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FDIC Enforcement Decisions and Orders

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{{11-30-95 p.C-3416}}
   [10,871] In the Matter of Golden Security Thrift and Loan, Alhambra, California, Docket No. FDIC-93-187b (9-7-93).

   Bank to cease and desist from such unsafe or unsound practices as operating with inadequate management; operating with inadequate capital; operating with an excessive level of poor quality assets; following hazardous lending and lax collection practices; operating without adequate reserve for loan losses; operating with inadequate liquidity; operating without proper internal routine and controls; operating in such a manner as to produce operating losses; and operating in violation of applicable laws or regulations, including various consumer protection laws and regulations. (This order was terminated by order of the FDIC dated 9-8-95. See ¶16,037.)

   [.1] Management—Qualifications—Review
   [.2] Capital—Tier 1 Capital—Increase/Maintain—Methods
   [.3] Assets—Adversely Classified—Eliminate/Reduce
   [.4] Loans—Extensions of Credit—Existing Borrowers—Curtail
   [.5] Lending and Collection Policy—Minimum Requirements
   [.6] Loan Loss Reserve—Establish/Maintain
   [.7] Appraisals—Review Program Required
   [.8] Violations of Law—Eliminate/Correct
   [.9] Conflicts of Interest—Written Policy Required
   [.10] Liquidity and Funds Management—Written Policy Required
   [.11] Loans—Concentrations of Credit—Monitoring Required
   [.12] Bank Operations—Internal Routine and Controls—Written Policy Required
   [.13] Dividends—Restricted
   [.14] Community Reinvestment Act—CRA Officer Designated
   [.15] Compliance Program—Compliance Officer Designated
   [.16] Bank Secrecy Act—BSA Officer Designated
   [.17] Truth in Lending Act—Compliance Review of Loan Files Required
   [.18] Insurance—Flood Insurance—Review and Notification to Borrowers
   [.19] Loan Applications—Pre-Screening Prohibited—Regulation B Compliance Required
   [.20] Compliance Program—Consumer Loans
   [.21] Community Reinvestment Act—Establish and Implement Program
   [.22] Board of Directors—Minutes—CRA and Consumer Matters Recorded
{{11-30-93 p.C-3417}}
   [.23] Violations—Eliminate/Correct
   [.24] Bank Operations—Personnel Training—Consumer and CRA Matters
   [.25] Compliance Program—Testing and Verification Required
   [.26] Loans—Geographic Analysis Required
   [.27] Community Reinvestment Act—Community Delineation Required
   [.28] Bank Secrecy Act—Compliance Program Required

In the Matter of

GOLDEN SECURITY THRIFT AND
LOAN

ALHAMBRA, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE
AND DESIST

FDIC-93-187b

   Golden Security Thrift and Loan, Alhambra, California ("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 the 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 counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated September 1, 1993, 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 TO CEASE AND DESIST

   IT IS HEREBY ORDERED that the Bank, and any institution-affiliated party as such 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:
   (a) operating with inadequate management;
   (b) operating with inadequate equity capital and reserves in relation to the volume and quality of assets held by the Bank;
   (c) operating with a large volume of poor quality loans;
   (d) operating with an inadequate loan valuation reserve;
   (e) following hazardous lending and lax collection practices;
   (f) operating with inadequate provisions for liquidity an funds management;
   (g) operating with inadequate routine and controls policies;
   (h) operating in such a manner as to produce operating losses; and

       (i) operating in violation of the following laws, rules, and regulations:
       (i) Part 323.4 of the FDIC Rules and Regulations as more fully described on Pages 6-b through 6-b-6 of the FDIC's Report of Examination of the Bank as of April 12, 1993;
       (ii) Section 1210 of the California Code of Regulations, as more fully described on Page 6-b-7 of the FDIC's Report of Examination of the Bank as of April 12, 1993;
       (iii) Sections 18271, 18436, 18455(c) and 18317 of the Financial Code as applicable to Industrial Loan Companies as regulated by the Department of Corporations, as more fully described on Page 6-b-7 of the Report of Examination as of April 12, 1993;
       (iv) Part 226, Regulation Z of the Board of Governors of the Federal Reserve System as more fully described on Pages 2 and 2-a of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
    {{11-30-93 p.C-3418}}
       (v) Section 326.8 of the FDIC's Rules and Regulations as more fully described on Pages 2-a and 2-a-1 of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
       (vi) Section 103.29(a)(1) of the FDIC's Rules and Regulations as more fully described on Page 2-a-1 of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
       (vii) Part 202, Regulation B of the Board of Governors of the Federal Reserve System as more fully described on Pages 2-a-1 through 2-a-4 of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
       (viii) Part 615, the Consumer Credit Protection Act as more fully described on Pages 2-a-4 and 2-a-5 of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
       (ix) Part 203 of the revised Regulation C of the Board of Governors of the Federal Reserve System as more fully described on Page 2-a-5 of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
       (x) Part 339 of the FDIC's Rules and Regulations as more fully described on Page 2-a-6 of the FDIC's Compliance Examination of the Bank as of December 30, 1992;
       (xi) Part 329 of the FDIC's Rules and Regulations as more fully described on Page 2-a-7 of the FDIC's Compliance Examination as of December 30, 1992;
       (xii) Part 345 of the FDIC's Rules and Regulations as more fully described on Page 2-a-7 of the FDIC's Compliance Examination of the Bank as of December 30, 1992; and
       (xiii) Part 338 of the FDIC's Rules and Regulations as more fully described on Page 2-a-8 of the FDIC's Compliance Examination of the Bank as of December 30, 1992.
   IT IS FURTHER ORDERED that the Bank take affirmative action as follows:

   [.1] 1. The Bank shall have and retain qualified management.
   (a) Each member of management shall have qualifications and experience commensurate with his or her duties and responsibilities at the Bank. Management should include a chief executive officer with proven ability in managing a Bank of comparable size and complexity. Management should also include a senior lending officer with significant appropriate lending, collection, and loan supervision experience. Each member of management shall be provided appropriate written authority from the Bank's Board of Directors to implement the provisions of this ORDER.
   (b) 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.
   (c) During the life of this ORDER, the Bank shall notify the Regional Director of the FDIC's San Francisco Regional Office ("Regional Director") and the Acting Commissioner of Corporations for the State of California ("Acting Commissioner") in writing when it proposes to add any individual to the Bank's Board of Directors or employ any individual as a senior executive officer. The notification must be received at least 30 days before such addition or employment is intended to become effective and should include a description of the background and experience of the individual or individuals to be added or employed.
   (d) The Bank may not add any individual to its Board of Directors or employ any individual as a senior executive officer if the Regional Director issues a notice of disapproval pursuant to Section 32 of the Act, 12 U.S.C. § 1831i.

[.2] 2. (a) During the life of this ORDER, the Bank shall maintain Tier 1 capital in such an amount as to equal or exceed seven (7.0) percent of the Bank's total assets.
   (b) Within 60 days from the effective date of this ORDER, the Bank shall develop and adopt a plan to meet the minimum risk-based capital requirements as described in the FDIC Statement of Policy on Risk-Based Capital contained in Appendix A to Part 325 of the FDIC Rules {{11-30-93 p.C-3419}}and Regulations, 12 C.F.R. Part 325, Appendix A. The Plan shall be in a form and manner acceptable to the Regional Director as determined at subsequent examinations.
   (c) The level of Tier 1 capital to be maintained during the life of this ORDER pursuant to Subparagraph 2(a) shall be in addition to a fully funded loan loss reserve, the adequacy of which shall be satisfactory to the Regional Director and the Acting Commissioner as determined at subsequent examinations and/or visitations.
   (d) Any increase in Tier 1 capital necessary to meet the requirements of Paragraph 2 of this ORDER may be accomplished by the following:

       (i) the sale of common stock; or
       (ii) the sale of noncumulative perpetual preferred stock; or
       (iii) the direct contribution of cash by the board of directors, shareholders, and/or parent holding company; or
       (iv) any other means acceptable to the Regional Director and the Acting Commissioner; or
       (v) any combination of the above means.
Any increase in Tier 1 capital necessary to meet the requirements of Paragraph 2 of this ORDER may not be accomplished through a deduction from the Bank's loan loss reserves.
   (e) If all or part of the increase in Tier 1 capital required by Paragraph 2 of this ORDER is accomplished by the sale of new securities, the Board of Directors shall forthwith 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 only to the Bank's existing shareholders), 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 the Federal securities laws. Prior to the implementation of the plan and, in any event, not less than fifteen (15) days prior to the dissemination of such materials, the plan and any materials used in the sale of the securities shall be submitted to the FDIC, Registration and Disclosure Section, 550 - 17th Street, N.W., Washington, D.C. 20429, for review. Any changes requested to be made in the plan or materials by the FDIC shall be made prior to their dissemination. If the increase in Tier 1 capital is provided by the sale of noncumulative perpetual preferred stock, then all terms and conditions of the issue, including but not limited to those terms and conditions relative to interest rate and convertibility factor, shall be presented to the Regional Director and the Acting Commissioner for prior approval.
   (f) In complying with the provisions of Paragraph 2 of this ORDER, the Bank shall provide to any subscriber and/or purchaser of the Bank's securities, a written notice of any planned or existing development or other changes which are 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 shall be furnished within ten (10) days from the date such material development or change was planned or occurred, whichever is earlier, and shall be furnished to every subscriber and/or purchaser of the Bank's securities who received or was tendered the information contained in the Bank's original offering materials.
   (g) For the purposes of this ORDER, the terms "Tier 1 capital" and "total assets" shall have the meanings ascribed to them in Part 325 of the FDIC Rules and Regulations, 12 C.F.R. §§ 325.2(t) and 325.2(v).

[.3] 3. (a) Within 10 days from the effective date of this ORDER, the Bank shall eliminate from its books, by charge-off or collection, all assets classified "Loss" as of April 12, 1993, that have not been previously collected or charged off. Elimination of these assets through proceeds of other loans made by the Bank is not considered collection for the purpose of this Paragraph.
   (b) Within 120 days from the effective date of this ORDER, the Bank shall have {{11-30-93 p.C-3420}}reduced the assets classified "Substandard" as of April 12, 1993 that have not previously been charged off to not more than $4,700,000.
   (c) Within 180 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" as of April 12, 1993 that have not previously been charged off to not more than $4,000,000.
   (d) Within 365 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" as of April 12, 1993 that have not previously been charged off to not more than $2,800,000.
   (e) Within 180 days from the effective date of this ORDER, the Bank shall have eliminated all assets classified "Special Mention" as of April 12, 1993.
   (f) The requirements of Subparagraphs 3(a), 3(b), 3(c), 3(d) and 3(e) of this ORDER are not to be construed as standards for future operations and, in addition to the foregoing, the Bank shall eventually reduce the total of all adversely classified assets. Reduction of these assets through proceeds of other loans made by the Bank is not considered collection for the purpose of this Paragraph. As used in Subparagraphs 3(b), 3(c), 3(d) and 3(f) the word "reduce" means:

       (i) to collect;
       (ii) to charge-off; or
       (iii) to sufficiently improve the quality of assets adversely classified to warrant removing any adverse classification, as determined by the FDIC.

[.4] 4. (a) Beginning with the effective 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 from the Bank that has been charged off or classified, in whole or in part, "Loss" and is uncollected. Subparagraph 4(a) of this ORDER shall not prohibit the Bank from renewing or extending the maturity of any credit in accordance with the Financial Accounting Standards Board Statement Number 15 ("FASB 15").
   (b) Beginning with the effective 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 from the Bank that has been classified, in whole or part, "Substandard" without the prior written approval of a majority of the Board of Directors or the loan committee of the Bank. Subparagraph 4(b) of this ORDER shall not prohibit the Bank from renewing or extending the maturity of any credit in accordance with FASB 15, providing that such renewal or extension shall be made only with the prior written approval of a majority of the Board of Directors or the loan committee of the Bank.

[.5] 5. (a) Within 60 days from the effective date of this ORDER, the Bank shall revise, adopt, and implement written lending and collection policies so as to provide effective guidance and control over the Bank's lending function. The Bank's policies shall include specific guidelines regarding the bank's problem loans, such as obtaining current financial statements from borrowers, performing repayment capacity analysis, and taking corrective action to restructure the Bank's problem loans or establish plans for their collateral liquidation. The Bank's policies shall also include provisions for an environmental risk program which includes procedures for identifying and evaluating potential environmental concerns associated with lending practices, other actions relating to real property, and consideration of the recommendations as more fully described on Page 6-a-1 of the FDIC's Report of Examination as of April 12, 1993;
   (b) The initial revisions to the Bank's loan policy and practices, required by this Paragraph, at a minimum, shall include the following:

       (i) provisions which require complete loan documentation, realistic repayment terms, current credit information adequate to support the outstanding indebtedness of the borrower (and documented analysis of borrower repayment capacity). Such documentation shall include current financial information, profit and loss statements or copies of tax returns and cash flow projections. Guidelines and responsibility for analysis of borrower submitted financial statements should be incorporated;
       (ii) provisions which specify the circumstances and conditions under which real estate appraisals must be conducted by an independent third party;
    {{6-30-94 p.C-3421}}
       (iii) provisions which establish standards for unsecured credit;
       (iv) provisions which establish officer lending limits;
       (v) provisions which prohibit the issuance of standby letters of credit unless the letters of credit are fully secured by readily marketable collateral and/or are supported by current and complete financial information;
       (vi) provisions that directors first determine that the lending staff has the expertise necessary to properly supervise construction loans and that adequate procedures are in place to monitor any construction involved before funds are disbursed;
       (vii) provisions which prohibit concentrations of credit in excess of 25 percent of the Bank's total equity capital and reserves to any borrower and that borrower's related interests;
       (viii) provisions which provide for a loan grading system to identify loans classified as "watch", "special mention", "substandard", "doubtful", and "loss" and require the preparation of a loan "watch list" which shall include relevant information on all loans which are identified as Special Mention or are classified "Substandard" and "Doubtful" as of April 12, 1993 or by the FDIC or California Department of Corporations in subsequent Reports of Examination and all other loans which warrant individual review and consideration by the board of directors as determined by the loan committee or active management. The loan "watch list" shall detail specific action plans for correction of deficiencies inherent in each loan included on the list, and shall be presented to the Board of Directors for review at least monthly with such review noted in the minutes;
       (ix) provisions which define the Bank's primary and secondary trade area, and provide limitations and approval requirements for lending out of the defined trade area; and
       (x) the Board of Directors shall adopt procedures whereby officer compliance with the revised loan policy is monitored and responsibility for exceptions thereto assigned. The procedures adopted shall be reflected in minutes of a Board of Directors meeting at which all members are present and the vote of each is noted.

   [.6] 6. Within 30 days from the effective date of this ORDER, the Bank shall establish and thereafter maintain an adequate reserve for loan losses.
   Additionally, within 30 days from the effective date of this ORDER, the Board of Directors shall develop or revise, adopt and implement a comprehensive policy for determining the adequacy of the reserve for loan losses. For the purpose of this determination, the adequacy of the reserve shall be determined after the charge-off of all loans or other items classified "Loss." The policy shall provide for a review of the reserve at least once each calendar quarter. Said review should be completed at least ten (10) days prior to the end of each quarter, in order that the findings of the Board of Directors with respect to the loan loss reserve may be properly reported in the quarterly Reports of Condition and Income. The review should focus on the results of the Bank's internal loan review, loan loss experience, trends of delinquent and non-accrual loans, an estimate of potential loss exposure of significant credits, concentrations of credit, and present and prospective economic conditions. A deficiency in the reserve shall be remedied in the calendar quarter it is discovered, prior to submitting the Report of Condition, by a charge to current operating earnings. The minutes of the Board of Directors meeting at which such review is undertaken shall indicate the results of the review. Upon completion of the review, the Bank shall increase and maintain its loss reserve consistent with the loan loss reserve policy established. Such policy and its implementation shall be satisfactory to the Regional Director and Acting Commissioner as determined at subsequent examinations and/or visitations.

   [.7] 7. The Bank shall develop an effective appraisal review program according to the specific recommendations on Page 6-a of the Report of Examination of the Bank as of April 12, 1993. The policy shall ensure that appraisals undertaken by the Bank conform to Part 323, if applicable. Such policy and its implementation shall be satisfactory to the Regional Director and the Acting Com- {{6-30-94 p.C-3422}}missioner as determined at subsequent examinations and/or visitations.

   [.8] 8. Within 60 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law which are more fully set out on Pages 6-b through 6-b-7 of the Report of Examination of the Bank as of April 12, 1993. In addition, the Bank shall take all necessary steps to ensure future compliance with all applicable laws and regulations.

   [.9] 9. The Bank shall revise, adopt and implement a written policy which shall address Conflicts of Interests, Audit and ORE policies as specifically noted on Pages 1-a-3 and 6-a-2 of the Report of Examination of the Bank as of April 12, 1993. Such policy and its implementation shall be satisfactory to the Regional Director and the Acting Commissioner as determined at subsequent examinations and/or visitations.

   [.10] 10. Within 60 days from the effective date of this ORDER, the Bank shall develop or revise, adopt, and implement a written liquidity and funds management policy. The policy shall include guidelines for volatile liability dependency. The Bank shall maintain a minimum liquidity ratio of 15%, and a maximum volatile liability dependency ratio, inclusive of all time deposits of $99,000 or more and all out-of-state deposits not included in deposits greater than $99,000, of 20% or less. Such policy and its implementation shall be in a form and manner acceptable to the Regional Director and the Acting Commissioner as determined at subsequent examinations and/or visitations.

   [.11] 11. The Bank shall establish a system to identify and monitor concentrations and to revise the Bank's risk diversification policy according to the specific recommendations on Page 1-a-6 of the Report of Examination of the Bank as of April 12, 1993. Such policy and its implementation shall be satisfactory to the Regional Director and the Acting Commissioner as determined at subsequent examinations and/or visitations.

   [.12] 12. Within 60 days from the effective date of this ORDER, the Bank shall correct internal routine and control deficiencies noted on Page 6-c and 6-c-1 of the Report of Examination of the Bank as of April 12, 1993, and shall adopt and implement a policy for the operation of the Bank in such a manner as to provide adequate internal routine and control policies consistent with safe and sound banking practices. Such policy and its implementation shall be satisfactory to the Regional Director and the Acting Commissioner as determined at subsequent examinations and/or visitations.

   [.13] 13. The Bank shall not pay cash dividends without the prior written consent of the Regional Director and the Acting Commissioner.

   [.14] 14. The earlier of the FDIC's approval of a senior lending officer at the Bank or within 90 days from the effective date of this ORDER, the Bank shall designate a fulltime senior officer, who is credit knowledgeable, as the Bank's specific Community Reinvestment Act ("CRA") Officer, and shall advise the Regional Director in writing of the same.

   [.15] 15. The earlier of the FDIC's approval of a senior lending officer at the Bank or within 90 days from the effective date of this ORDER, the Bank shall designate one or more specific full-time senior officer(s) as Compliance Officer(s), and shall advise the Regional Director in writing of the same.

   [.16] 16. Within 30 days from the effective date of this ORDER, the Bank shall designate a specific full-time senior officer as a Bank Secrecy Act Officer, and shall advise the Regional Director in writing of the same.

   [.17] 17. Within 90 days from the effective date of this ORDER, the Bank shall perform a file search of all of the Bank's residential mortgage and mobile home loans, originated since September 3, 1991 and those loans terminated since December 30, 1990, for understatement of Annual Percentage Rate and Finance Charges. The Bank shall provide to the Regional Director evidence that it completed reimbursements to customers pursuant to Section 108(e) of the Truth in Lending Act.

   [.18] 18. Within 120 days from the effective date of this ORDER, the Bank shall perform a survey of all loans secured by improved real estate or a mobile home, notify the borrower(s) of the necessity for flood insurance, procure flood insurance for the duration of such loans as necessary, and include all pertinent documentation in appropriate credit files. Such survey and the implementation of the requirements of Paragraph 18 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.19] 19. Effective the date of this ORDER, the Bank shall cease any and all prescreening activities with respect to loan ap- {{11-30-93 p.C-3423}}activities with respect to loan applications and comply fully with all provisions of Regulation B of the Board of Governors of the Federal Reserve System. Such compliance shall incorporate appropriate training of loan personnel of the Bank as set forth in Paragraph 24 of this ORDER. The Bank's actions as required by Paragraph 19 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.20] 20. Within 120 days from the effective date of this ORDER, the Bank shall review, formally approve and implement a comprehensive written compliance program and policies to guide employees in day-to-day operations. In addition, employees shall be trained in the proper preparation of Truth in Lending disclosures and determination of flood hazard status. Such program and its implementation shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.21] 21. Within 90 days from the effective date of this ORDER, the Bank shall review, formally approve and implement a CRA program that includes goals and objectives for the institution. Such program and its implementation shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.22] 22. Within 30 days from the effective date of this ORDER, the Bank shall ensure that henceforth its considerations of CRA and consumer compliance matters are thoroughly documented in board and committee minutes. The Bank's actions as required by Paragraph 22 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.23] 23. Within 30 days from the effective date of this ORDER, the Bank shall correct all violations found at the December 30, 1992 Compliance Examination and implement procedures to prevent their recurrence. The Bank's actions as required by Paragraph 23 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.24] 24. Within 120 days from the effective date of this ORDER, the Bank shall provide a systematic method of on-going training in compliance and CRA regulations to appropriate personnel, and shall document the training activities for thrift recordkeeping purposes. The Bank's actions as required by Paragraph 24 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.25] 25. Within 90 days from the effective date of this ORDER, the Bank shall provide a system for independently testing its policies, procedures, and practices for compliance with regulations, and shall document testing results in the board minutes. The Bank's actions as required by Paragraph 25 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.26] 26. Within 120 days from the effective date of this ORDER, the Bank shall develop a system to review, analyze and report on the geographic distribution of all credit extensions, renewals, applications and denials so as to derive conclusions as to its lending patterns and practices. The Bank's actions as required by Paragraph 26 shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.27] 27. Within 90 days from the effective date of this ORDER, the Bank shall review and formally approve a reasonable community delineation(s) to ensure conformance with CRA regulations.

   [.28] 28. Within 60 days from the effective date of this ORDER, the Bank shall review, approve and implement a Bank Secrecy Act program in accordance with the minimum provisions of regulations. Such program and its implementation shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.
   29. Within 30 days of the end of the calendar quarter following the effective date of this ORDER, and within thirty days of the end of each calendar quarter thereafter, the Bank shall furnish written progress reports to the Regional Director and the Acting Commissioner detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director and the Acting Commissioner has released the Bank in writing from making further reports.
   The provisions of this ORDER shall be binding upon the Bank, its directors, officers, employees, agents, successors, as- {{11-30-93 p.C-3424}}signs, and other persons participating in the conduct of the affairs of the Bank.
   This ORDER shall become effective ten (10) days from the date of its issuance.
   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 San Francisco, California, this 7th day of September, 1993.
   Pursuant to delegated authority

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