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{{7-31-94 p.C-3665}}
   [10,990] In the Matter of Bank of Coffey, Coffey, Missouri, Docket No. FDIC-94-55b, 5-27-94.

   Bank to cease and desist from such unsafe or unsound practices as committing violations of consumer laws and the Community Reinvestment Act; and failing to provide adequate supervision over the Bank's compliance and CRA programs.

{{7-31-94 p.C-3666}}
   [.1] Community Reinvestment Act—Compliance Officer Required
   [.2] Violations of Law—Eliminate/Correct
   [.3] Consumer Laws—Compliance Program—Minimum Requirements
   [.4] Insurance—Flood Insurance—Review and Notification to Borrowers
   [.5] Interest—Rates Charged Male and Female Borrowers—Review and Restitution Required
   [.6] Community Reinvestment Act—Compliance Program—Minimum Requirements
   [.7] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

BANK OF COFFEY
COFFEY, MISSOURI
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-94-55b

   Bank of Coffey, Coffey, Missouri ("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 such alleged charges under section 8(b) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b), 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 May 6, 1994, whereby solely for the purpose of this proceeding and without admitting or denying any unsafe or unsound banking practices or 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 violated laws and/or regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

DEFINITIONS

   1. "CRA" means the Community Reinvestment Act of 1977, 12 U.S.C. §§ 2901–2907, and its implementing regulations, 12 C.F.R. Part 345.
   2. "Consumer laws" means: (i) the laws and regulations, other than the CRA, referenced in Parts I, II, and III of the FDIC Compliance Examination Manual, including those referred to in the FDIC's Compliance Report of the Bank as of July 9, 1993, ("Report"); and (ii) the Truth in Savings Act and its implementing regulations, 12 C.F.R. Part 230.
   3. "Compliance program" means a written program as described in Appendix G of the FDIC Compliance Examination Manual, including a consciously planned and organized effort to meet the Bank's compliance responsibilities regarding consumer laws in a comprehensive manner on an ongoing basis.
   4. "Closed-end credit" means the same as the definition in 12 C.F.R. § 226.2(a)(10).
   5. "Consumer credit" means the same as the definition in 12 C.F.R. § 226.2(a)(12).
   6. "Federally-related mortgage loan" means the same as the definition in 24 C.F.R. § 3500.2(a)(3).
   7. "Residential mortgage transaction" means the same as the definition in 12 C.F.R. § 226.2(a)(24).
   8. "RESPA" means the same as the definition in 24 C.F.R. § 3500.2(a)(12).

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED, that the Bank, its institution-affiliated parties, as that 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 and unsound banking practices and violations of law and/or regulations:
   A. committing violations of applicable consumer laws;
   B. committing violations of the CRA; and
   C. failing to provide adequate supervision and direction over the Bank's compliance and CRA programs to prevent violations of consumer laws and the CRA.
   IT IS FURTHER ORDERED, that the {{7-31-94 p.C-3667}}Bank, its institution-affiliated parties, and its successors and assigns, take affirmative action as follows:

    [.1] 1. (a) No more than 60 days from the effective date of this ORDER, the Bank shall have and thereafter retain a qualified compliance officer who shall be given stated written authority by the Bank's board of directors to implement and supervise the Bank's CRA and compliance programs, including but not limited to, providing adequate training for the Bank's directors and employees in the CRA and all consumer laws, and establishing controls and procedures to prevent violations of the CRA and consumer laws. The compliance officer shall report directly to the board of directors.
       (b) The Bank shall promptly notify the Regional Director of the FDIC's Kansas City Regional Office ("Regional Director") of the identity of the compliance officer. If the compliance officer is to be added as a director or a senior executive officer of the Bank, the Bank shall comply with the requirements of section 32 of the Act, 12 U.S.C. § 1831i, and section 303.14 of the FDIC Rules and Regulations, 12 C.F.R. § 303.14, prior to the addition of the compliance officer to such position.
       (c) Each calendar quarter, the compliance officer shall perform, or supervise the performance of, an internal audit of the Bank's CRA and consumer laws compliance programs, and shall report the results of the audit to the Bank's board of directors. The Bank's board of directors shall record the results of said audit and any recommendation by the compliance officer and/or the board in the board's minutes.
       (d) The assessment of whether the Bank has a qualified compliance officer shall be based upon the officer's conduct with respect to the Bank in: (i) complying with the requirements of this ORDER; and (ii) complying with applicable consumer laws and the CRA.

    [.2] 2. (a) Except for violations of the following regulations, no more than 60 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of the CRA and consumer laws committed by the Bank as described on pages 2 through 2-a-10 of the Report:

         (1) Equal Credit Opportunity.
           (i) 12 C.F.R. § 202.5(e); and
           (ii) 12 C.F.R. § 202.12(b)(1).
         (2) Truth in Lending. 12 C.F.R. § 226.19(a)(1).
         (3) Truth in Savings. 12 C.F.R. § 230.8(b).
         (4) Real Estate Settlement Procedures.
           (i) 24 C.F.R. § 3500.6(a);
           (ii) 24 C.F.R. § 3500.7(a);
           (iii) 24 C.F.R. § 3500.7(e);
           (iv) 24 C.F.R. § 3500.8(a); and
           (v) 24 C.F.R. § 3500.21(b) and 3500.21(d).
         (5) Fair Housing. 12 C.F.R. § 338.7 (a)(1)(ii).
       (b) For purposes of this ORDER, the violations of the following regulations, described on pages 2 through 2-a-10 of the Report, shall be considered corrected if the Bank provides each borrower identified in the Report with an accurate disclosure within the time prescribed in paragraph 2(a) of this ORDER:
         (1) Equal Credit Opportunity. 12 C.F.R. § 202.9(a)(2).
         (2) Truth in Lending.
           (i) 12 C.F.R. § 226.17(a);
           (ii) 12 C.F.R. § 226.17(c);
           (iii) 12 C.F.R. § 226.18(c);
           (iv) 12 C.F.R. § 226.18(e), in accordance with 12 C.F.R. § 226.22(a);
           (v) 12 C.F.R. § 226.18(i);
           (vi) 12 C.F.R. § 226.18(m); and
           (vii) 12 C.F.R. § 226.23(b).
         (3) Expedited Funds Availability. 12 C.F.R. § 229.17.
         (4) Truth in Savings. 12 C.F.R. § 230.4(a)(1), including a disclosure in accordance with 12 C.F.R. § 230.3(a).
       (c) For purposes of this ORDER, the violation of 12 C.F.R. § 226.18(d), described on page 2 of the Report, shall be considered corrected if, within the time prescribed in paragraph 2(a) of this ORDER:
         (i) the Bank provides each borrower with a written disclosure of the cost of the insurance and of the fact that the {{7-31-94 p.C-3668}}insurance is not required by the Bank in order to retain the extension of credit; and
         (ii) after receiving the disclosure prescribed in paragraph 2(c)(i): (A) the borrower provides a written affirmative request that the insurance be continued, in which case the insurance shall be continued; or (B) if within 20 days after receiving the disclosure the borrower does not request in writing that the insurance be continued, the Bank shall cancel said insurance and refund the entire amount of insurance premium paid by the borrower.

    [.3] 3. (a) No more than 60 days from the effective date of this ORDER, the Bank shall develop and submit to the Regional Director a compliance program which, at a minimum, shall expressly provide for:
         (i) adequate training in consumer laws conducted at least once every 12 calendar months for all Bank employees involved in lending, and for any others, including directors, whose duties and responsibilities include the need to be knowledgeable of consumer laws;
         (ii) adequate procedures for monitoring the Bank's compliance with consumer laws including, but not limited to, the following that:
           (A) quarterly internal audits performed or supervised by the compliance officer in accordance with paragraph 1(c) of this ORDER;
           (B) on each closed-end credit transaction:
             (1) the Truth in Lending disclosures are made in accordance with 12 C.F.R. § 226.17(a);
             (2) required disclosures accurately reflect the terms of the legal obligation between the parties in accordance with 12 C.F.R. § 226.17(c);
             (3) the accurate itemization and disclosure of the amount financed is made in accordance with 12 C.F.R. § 226.18(c)(1) or § 226.18(c)(2);
             (4) the accurate calculation and disclosure of the annual percentage rate is made in accordance with 12 C.F.R. §§ 226.18(e) and 226.22;
             (5) which by its terms is payable on demand, the Bank makes the disclosures in accordance with 12 C.F.R. §§ 226.17(c)(5) and 226.18(i);
             (6) in which the Bank has or will acquire a security interest in property purchased as part of the transaction or in other property identified by item or type, the Bank complies with 12 C.F.R. § 226.18(m); and
             (7) in which the Bank has or will acquire a security interest in a consumer's principal dwelling which is subject to rescission under 12 C.F.R. § 226.23, the Bank makes the disclosures in accordance with 12 C.F.R. § 226.23(b);
           (C) premiums for credit life, accident, health, or loss-of-income insurance may be excluded from the finance charge only in accordance with 12 C.F.R. § 226.5(d)(1);
           (D) to each applicant for a federally-related mortgage loan or a residential mortgage transaction subject to RESPA, the Bank makes the disclosures in accordance with 12 C.F.R. § 226.19 and 24 C.F.R. §§ 3500.6(a) and 3500.7(a);
           (E) on each federally-related mortgage loan in which the Bank is the settlement agent as defined in 24 C.F.R. § 3500.2(a)(15), the Bank uses the "HUD-1" Uniform Settlement Statement in accordance with 24 C.F.R. §§ 3500.8(a), 3500.8(b) and 3500.10(b);
           (F) with respect to each application for a federally-related mortgage loan, when the Bank requires: (1) the use of a particular provider of a settlement service, and (2) any portion of the cost of the settlement service is paid by the borrower, the Bank complies with 24 C.F.R. § 3500.7(e);
           (G) with respect to each application for a federally-related mortgage loan, the Bank makes the disclosures in accordance with 24 C.F.R. §§ 3500.21(b) and 3500.21(d), 56 Fed. Reg. 19,506, 19,508 and 19,509 (1991) (to be codified at 24 C.F.R. §§ 3500.21(b) and 3500.21(d)), implementing 12 U.S.C. § 2605(a);
           (H) for any loan defined in 12 C.F.R. § 339.2(b), the Bank complies {{7-31-94 p.C-3669}}with the record keeping requirements prescribed in 12 C.F.R. § 339.5;
           (I) with respect to making, increasing, extending, or renewing any loan defined in 12 C.F.R. § 339.2(b), the Bank complies with 12 C.F.R. § 339.6;
           (J) with respect to loans secured by improved real estate or a mobile home located in a flood hazard area in which flood insurance is available, no such loan is made, increased, extended, or renewed unless the property securing the loan is covered by flood insurance in accordance with 12 C.F.R. § 339.3;
           (K) in accordance with 12 C.F.R. § 329.2, no interest is paid, directly or indirectly, on demand deposits;
           (L) for each application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, the Bank takes a written application in accordance with 12 C.F.R. §§ 202.5(e) and 202.13;
           (M) when adverse action is taken on a credit application, the Bank notifies the applicant(s) in accordance with 12 C.F.R. § 202.9(a);
           (N) the Bank retains records in accordance with 12 C.F.R. § 202.12(b);
           (O) the Bank extends credit in accordance with the anti-discrimination requirements of 12 C.F.R. § 202.4;
           (P) the Bank requests and retains information on applicants for a home purchase loan as defined in 12 C.F.R. § 338.6(e), in accordance with 12 C.F.R. § 338.7(a);
           (Q) the Bank makes the disclosures to potential depositors in accordance with 12 C.F.R. § 229.17(a);
           (R) the Bank maintains records in accordance with 31 C.F.R. §§ 103.22(f) and 103.34(b)(12);
           (S) before a deposit account is opened or a service is provided, whichever is earlier, the Bank makes the disclosures in accordance with 12 C.F.R. §§ 230.3(a), 230.3(b) and 230.4(a)(1);
           (T) Bank advertisements of deposit accounts are in accordance with 12 C.F.R. § 230.8(b); and
           (U) the Bank complies with the Bank Secrecy Act, 31 U.S.C. §§ 5311–5327, and 31 C.F.R. Part 103, in accordance with 12 C.F.R. § 326.8.
       (b) The compliance program shall be submitted to the Regional Director for review and comment within the time period prescribed in paragraph 3(a) of this ORDER. Thereafter, any modification to the compliance program shall be submitted to the Regional Director immediately upon completion of a final draft but before adoption of the modification by the board of directors. No more than 15 days from the receipt of any comment by the Regional Director, the board of directors of the Bank shall approve the compliance program and any subsequent modification to it, which approval shall be recorded in the minutes of the board of directors. Thereafter, the Bank and its institution-affiliated parties shall follow the compliance program and/or any subsequent modification thereto.

    [.4] 4. (a) Within 90 days of the effective date of this ORDER, the Bank shall:

           (i) (A) identify, by name and address of the borrower(s), each currently outstanding loan made, increased, extended or renewed by the Bank since January 22, 1992, which is secured by improved real estate or a mobile home located in a flood hazard area in which flood insurance is available, but which is not covered by flood insurance; and,
           (B) at the next regular meeting of the board of directors after preparation of the list, record the loans so identified in the board of director's minutes;
         (ii) notify each borrower identified: (A) that flood insurance required by 12 C.F.R. § 339.3 must be purchased; (B) of the dollar amount of flood insurance required to comply with 12 C.F.R. § 339.3 and the dollar amount of the premiums for such insurance; and (C) that, if the borrower fails to purchase such insurance upon notification, the {{7-31-94 p.C-3670}}Bank will purchase the required flood insurance, will list the borrower as the named insured and the Bank as the mortgagee, and will include the insurance premium in the amount of the subject loan;
         (iii) if a borrower fails to purchase flood insurance upon notification by the Bank, purchase the insurance in accordance with item 4(a)(ii)(C); and
         (iv) retain in the appropriate Bank record of each loan a copy of the notification to the borrower and the applicable insurance policy.
       (b) With respect to property covered by item 4(a)(i)(A), the Bank shall not release its lien on any such property unless:
         (i) the loan for which the property serves as collateral has been paid in full; or
         (ii) the Bank simultaneously obtains substitute collateral of substantially similar value and complies with 12 C.F.R. Part 339.

    [.5] 5. (a) No more than 90 days from the effective date of this ORDER, with respect to each loan made, increased, extended, or renewed ("each loan made") since January 22, 1992, the Bank shall develop and submit to the Regional Director a written plan for the reimbursement of each female borrower charged more interest than any male borrower for a loan of the same type and Bank risk code ("reimbursement plan"). The reimbursement plan shall include, at a minimum:
         (i) a search of Bank records and the identification of each loan made to a female borrower and each loan made to a male borrower since January 22, 1992;
         (ii) with respect to each loan identified under paragraph 5(a)(i) of this ORDER:
           (A) a separate list by name and mailing address, loan type, Bank risk code, and interest rate of (1) each loan made to a female borrower and (2) each loan made to a male borrower since January 22, 1992;
           (B) an analysis and comparison of the terms and interest rate for each loan listed pursuant to paragraph 5(a) (ii)(A);
           (C) for each loan listed pursuant to paragraph 5(a)(ii)(A), an appropriate procedure for identifying by each female's name and mailing address, and loan number, each loan on which the interest rate charged was higher than on any loan of the same type and Bank risk code to a male borrower; and
           (D) the actual identification by the female's name and mailing address, and loan number, for each loan on which the interest rate charged was higher than any loan of the same type and Bank risk code to a male borrower; and
           (iii) the dollar amount to be reimbursed to each female borrower identified in paragraph 5(a)(ii)(D), which reimbursement shall be at least:
             (A) the difference in the dollar amount of interest charged to any female borrower and the dollar amount of interest charged to any male borrower with a loan of the same type and Bank risk code as the female borrower; and
             (B) the time value of money resulting from the difference in the interest charged.
       (b) The reimbursement plan shall be submitted to the Regional Director for review and comment within the time period prescribed in paragraph 5(a) of this ORDER. Thereafter, any modification to the reimbursement plan shall be submitted to the Regional Director immediately upon completion of a final draft, but before adoption of the modification by the board of directors. No more than 15 days from the date of receipt of any comment by the Regional Director, the board of directors shall approve the reimbursement plan and any subsequent modification to it, which approval shall be recorded in the minutes of the board of directors. Within 10 days after approving the reimbursement plan or any modification to it, the Bank shall follow the reimbursement plan and reimburse each female borrower identified therein by mailing a check for the appropriate dollar amount to the female borrower or by making an immediately available deposit on her behalf. In addition, with respect to any loan to a female borrower identified and listed pursuant to paragraph 5(a)(ii)(D) of this ORDER which is outstanding as of the effective date of this ORDER, the Bank shall lower the interest {{8-31-94 p.C-3671}}rate on the loan to the rate in effect on any comparable loan to male borrower of the same loan type and Bank risk code, and maintain that rate for so long as the loan is outstanding. If, by its terms, an outstanding loan provides for a variable interest rate, once the interest rate is lowered to the interest rate on comparable loan(s) to a male borrower, the interest rate may be maintained according to the loan's variable interest rate terms.

    [.6] 6. (a) No more than 60 days from the effective date of this ORDER, the Bank shall develop and submit to the Regional Director a written CRA program which shall include, at a minimum:

         (i) adequate training for the Bank's directors and employees in the CRA;
         (ii) controls and procedures to ensure compliance with the requirements of 12 C.F.R. §§ 345.4 and 345.6;
         (iii) goals, objectives and a methodology for self-assessment in accordance with Assessment Factor C for institutions with a CRA rating of "Satisfactory" of the "Uniform Interagency Community Reinvestment Act Final Guidelines for Disclosure of Written Evaluations and Revised Assessment Rating System," ("Guidelines") 55 Fed. Reg. 18,163 at 18,168 and 18,170 and 55 Fed. Reg. 27,545 (1990);
         (iv) provisions for an ongoing analysis, ascertainment and documentation of the credit and credit-related service needs of the community, including active communication with members of the community, in accordance with Assessment Factor A for institutions with a CRA rating of "Satisfactory" of the Guidelines, 55 Fed. Reg. at 18,168 and 18,170, and the documentation requirements of the Federal Deposit Insurance Corporation Financial Institutions Letter, FIL-53-92, regarding CRA Record-keeping and Documentation, (July 17, 1992) ("FIL-53-92");
         (v) provisions for marketing and advertising programs which inform the local community about the Bank's credit services, and for maintenance of records of the Bank's efforts to inform the local community of its willingness to help meet their credit needs, in accordance with Assessment Factor B for institutions with a CRA rating of "Satisfactory" of the Guidelines, 55 Fed. Reg. at 18,168 and 18,172, and FIL-53-92;
         (vi) provisions for aiding in the development and redevelopment of the local community through expanded use and funding of local, state or federally sponsored lending programs in accordance with Assessment Factor J for institutions with a CRA rating of "Satisfactory" of the Guidelines, 55 Fed. Reg. at 18,168 and 18,172;
         (vii) provisions for periodic review of the Bank's current community delineation and for maintenance of documents which establish a reasonable basis for the delineation, in accordance with the Guidelines' Reasonableness of Delineated Community for institutions with a CRA rating of "Satisfactory," 55 Fed. Reg. at 18,168 and 18,173, and FIL-53-92; and
         (viii) provisions for periodic review and documentation of the geographic distribution of the Bank's loan applications, extensions of credit, and credit denials in accordance with Assessment Factor E for institutions with a CRA rating of "Satisfactory" of the Guidelines, 55 Fed. Reg. at 18,173, and the Federal Financial Institutions Examination Council Community Reinvestment Act Policy Statement on Analyses of Geographic Distribution of Lending, reprinted in 2 Federal Deposit Insurance Corporation Law, Regulations, and Related Acts (FDIC) 5339 (Feb. 14, 1992), and FIL-53-92.
       (b) The written CRA program shall be submitted to the Regional Director for review and comment within the time period prescribed in paragraph 6(a) of this ORDER. Thereafter, any modification to the CRA program shall be submitted to the Regional Director immediately upon completion of a final draft, but before adoption of the modification by the board of directors. No more than 15 days from the date of receipt of any comment by the Regional Director, the board of directors shall approve the program and any subsequent modifications thereto, which approval shall be recorded in the minutes of the board of directors. Thereafter, the Bank and its institution-affiliated parties shall {{8-31-94 p.C-3672}} follow the written CRA program and/or any subsequent modification thereto.
   [.7]7. Following the effective date of this ORDER, the Bank shall send to its shareholders a description of this ORDER, (A) in conjunction with the Bank's next shareholder communication, and also (B) in conjunction with its notice or proxy statement preceding the Bank's next shareholder meeting. The description shall fully describe the ORDER in all material respects. The description and any accompanying communication, statement, or notice shall be sent to the FDIC, Registration and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429-9990, for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice, or statement.
   8. The Bank shall furnish written progress reports to the Regional Director detailing the form and manner of any action taken to secure compliance with this ORDER and the results thereof every 90 days, beginning 90 days from the effective date of this ORDER. In addition, the Bank shall furnish such reports on request of the Regional Director. 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 board meeting.
   This ORDER shall become effective 10 days from the date of its issuance.
   The provisions of this ORDER shall be binding upon the Bank and its institution-affiliated parties, successors and assigns.
   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 this 27th day of May, 1994.
   Pursuant to delegated authority.

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