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FDIC Enforcement Decisions and Orders

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{{10-31-94 p.C-3744}}
   [11,030] In the Matter of American State Bank, Tulsa, Oklahoma, Docket No. FDIC-94-112b (8-26-94).

   Bank to cease and desist from such unsafe or unsound practices as operating in violation of consumer laws and/or regulations, and failing to provide adequate supervision over the Bank's affairs. (This order was terminated by order of the FDIC dated 11-5-98; see ¶16,206)

[.1] Violations of Law—Eliminate/Correct
[.2] Bank Secrecy Act—Compliance Program
[.3] Consumer Laws—Compliance Program
[.4] Loan Applicants—Notice of Adverse Actions
[.5] Data Collection—Home Purchase Loan Applications
[.6] Community Reinvestment Act—Community Delineation Required
[.7] Community Reinvestment Act—Written Policy Required
[.8] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

AMERICAN STATE BANK
TULSA, OKLAHOMA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-94-112b

   American State Bank, Tulsa, Oklahoma ("Bank"), through its board of directors, having been advised of its right to the issuance and service of 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) 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 August 26, 1994, whereby, solely for the purpose of this proceeding and without admitting or de- {{10-31-94 p.C-3745}}nying 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 violations of laws 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 cease and desist from the following unsafe or unsound banking practices and violations of laws and/or regulations:
   (a) Engaging in violations of applicable consumer laws and/or regulations; and
   (b) Failing to provide adequate supervision and direction over the Bank's compliance program to prevent violations of consumer laws and/or regulations.
IT IS FURTHER ORDERED, that the Bank take affirmative action as follows:

   [.1] 1. After the effective date of this ORDER, the Bank, consistent with sound banking practices, shall, to the extent possible, eliminate and/or correct all violations of laws and regulations existing in the Bank as more fully set forth on pages 2 through 2-a-6 and page 3 of the February 9, 1994 Compliance Report. In addition, the Bank shall ensure its future compliance with all applicable laws and regulations.

       [.2] 2. (a) Within 60 days after the effective date of this ORDER, the Bank shall revise and implement the Bank Secrecy Act program as required by section 326.8 of the FDIC Rules and Regulations, 12 C.F.R. § 326.8.
       (b) Within 60 days after the effective date of this ORDER, the Bank shall develop and implement procedures to comply with section 103.22 and 103.29 of the Department of the Treasury Regulations, 31 C.F.R. §§ 103.22 and 103.29, including, but not limited to, ensuring all required information is submitted on Currency Transaction Reports (Form 4789); all required information is maintained on the chronological logs of transactions, and customers are properly exempted.

    [.3] 3. (a) Within 60 days after the effective date of this ORDER, the Bank shall develop and implement a written compliance program which, at a minimum, shall expressly provide for:

         (i) Comprehensive training in consumer laws conducted at least once a year for all Bank employees whose duties and responsibilities include the need to comply with consumer laws and regulations;
         (ii) Procedures for monitoring the Bank's compliance with consumer laws, including an internal audit of the Bank's compliance program to be performed or supervised by the compliance officer each calendar quarter. The compliance officer shall report the results of said audit to the Bank's board of directors, and the Bank's board of directors shall record the results of said audit and any recommendations by the compliance officer and/or the board of directors in the board of directors' minutes of the meeting;
       (b) The board of directors shall approve the revisions to the written compliance program and/or any subsequent modification thereto, which approval shall be recorded in the minutes of the board of directors. Thereafter, the Bank and its successors and assigns shall follow the written compliance program and/or any subsequent modification thereto.

   [.4] 4. Within 60 days after the effective date of this ORDER, the Bank shall develop and implement procedures to ensure compliance with regulations governing loan applicants and notifications to customers against whom adverse action is taken. These procedures shall include:
       (a) Procedures to ensure that the Bank complies with section 202.5 of Regulation B of the Board of Governors of the Federal Reserve System ("Regulation B"), 12 C.F.R. § 202.5, concerning the taking of applications for extensions of credit including, but not limited to, section 202.5(d) of Regulation B, 12 C.F.R. § 202.5(d), which provides that creditors shall not request the sex, race, color, religion, or national origin of an applicant, except as required for monitoring purposes.
       (b) Procedures to ensure that the Bank notifies a loan applicant against whom adverse action has been taken, of ONLY the {{10-31-94 p.C-3746}}specific reason(s) for that action as required by section 202.9(a)(2) of Regulation B, 12 C.F.R. § 202.9(a)(2).

   [.5] 5. Within 60 days after the effective date of this ORDER, the Bank shall develop and implement procedures for requesting and retaining data on home purchase loan applicants as required by section 338.7 of the FDIC Rules and Regulations, 12 C.F.R. § 338.7.
   6. Within 60 days after the effective date of this ORDER, the Bank shall develop and implement procedures for collecting and recording data on applications for, and originations and purchases of, home purchase loans (including refinancing) and home improvement loans as required by section 203.4 of Regulation C of the Board of Governors of the Federal Reserve System ("Regulation C"), 12 C.F.R. § 203.4.

    [.6] 7. (a) Within 60 days after the effective date of this ORDER, the Bank shall implement procedures to comply with Part 345 of the FDIC Rules and Regulations, 12 C.F.R. Part 345. These procedures shall include:
         (i) Adopt a delineated community for the Harvard Hills Branch and adopt a more reasonable delineation for the Medical Center Branch as required by section 345.3(a) of the FDIC Rules and Regulations, 12 C.F.R. § 345.3(a); and
         (ii) Adopt a Community Reinvestment Act ("CRA") Statement for the Harvard Hills Branch as required by section 345.4(a) of the FDIC Rules and Regulations, 12 C.F.R. § 345.4(a).

[.7] 8. (a) Within 60 days after the effective date of this ORDER, the Bank shall adopt a written CRA policy which:
       (i) Provides for CRA goals and objectives and employee training;
       (ii) Provides a methodology for periodic self-assessment of the Bank's CRA performance;
       (iii) Ensures that an ongoing analysis and ascertainment of the credit and credit-related service needs of the community takes place pursuant to the terms and provisions of the Community Reinvestment Act, 12 U.S.C. §§ 2901-2907, and Part 345 of the FDIC Rules and Regulations, 12 C.F.R. Part 345;
       (iv) Provides for a periodic review of the Bank's community delineations;
       (v) Provides for a routine review of the geographic distribution of the Bank's loan applications, extensions of credit, and credit denials; and
       (vi) Provides for a review of the impact of lending policies and practices on the delineated communities.
       (b) Such a policy should also include:
       (i) A provision providing for the oversight and involvement of the board of directors in the CRA process. The board of directors's minutes shall document all discussion and review of the Bank's CRA-related activity;
       (ii) A formal strategy designed to inform the community of the Bank's available credit products;
       (iii) Internal review of advertising efforts to ensure all areas of the delineated community are made aware of the Bank's credit services and deposit products;
       (iv) A formal strategy to effectively ascertain community credit needs by direct contact with various community members. Outreach with groups representing low-or moderate-income groups should be in proportion to their percentage of the total population. The results of such contacts should be documented;
       (v) Development of a system to geographically analyze the distribution of credit applications, denials, and loans. The results of this analysis should be reviewed by the board of directors and incorporated into the CRA process.
       (vi) Implementation of policies, procedures, and training to ensure that the Bank does not discriminate in the granting of credit. The policies, procedures, and training should be reviewed by the board of directors; and
       (vii) A more active role by the board of directors in supporting and development or implementation of specific projects promoting economic revitalization and growth. Board involvement should include establishing a working relationship with government and private sector representatives to identify opportunities for the Bank's involvement in addressing community development needs.

    [.8] 9. (a) 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 {{3-31-96 p.C-3747}}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 Unit, 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.
       (b) Within 30 days after the end of the first calendar quarter following the effective date of this ORDER, and within 30 days after the end of each successive calendar quarter, 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. 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. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director has released the Bank in writing from making additional reports.
       The effective date of this ORDER shall be 10 days after the date of its issuance.
   The provisions of this ORDER shall be binding upon the Bank and its institution-affiliated parties.
   The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provision of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   Dated at Dallas, Texas, this 26th day of August, 1994.
   Pursuant to delegated authority.

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