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FDIC Enforcement Decisions and Orders

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{{10-31-92 p.C-2616}}
   [10,614] In the Matter of Independent Bank, Manassas, Virginia, Docket No. FDIC-92-254b (8-11-92).

   Bank to cease and desist from such unsafe or unsound practices as failing to provide adequate supervision over the Bank's affairs; operating with management whose policies are inadequate for the needs of the Bank; following hazardous lending and lax collection practices; operating with inadequate allowance for loan and lease losses; operating with inadequate capital; engaging in practices which {{2-28-94 p.C-2617}}produce inadequate operating income; and operating in violation of applicable laws or regulations. (This order was terminated by order of the FDIC dated 12-21-93; see ¶ 15,776.)

   [.1] Management—Qualifications—Review
   [.2] Management—Management Plan—Minimum Requirements
   [.3] Capital—Tier 1 Capital—Increase/Maintain—Methods
   [.4] Allowance for Loan and Lease Losses—Establish/Maintain
   [.5] Assets—Adversely Classified—Eliminate/Reduce
   [.6] Assets—Adversely Classified—Eliminate/Reduce—Individual Written Plans
   [.7] Loans—Extensions of Credit—Existing Borrowers—Curtail
   [.8] Loans—Overdue—Accrual of Interest
   [.9] Budget and Earnings Forecast—Preparation Required
   [.10] Violations of Law—Eliminate/Correct
   [.11] Loan Policy—Written Revision—Minimum Requirements
   [.12] Brokered Deposits—Notice to FDIC Required
   [.13] Technical Exceptions—Eliminate/Correct
   [.14] Asset/Liability Management—Written Policy—Minimum Requirements
   [.15] Dividends—Restricted
   [.16] Shareholders—Disclosure—Cease and Desist Order
   [.17] Compliance Reports—Frequency

In the Matter of

INDEPENDENT BANK
MANASSAS, VIRGINIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-92-254b

   Independent Bank, Manassas, Virginia ("Bank"), having been advised of its right to a written Notice of Charges and of Hearing detailing unsafe or unsound banking practices and violations of applicable laws and regulations alleged to have been committed by the Bank and of its right to a hearing regarding such alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("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 a representative of the Legal Division of the Federal Deposit Insurance Corporation ("FDIC"), dated July 22, 1992, whereby solely for the purpose of this proceeding and without admitting or denying any of the alleged charges of unsafe or unsound banking practices and violations of applicable laws and 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 applicable laws and 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 institution-affiliated parties, as such term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns cease and desist from the following unsafe or unsound banking practices and violations of laws and regulations:
   A. Failing to provide adequate supervision and direction over the affairs of the Bank by the board of directors of the Bank to prevent unsafe or unsound practices and violations of laws and regulations;
   B. Operating the Bank with management {{2-28-94 p.C-2618}}whose policies and practices have been inadequate for the needs of the Bank;
   C. Operating the Bank with an excessive volume of adversely classified assets, non-earning assets, and overdue loans;
   D. Engaging in deficient lending and ineffective and lax collection practices, including but not limited to: (i) failing to implement the Bank's loan policy, including failing to follow an effective loan review and grading process; (ii) failing to establish and/or enforce repayment programs; (iii) extending unsound credit to borrowers who lack sufficient repayment ability; (iv) capitalizing unpaid accrued interest into the principal balances of loans and/or renewing loans without full payment of interest; (v) extending credit without properly evaluating collateral protection; (vi) continuing to accrue interest on loans that are ninety (90) days or more delinquent in principal or interest payments and which are not both well secured and in the process of collection; and (vii) extending credit with deficient or inadequate supporting loan documentation, including but not limited to current financial statements and cash flow and/or operating information;
   E. Failing to provide and maintain an adequate allowance for loan and lease losses for the volume, kind, and quality of loans held by the Bank;
   F. Operating the Bank with inadequate capital for the kind and quality of assets held;
   G. Engaging in practices which produce inadequate operating income and excessive loan losses; and
   H. Engaging in violations of applicable federal and state laws and regulations, as more fully described on page 6-a of the FDIC's Report of Examination of the Bank as of December 31, 1991.
   IT IS FURTHER ORDERED that the Bank and its successors and assigns take affirmative action as follows:

[.1] 1. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall have and retain qualified management who shall be provided with the necessary written authority to implement the provisions of this ORDER. The qualifications of management shall be assessed on its ability to (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. As long as this ORDER remains in effect, the Bank shall notify the Regional Director of the FDIC's Atlanta Regional Officer ("Regional Director") and the Virginia Commissioner of Financial Institutions ("Commissioner") in writing of any changes in management. Such notification shall be in addition to any application and prior approval requirements established by section 32 of the Act, 12 U.S.C. § 1831i, and implementing regulations; must include the names and qualifications of any replacement personnel; and must be provided at least thirty (30) days prior to the individual's assuming the new position.

   [.2] (b) In complying with the requirements of paragraph 1(a) of this ORDER, the Bank's board of directors shall, within sixty (60) days from the effective date of this ORDER, formulate and submit a written management plan ("Management Plan") to the Regional Director and the Commissioner for review and comment which plan shall contain the following:

       (i) A review of each existing officer's performance and abilities. If existing personnel do not satisfy the Bank's needs, the plan shall identify which positions require hiring additional personnel from outside the Bank;
       (ii) A timetable for the recruitment of any needed personnel;
       (iii) An organizational chart depicting functional lines of authority for all supervisory, administrative, lending and accounting functions; and
       (iv) Written job descriptions for all personnel in supervisory, administrative, and accounting functions.
   (c) Not more than thirty (30) days from receipt of any comment from the Regional Director or from the Commissioner, the board of directors shall, after consideration of such comment, approve the Management Plan which approval shall be recorded in the minutes of the board of directors' meeting. Thereafter, the Bank and its successors and assigns shall implement and follow the Management Plan and shall implement and follow any modifications to the Management Plan as such {{10-31-92 p.C-2619}}modifications may be made from time to time.

[.3] 2. (a) Within thirty (30) days after December 31, 1992, and within thirty (30) days after each March 31, June 30, September 30, and December 31, date thereafter while this ORDER remains in effect, the Bank's board of directors shall calculate the Bank's Tier 1 capital as a percentage of its total assets ("capital ratio") as of the nearest preceding March 31, June 30, September 30, and December 31 date. If such capital ratio is less than six percent (6.0%), the Bank shall, within sixty (60) from the date of such calculation, increase its Tier 1 capital by an amount sufficient to raise its capital ratio to not less than six percent (6.0%) as of the nearest preceding March 31, June 30, September 30, or December 31 date. Any such increase in Tier 1 capital required by this paragraph 2(a) of the ORDER may be accomplished by any one or more of the following:

       (i) The sale of new securities in the form of common stock;
       (ii) The collection in cash of all or part of the assets other than loans classified "Loss" or "Doubtful" as of December 31, 1991, and charged off in accordance with paragraph 4 of this ORDER;
       (iii) The direct contribution of cash by the directors and shareholders of the Bank;
       (iv) The collection in cash of assets other than loans previously charged off; or
       (v) Any other means acceptable to the Regional Director and the Commissioner.
    (b) (i) If all or part of the increase in the Bank's Tier 1 capital required under paragraph 2(a) of this ORDER is accomplished by the sale of new securities, the board of directors shall take all necessary steps to adopt and implement a plan for the sale of such additional securities, including the voting of any shares owned or proxies held or controlled by them in favor of the plan. Should the implementation of the plan involve a public distribution of the Bank's securities (including a distribution limited to the Bank's existing shareholder), 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 applicable Federal securities laws. Prior to the sale of such 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, and to the Commissioner for review. All changes requested by the FDIC or by the Commissioner to be made in such offering materials shall be made prior to their dissemination.
       (ii) In complying with the provisions of paragraph 2(b)(i) of this ORDER, the Bank shall provide to each subscriber and/or purchaser of Bank's securities, 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 2(b)(ii) of the ORDER shall be furnished within ten (10) calendar days from the date that such material development or change was planned or occurred, whichever is earlier, and shall be furnished to every purchaser and/or subscriber of Bank securities who received or was tendered the information contained in the Bank's original offering materials.
   (c) In addition to the requirements of paragraph 2(a) of this ORDER, for as long as this ORDER remains in effect, the Bank shall meet the minimum ratio requirements established for "risk-based capital" by the deadlines set out in Appendix A of Part 325 of the FDIC's Rules and Regulations, 12 C.F.R. Part 325, which Appendix A is entitled "Statement of Policy on Risk-Based Capital," and/or any subsequent amendments or modifications thereto.
   (d) For the purposes of this ORDER, the terms "Tier 1 capital" and "total assets" shall have the meanings ascribed to {{10-31-92 p.C-2620}}them in sections 325.2(m) 325.2(n), respectively, of the FDIC's Rules and Regulations, 12 C.F.R. §§ 325.2(m) and 325.2(n).

[.4] 3. (a) Within thirty (30) days from the effective date of this ORDER, and concurrently with compliance with the requirements of paragraph 4 of this ORDER, the Bank shall establish and thereafter continually maintain an adequate allowance for loan and lease losses in accordance with the prevailing requirements of the Instructions for the Reports of Condition and Income, by charges against current operating income. In complying with the requirements of this paragraph 3(a) of the ORDER, the Bank's board of directors shall, at a minimum, review the adequacy of the Bank's allowance for loan and lease losses prior to the end of each calendar quarter. The Bank's board of directors shall consider the volume and quality of internally rated loans, the level of delinquent and nonaccrual loans, risk in loans listed for Special Mention, loans adversely classified in the most recent Report of Examination, and anticipated growth in the loan portfolio, in determining the adequacy of its allowance. The minutes of the board meeting at which review of the allowance for loan and lease losses is undertaken shall indicate the results of the review, the amount of any recommended increases in the allowance, and the basis for determining the amount of allowance provided.
   (b) Reports of Condition and Income required to be filed by the Bank prior to the effective date of this ORDER and subsequent to March 31, 1992, shall reflect a provision for the allowance for loan and lease losses necessary to comply with paragraph 3(a) of this ORDER. If necessary to comply with this paragraph 3(b) of the ORDER, the Bank shall file amended Reports of Condition and Income within thirty (30) days from the effective date of this ORDER.

   [.5] 4. Within thirty (30) days from the effective date of this ORDER, the Bank shall eliminate from its books, by collection, charge-off or other proper entries, all assets or portions of assets classified "Loss" and one-half of all assets or portions of assets classified "Doubtful" by the FDIC as a result of its examination of the Bank as of December 31, 1991, which have not been previously collected or charged off, unless otherwise approved in writing by the Regional Director and the Commissioner. Reduction of these assets through use of proceeds of loans made by the Bank does not constitute collection for the purpose of this paragraph 4 of the ORDER.

[.6] 5. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall submit to the Regional Director and the Commissioner a written plan of action to reduce each line of credit which was adversely classified by the FDIC as of December 31, 1991, and which aggregated one hundred thousand dollars ($100,000) or more as of that date. Such plan of action shall thereafter be implemented by the Bank and monitored, and progress reports shall be submitted by the Bank to the Regional Director and the Commissioner concurrently with the other reporting requirements set forth in paragraph 16 of this ORDER.
   (b) As used in this paragraph 5 of the ORDER, "reduce" means to (i) collect, (ii) charge off, or (iii) improve the quality of such assets sufficiently to warrant removal of any adverse classification by the FDIC.

[.7] 6. (a) Effective the date of this ORDER, the Bank shall not extend, directly or indirectly, any additional 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" or "Doubtful", and is uncollected, unless a majority of the Bank's board of directors first: (i) determines that such extension is in the best interests of the Bank; (ii) determines that the Bank has satisfied the requirements set out in paragraph 5(a) or this ORDER as to such borrower; (iii) approves such extension; and (iv) notifies the Regional Director and the Commissioner in writing of such approval within ten (10) days after any such approval is granted. A written record of the board of directors' determination and approval of any advance under this paragraph 6(a) of the ORDER shall be maintained in the credit files of the affected borrowers as well as in the minutes of the board of directors.
   (b) Effective the date of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit to or for the {{10-31-92 p.C-2621}}benefit of any borrower who has a loan or other extension of credit with the Bank that has been classified, in whole or in part, "Substandard", and is uncollected, unless a majority of the Bank's board of directors first: (i) determines that such advance is in the best interest of the Bank, (ii) determines that the Bank has satisfied the requirements set out in paragraph 5(a) of this ORDER as to such borrower, and (iii) approves such advance. A written record of the board of directors' determination and approval of any advance under this paragraph 6(b) of the ORDER shall be maintained in the credit files of the affected borrowers as well as in the minutes of the board of directors.
   (c) The requirements of this paragraph 6 of the ORDER shall not prohibit the Bank from renewing or extending the maturity of any credit already extended to the borrower, provided such action is in accordance with both federal and state laws, rules and regulations, and further provided all interest due at the time of such renewal or extension is collected in cash from the borrower.

[.8] 7. (a) Within thirty (30) days from the effective date of this ORDER, and in accordance with the Instructions for the Reports of Condition and Income, the Bank shall reverse on its books all accrued and unpaid interest on any loan that is ninety (90) days or more delinquent in principal or interest payments and is not both well secured and in the process of collection.
   (b) Effective the date of this ORDER, the Bank shall not: (i) accrue interest on any loan that is, or becomes, ninety (90) days or more delinquent in principal or interest payments unless the loan is both well secured and in the process of collection; (ii) add uncollected interest to the unpaid principal balance of any loan on which interest is due unless such addition is supported by additional tangible collateral which adequately and completely secures the loan; (iii) extend credit by means of a new note for uncollected interest due on any loan unless such new extension of credit is supported by additional tangible collateral which adequately and completely secures the loan; or (iv) book uncollected interest by any other means in contravention of the Instructions for Reports of Condition and Income.
   (c) For purposes of this paragraph 7 of the ORDER, "well secured" and "in the process of collection" shall have the same meanings as those terms have in the prevailing Instructions for the Reports of Condition and Income.

[.9] 8. (a) Within thirty (30) days after the effective date of this ORDER, the Bank shall prepare a realistic and comprehensive budget and earnings forecast for calendar year 1992 and shall submit this budget and earnings forecast to the Regional Director and the Commissioner for review and comment.
   (b) As long as this ORDER remains in effect, the Bank shall prepare realistic and comprehensive calendar year budgets and earnings forecasts on a consolidated basis as of January 1 of each year subsequent to 1992 and shall submit them to the Regional Director and the Commissioner for review and comment no later than January 31 of the budget year.
   (c) In preparing the budgets and earnings forecasts required by this paragraph 8 of the ORDER, the Bank shall, at a minimum:

       (i) Identify the major areas in, and means by, which the board of directors will seek to improve the Bank's operating performance; and
       (ii) Describe the operating assumptions that form the basis for, and adequately support, major projected income and expense components.
   (d) Progress reports comparing the Bank's actual income and expense performance with budgetary projections shall be submitted to the Regional Director and the Commissioner concurrently with the other reporting requirements set forth in paragraph 16 of this ORDER.

   [.10] 9. Within thirty (30) days from the effective date of this ORDER, the Bank shall take all necessary steps to eliminate or correct all violations of law and regulations committed by the Bank, as described on page 6-a of the FDIC's Report of Examination of the Bank as of December 31, 1991. In addition, the Bank shall adopt appropriate procedures to ensure its future compliance with all applicable laws and regulations.

   [.11] 10. (a) Within sixty (60) days from {{10-31-92 p.C-2622}}the effective date of this ORDER, the Bank shall review and revise its written loan policy. The Bank's written loan policy, as revised, shall include, but not necessarily be limited to, specification of the following elements:

       (i) General fields of lending in which the Bank will engage and the kinds and types of loans within each general field;
       (ii) Description of the Bank's normal trade area and circumstances under which the Bank may extend credit outside of such area;
       (iii) Lending authority of each loan officer;
       (iv) Lending authority of any loan or executive committee;
       (v) Responsibility of the board of directors in reviewing, ratifying, or approving loans;
       (vi) Limitations on the amount of credit advanced in relation to the value of the collateral;
       (vii) Guidelines for obtaining and reviewing the documentation required by the Bank upon extension and renewal for each type of secured loan;
       (viii) Guidelines under which unsecured loans will be granted;
       (ix) Guidelines for rates of interest and the terms of repayment for secured and unsecured loans;
       (x) A requirement providing for written documentation of each borrower's ability to repay each extension of credit and any renewal, and the extension of credit and any renewal, and the establishment of a written repayment plan for each loan taking into consideration the source of repayment and the purpose of the loan;
       (xi) A program for obtaining and reviewing real estate appraisals in compliance with the requirements of Part 323 of the FDIC's Rules and Regulations, 12 C.F.R. Part 323, as well as for ordering reappraisals, when needed;
       (xii) Maintenance and review of complete and current credit files on each borrower;
       (xiii) Limitations on the maximum volume of loans in relation to total assets;
       (xiv) Limitations on the extension of credit through overdrafts;
       (xv) Guidelines which, at a minimum, address the goals for portfolio mix and risk diversification and cover the Bank's plans for monitoring and taking appropriate corrective action, if deemed necessary, on any concentrations that may exist;
       (xvi) Guidelines establishing an effective internal loan review and grading system, which identifies those loans warranting special attention for reasons relating to their ultimate collectibility, and, at a minimum, provides for:
         (A) An identification or grouping of loans that warrant the special attention of management (Bank's "Watch List");    (B) For each loan identified pursuant to subparagraph 10(a)(xvi)(A), a written statement of the reasons why the particular loan merits special attention; and    (C) A mechanism for reporting periodically to the Bank's board of directors on the status of each loan identified pursuant to subparagraph 10(a)(xvi)(A), and on the actions taken to planned by management to improve the quality of each such loan;
       (xvii) Guidelines addressing the Bank's review of the allowance for loan and lease losses;
       (xviii) Guidelines establishing appropriate and adequate collection procedures including, but not limited to, actions to be taken against borrowers who fail to make timely payments;
       (xix) Prohibitions against (i) the addition of uncollected interest to the unpaid principal balance of any loan on which such interest is due, (ii) the acceptance of a separate note for uncollected interest due on any loan unless supported by additional tangible collateral which adequately and completely secures the loan, (iii) the continuation of accrual of interest on any loan delinquent in principal or interest payments ninety (90) days or more and which is not both well secured and in the process of collection, or (iv) any other device that, in essence, avoids recognition of the overdue status of loans or artificially inflates the income of the Bank; and
       (xx) Specific guidelines governing the {{10-31-92 p.C-2623}}processing, administration and disposition of "other real estate" assets, including procedures for determining the current market value of all parcels of "other real estate" and for periodically revaluating the market value of "other real estate."
   (b) The revised written loan policy and all subsequent modifications shall be submitted to the Regional Director and the Commissioner for review and comment. No more than thirty (30) days after the receipt of any comment from the Regional Director and the Commissioner, the board of directors shall approve the written loan policy and any subsequent modifications, which approval shall be recorded in the minutes of the board of directors. Thereafter, the Bank and its successors and assigns shall implement and follow the loan policy and shall implement and follow any modifications to the loan policy as such modifications may be made from time to time.

   [.12] 11. While this ORDER remains in effect, the Bank shall give prior written notice to the Regional Director each time the Bank intends to accept, renew or rollover brokered deposits. The notification shall contain the information required to be filed by an undercapitalized insured depository institution seeking approval to utilize brokered deposits as set forth in section 337.6(d) of the FDIC Rules and Regulations, 12 C.F.R. § 337.6(d). The Regional Director shall have the right to reject the Bank's plans for utilizing brokered deposits. Written reports detailing the level, source, and use of brokered deposits by the Bank shall be submitted by the Bank to the Regional Director concurrently with the other reporting requirements set forth in paragraph 16 of this ORDER. For purposes of this ORDER, the term "brokered deposits" shall have the same definition as found in section 337.6(a)(1) of the FDIC Rules and Regulations, 12 C.F.R. § 337.6(a)(1). While this ORDER is in effect, if by application of section 29 of the Act—12 U.S.C. § 1831, as amended by the FDIC Improvement Act of 1991, Pub. L. No. 102–242, 105 Stat. 2236 (1991)—or by application of any implementing regulations, the Bank would be prohibited from accepting brokered deposits, then the provisions of section 29 of the Act and any implementing regulations shall supersede application of this paragraph.

[.13] 12. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall take all necessary steps to correct the technical exceptions for loans listed on pages 2-e and 2-e-1 of the FDIC's Report of Examination of the Bank as of December 31, 1991.
   (b) Effective the date of this ORDER, the Bank shall not extend or renew any secured credit until all required collateral documentation, or evidence of the required collateral documentation, has been obtained and reviewed by a loan officer or by the board of directors' loan committee.
   (c) Effective the date of this ORDER, the Bank shall not extend any credit, whether secured or unsecured, without first obtaining and analyzing credit information sufficient to identify the borrower's source of repayment and to support a scheduled repayment plan. Bank's analysis shall be documented in Bank's credit files by a credit memorandum which sets forth the Bank's analysis and rationale for extending each credit.

[.14] 13. (a) Within sixty (60) days from the effective date of this ORDER, the Bank's board of directors shall review and revise the Bank's written Asset-Liability Management Policy in conformity with the requirements of paragraph 13(b) of this ORDER. Following its review and revision, the Bank's board of directors shall submit the Bank's Asset-Liability Management Policy to the Regional Director and the Commissioner for their review and approval. After review by the Regional Director and the Commissioner, the policy shall be adopted by the board of directors of the Bank and fully implemented by the officers of the Bank.
   (b) The Bank's Asset-Liability Management Policy, at minimum, shall be revised to provide for the following:

       (i) Establishment of an asset-liability committee, specifying committee membership, what its responsibilities will be, meeting frequency, how it will obtain input from the Bank's board of directors, and how its results will be reported back to the Bank's board of directors;
    {{10-31-92 p.C-2624}}
       (ii) Periodic review of the Bank's deposit structure, including the volume and trend of total deposits and the volume and trend of the various types of deposits offered, and maturity distribution of time deposits, rates being paid on each type of deposit, rates being paid by trade area competition, caps on large time deposits, public funds, and out-of-area deposits;
       (iii) A method of computing the Bank's cost of funds;
       (iv) A method of loan pricing, which includes (1) consideration of the Bank's cost of funds, overhead and administrative costs, and desired profits, and (2) under what conditions Bank will use fixed rates and under what conditions Bank will use floating rates;
       (v) In conjunction with the Bank's investment policy, a determination of which types of investments are permitted, the desired mix of those investments, the maturity distribution, what amount of funds will be available, and a review of pledging requirements;
       (vi) In conjunction with the Bank's loan policy, a determination of which types of loans are permitted and desirable, the desired mix among different types of loans, the volume of loans compared to total deposits and total loans, upcoming loan maturities, and loan commitments outstanding;
       (vii) Periodic calculations to determine the extent to which the Bank is funding long-term assets with short-term liabilities, establishing a target ratio or parameters, or both, for such funding;
       (viii) Periodic calculations to measure the Bank's interest rate risk exposure at time horizons of at least six (6) months and twelve (12) months, establishing targets for the ratio of Rate Sensitive Assets to Rate Sensitive Liabilities and for the difference between Rate Sensitive Assets and Rate Sensitive Liabilities as a percentage of total assets;
       (ix) In conjunction with the Bank's liquidity policy, periodically reviewing performance with the Bank's liquidity ratio target and reviewing compliance with required legal reserves; and
       (x) Periodic review of possible alternative sources of funds, including establishing bank lines of credit and periodically testing their use.

   [.15] 14. Effective the date of this ORDER, the Bank shall not pay any cash or property dividends without the prior written consent of both the Regional Director and the Commissioner.

   [.16] 15. Following the effective date of this ORDER, the Bank shall send to its shareholders or otherwise furnish 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 this 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, and to the Commissioner, for review at least twenty (20) days prior to dissemination to shareholders. Any changes requested to be made by the FDIC or the Commissioner shall be made prior to dissemination of the description, communication, notice or statement.

   [.17] 16. Within ninety (90) days from the effective date of this ORDER, and within fifteen (15) days following the end of each calendar quarter thereafter, the Bank shall furnish written progress reports to the Regional Director and the Commissioner detailing the form and manner of any actions taken to secure compliance with this ORDER and the results of such actions. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director and the Commissioner have released the Bank in writing from making further reports. 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 appropriate board meeting.
   17. The provisions of this ORDER shall become effective ten (10) days from the date of its issuance and shall be binding upon the Bank, its institution-affiliated parties, and its successors and assigns. Further, 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.
   Dated at Atlanta, Georgia, this 11th day of August, 1992.
   Pursuant to delegated authority.

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