Federal Deposit
Insurance Corporation

{{12-31-96 p.C-3585}}
   [¶10,945] In the Matter of Bay Bank & Trust Co., Panama City, Florida, Docket No. FDIC-93-2202b (2-11-94).

   Bank to cease and desist from such unsafe or unsound practices as operating in violation of applicable laws or regulations; paying excessive or unauthorized compensation, benefits, or bonuses to officers and consultants; transferring assets to institution-affiliated parties at less than fair market value; failing to provide adequate supervision over the Bank's affairs; failing to submit Reports of Condition and Income in accordance with instructions; operating with management whose policies are detrimental to the Bank and jeopardize safety of its deposits. (This order was terminated by order of the FDIC dated 10-15-96. See ¶16,122.)

   [.1] Compensation—Specific Individuals—Audit and Restitution
   [.2] Violations of Law—Eliminate/Correct
   [.3] Officers and Directors—Compliance with State Law Required
   [.4] Officers and Directors—Life Insurance—Report to FDIC
   [.5] Institution-Affiliated Parties—Transactions with—Report Required
   [.6] Consulting Services—Review and Report to FDIC Required
   [.7] Reports of Condition and Income—Amendment Required
   [.8] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

BAY BANK & TRUST CO.
PANAMA CITY,FLORIDA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-93-220b
   Bay Bank & Trust Co., Panama City, Florida ("Bank"), having received a written Notice of Charges and of Hearing detailing unsafe or unsound banking practices and violations of law and regulations alleged to have been committed by the Bank and detailing 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 that right, 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 February 10, 1994 whereby solely for the purpose {{12-31-96 p.C-3586}}of this proceeding and without admitting or denying any of the alleged charges of unsafe or unsound banking practices and violations of law 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 violations of law and regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

   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 law and regulations:
   A. Violating applicable laws and regulations more fully described on pages 11–12 and 17–32 of the Notice of Charges and of Hearing, Docket No. FDIC-93-220b, dated December 3, 1993.
   B. Paying compensation to John Christo, Jr. in regard to consulting and other services allegedly provided to the Bank that is in excess of the reasonable compensation for such services both in relation to the Bank's ability to pay such compensation and in relation to the fair market value of the services rendered or to be rendered to the Bank.
   C. Paying improper bonuses to John Christo, Jr.;
   D. Paying compensation to John Christo, III that is in excess of the reasonable compensation for such services both in relation to the Bank's ability to pay such compensation and in relation to the fair market value of the services rendered or to be rendered to the Bank;
   E. Continuing to employ Franklin L. Wood, Sr. as acting president and chief executive officer of the Bank in violation of section 32 of the Act, 12 U.S.C. § 1831i, and section 658.33(5) of the Florida Financial Institutions Code, Fla. Stat. Ch. 658.33(5)(1992);
   F. Continuing improperly to pay policy loan interest in regard to insurance policies on the life of John Christo, Jr.;
   G. Selling, transferring or otherwise disposing of Bank assets to "institution-affiliated parties" of the Bank at below fair market value;
   H. Paying compensation to Little-Wood Associates in regard to consulting services provided by Franklin L. Wood, Sr. to the Bank that is in excess of the authorized compensation for such services;
   I. Failing to submit Reports of Condition and Income in accordance with prevailing instructions;
   J. 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 banking practices and violations of laws and regulations; and
   K. Operating the Bank with management whose policies and practices are detrimental to the Bank and jeopardize the safety of its deposits.
   IT IS FURTHER ORDERED that the Bank and its successors and assigns take affirmative action as follows:

[.1] 1. (a) Within 30 days from the effective date of this ORDER, the Bank shall prepare and submit to the Regional Director of the FDIC's Atlanta Regional Office ("Regional Director") for review and comment a detailed and reasoned written analysis and explanation of the salary, bonuses, stipends, fees or any other means of compensation paid directly or indirectly to or for the benefit of John Christo, Jr. and John Christo, III by the Bank since January 1, 1993. The written explanation shall describe in particular detail the services provided by John Christo, Jr. and John Christo, III to the Bank and shall describe why such compensation paid by the Bank to John Christo, Jr. and John Christo, III constitutes reasonable compensation for services performed by Messrs. Christo for or on behalf of the Bank, and why such compensation is not excessive both in relation to the Bank's ability to pay such compensation and in relation to the fair market value of the services rendered or to be rendered to the Bank.
   (b) The board of directors shall review the analysis and explanation described in paragraph 1(a) of this ORDER and any comment provided thereon by the Regional Director at the board's next meeting after receipt of such comment, and shall determine, as a result of such review, whether the salary, bonuses, stipends, fees or any other means of compensation {{4-30-94 p.C-3587}}paid directly or indirectly to or for the benefit of John Christo, Jr. and John Christo, III by the Bank since January 1, 1993, have exceeded reasonable compensation for services performed by Messrs. Christo for the Bank. A written record of such board of directors' review and determination under this paragraph 1(b) of the ORDER shall be reflected in the board of directors' minutes.
   (c) Should the board of directors determine, as a result of the review and analysis described in paragraph 1(b) of this ORDER, that the salary, bonuses, stipends, fees or any other means of compensation paid directly or indirectly to or for the benefit of John Christo, Jr. or John Christo, III by the Bank since January 1, 1993, have exceeded reasonable compensation for services performed by John Christo, Jr. and/or John Christo, III for the Bank, the Bank shall immediately recover such excessive compensation from John Christo, Jr. and/or John Christo, III.

   [.3] 3. Effective the date of this ORDER, the Bank shall insure that all executive officers and directors of the Bank are serving in full compliance with all applicable Federal and state laws and regulations, including but not limited to section 32 of the Act, 1831i, and section 658.33(5) of the Florida Financial Institutions Code, Fla. Stat. Ch. 658.33(5)(1992).

[.4] 4. (a) Within 60 days from the effective date of this ORDER, the board of directors of the Bank shall prepare and submit to the Regional Director for review and comment a written explanation of and accounting and justification for all policy premiums and policy loan interest paid by the Bank as of and subsequent to January 1, 1988, for or in regard to any life insurance policies maintained on the life of John Christo, Jr.
   (b) The board of directors shall review the explanation, accounting and justification described in paragraph 4(a) of this ORDER, and any comment provided thereon by the Regional Director, at the board's next meeting after receipt of such comment, and shall determine, as a result of such review, whether the policy premiums and/or the policy loan interest paid by the Bank as of and subsequent to January 1, 1988, for or in regard to any life insurance policies maintained on the life of John Christo, Jr., constituted payment of legitimate expenses for goods, products or services benefitting the Bank. A written record of such board of directors' review and determination under this paragraph 4(b) of the ORDER shall be reflected in the board of directors' minutes.
   (c) Should the board of directors determine, as a result of the review and analysis described in paragraph 4(b) of this ORDER, that any or all of the policy premiums and/or policy loan interest paid by the Bank as of and subsequent to January 1, 1988, for or in regard to any life insurance policies maintained on the life of John Christo, Jr., did not constitute payment of legitimate expenses for goods, products or services benefitting the Bank, the Bank shall immediately recover such improper life insurance premium and/or policy loan interest payments, and prevent such improper payments in the future.

[.5] 5. (a) Within 30 days from the effective date of this ORDER, the Bank shall prepare and submit to the Regional Director for review and comment a written explanation of and accounting and justification for all assets of the Bank which have been sold, transferred or otherwise conveyed to any "institution-affiliated party" of the Bank, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), on and after January 1, 1993.
   (b) The board of directors shall review the explanation, accounting and justification described in paragraph 5(a) of this ORDER, and any comment thereon provided by the Regional Director, at the board's next meeting after receipt of such comment, and shall determine, as a result of such review, whether the Bank has received less than fair market value for any assets of the Bank which have been sold, {{4-30-94 p.C-3588}}transferred or otherwise conveyed to any institution-affiliated party of the Bank on or after January 1, 1993. A written record of such board of directors' review and determination under this paragraph 5(b) of the ORDER shall be reflected in the board of directors' minutes.
   (c) Should the board of directors determine, as a result of the review and analysis described in paragraph 5(b) of this ORDER, that the Bank has received less than fair market value for any assets of the Bank which have been sold, transferred or otherwise conveyed to any institution-affiliated party of the Bank on or after January 1, 1993, the Bank shall immediately recover the full fair market value of such assets, and prevent future sales, transfers, or conveyances of Bank assets to any of its institution-affiliated parties at less than fair market value.

[.7] 7. (a) Within 30 days from the effective date of this ORDER, the Bank shall review all Consolidated Reports of Condition and Income filed with the FDIC on and after September 30, 1992, and shall amend said reports, if necessary, to reflect properly and accurately the financial condition of the Bank as of the date of each such report. In particular, each Consolidated Report of Condition and Income subject to this paragraph 7 shall be amended to fully and accurately reflect all extensions of credit adversely classified "Loss" by either the FDIC or the Florida Department of Banking and Finance in any applicable Report of Examination of the Bank and also reflect an appropriate loan and lease loss expense.
   (b) Effective the date of this ORDER, the Bank shall prepare and file all Reports of Condition and Income in full compliance with the instructions for the preparation of such reports and in accordance with the requirements of Part 325 of the FDIC's Rules and Regulations, 12 C.F.R. Part 325.