an accurate annual percentage rate (A.P.R.) and an accurate finance charge as required by Regulation Z.
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   [.3] 6. Within 60 days of the effective date of this ORDER, the Bank shall adopt and implement a written compliance program which at a minimum shall address the proper maintenance of records, the establishment of appropriate internal controls and procedures and sufficient training for all compliance personnel to provide effective guidance, control and personnel over the Bank's consumer lending functions. The compliance program shall be in a form and manner acceptable to the Regional Director of the FDIC Memphis Regional Office ("Regional Director") as determined by subsequent examinations and/or visitations.

   [.4] 7. a. Within 60 days of the effective date of this ORDER, the Board of Directors ("Board") shall appoint a qualified compliance officer to oversee and coordinate the Bank's overall compliance efforts, including the training and supervision of all personnel in compliance matters.
   b. The Board shall ensure that the compliance officer appointed receives the necessary training to fulfill the responsibilities of his or her position.
   c. The compliance officer shall be assessed on his or her ability to:

       (i) Comply with the requirements of this ORDER:
       (ii) Comply with the approved compliance program referred to in paragraph 6 above, and maintain the Bank's compliance program in a safe and sound manner; and
       (iii) Comply with applicable State and Federal laws and regulations.

   [.5] 8. a. Within 60 days of the effective date of this ORDER, the Board shall obtain the services of a competent outside auditor(s) or consultant(s) who is fully trained and knowledgeable in the area of compliance.
   b. The outside auditor(s) or consultant(s) shall provide assistance to the Board to ensure continued compliance with the approved compliance program referred to in paragraph 6 above and with applicable State and Federal laws and regulations.

   [.6] 9. a. Notwithstanding the requirements set forth in any of the above paragraphs, within 60 days of the effective date of this ORDER, the Bank shall establish a consumer loan review system ("System") to review the Bank's consumer loan documentation, including but not limited to disclosure statements and adverse actions, notices, and identify, categorize and correct errors contained in such documents prior to dissemination to the consumer.
   b. The System shall provide that the review of each document shall be by an individual, other than the preparer of such document, who is knowledgeable of State and Federal consumer laws and regulations.
   c. The System shall provide for a written Report to be furnished to the Regional Director on a quarterly basis which shall identify both the total number of transactions reviewed and the total number of transactions found to be in noncompliance with the appropriate State and Federal consumer laws and regulations.

   [.7] 10. On the fifteenth day of the second month following the effective date of this ORDER, and on quarterly basis thereafter, the Bank shall furnish written progress reports to the Regional Director detailing the form and manner of any actions taken to secure compliance with all provisions of this ORDER and the result thereof. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director has released the Bank in writing from making further reports.
   The effective date of this ORDER shall be ten (10) days from the date of issuance.
   The provisions of this ORDER shall be binding upon the Bank, its directors, officers, employees, agents, successors, assigns, and institution-affiliated parties 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 be modified, terminated, suspended, or set aside by the FDIC.
   Dated December 10th, 1991.
   Pursuant to delegated authority.

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