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FDIC Enforcement Decisions and Orders
{{5-31-05 p.C-4607}}
A cease and desist order was issued, based on findings by the FDIC that it had reason to believe that respondent had engaged in unsafe and unsound practices. (This order was terminated by order of the FDIC dated 3-23-05; see ¶
[.1] ManagementQualifications Specified
In the Matter of
IT IS ORDERED, that the Bank and institution-affiliated parties of the Bank cease and desist from the following unsafe or unsound banking practices:
[.1] 1. The Bank shall have and retain qualified management. Each member of management shall possess qualifications and experience commensurate with his or her duties and responsibilities at the Bank. The qualifications of management personnel shall be evaluated on their ability to:
(b) operate the Bank in a safe and sound manner; (c) comply with applicable laws and regulations; (d) comply with the existing Bank policies; and (e) restore all aspects of the Bank to a safe and sound condition, capital adequacy, earnings, management effectiveness, and funds management. During the life of the ORDER, the Bank shall notify the Regional Director of the FDIC's Dallas Regional Office, Dallas, Texas ("Regional Director") and the Bank Commissioner for the State of Oklahoma ("Commissioner"), in writing of any changes in management. The notification must include the name(s) and background(s) of any replacement personnel and must be provided prior to the individual(s) assuming the new position(s).
(ii) realistic and comprehensive budgets; (iii) a budget review process to monitor the income and expenses of the Bank to compare actual figures with budgetary projections; and (iv) a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components.
[.3] 3. (a) After the effective date of this ORDER, the Bank, consistent with sound banking practices, shall eliminate and/or correct all violations of laws and/or regulations existing in the Bank as of March 30, 1998, as more fully set forth on pages 31 through 50 of the March 30, 1998, Report of Examination. In addition, the Bank shall ensure its future compliance with all applicable laws and regulations.
[.4] 4. Within 120 days of the effective date of this ORDER, the Board shall consider and act to establish a formal written corporate strategy for the bank. It is suggested that the plan be as comprehensive as appropriate to direct the activities of management to achieve stated defined goals. Consideration should be afforded to establishing clear goals for capital maintenance, earnings and other recommendations as detailed in the Report.
(b) An operating plan for the next 12 to 18 months to accomplish the short-term goals; and (c) Specify the long-term corporate goals of the Bank with consideration accorded growth, organizational structure, capital maintenance, profitability, and service to the community. [.5] 5. After the effective date of this ORDER, and for so long thereafter as this ORDER is outstanding, the Bank shall maintain adjusted Tier 1 capital equal to or greater than 6 percent of its adjusted total assets. [.6] 6. While this ORDER is in effect, the Bank shall neither declare nor pay in any manner whatsoever, directly or indirectly, any dividend, cash or otherwise, to shareholders without the prior written consent of the Regional Director and the Commissioner.
[.7] 7. Within 30 days after the effective date of this ORDER, the Board shall establish an Asset/Liability Management Committee to identify, measure, monitor, control interest rate risk, and effect periodic reporting to the board of directors. The committee shall initiate the following actions:
(b) Maintain a measurement system that identifies, measures, and monitors IRR; and, (c) Establish effective internal interest rate risk controls. [.8] 9. Within 90 days of the effective date of this Order, the board of directors shall review and revise as appropriate the entire of body of formal policies under which the bank operates. The specific policies to evaluate include those directed to provide guidance {{11-30-98 p.C-4610}}to the essential bank functions of loans, investments, funds management, regulatory compliance, and internal controls. Consideration should be afforded to the recommendations for policy amendment as detailed in the Report of Examination dated March 30, 1998. The adequacy of the policies will be reviewed at future regulatory examinations or visitations of the Bank. [.9] 10. Within 60 days of the effective date of this ORDER, the Bank shall review and improve as warranted the methodology employed by the Bank to determine that the level of allowance for loan and lease losses accurately depicts the loss exposure within the loan portfolio. The methodology shall require that prior to the end of each calendar quarter, the board of directors of the Bank shall review the adequacy of the Bank's allowance for loan and lease losses. Such reviews shall include, at a minimum, the Bank's loan loss experience, an estimate of the potential loss exposure in the portfolio, trends of delinquent and nonaccrual loans, and prevailing and prospective economic conditions within the trade area. The minutes of the board meetings at which such reviews are undertaken shall include complete details of the reviews and the resulting recommended increases in the allowance for loan and lease losses. [.10] 11. The board of directors shall ensure that necessary action is taken to eliminate or correct all internal routine and control deficiencies described on page 60 and 61 of the Report of Examination dated March 30, 1998. [.11] 12. Within 60 days after the effective date of this ORDER, the Bank, to the best of its ability using reasonable effort, shall eliminate and/or correct all technical exceptions with regard to loan documentation existing in the Bank as of March 30, 1998, as more fully set out on pages 54 and 55 of the March 30, 1998, Report of Examination. [.12] 13. Within 30 days after the effective date of this ORDER, the board of directors shall ensure that the December 31, 1997, Consolidated Reports of Condition and Income are reviewed. If necessary, these reports should be promptly amended to properly reflect the financial condition of the Bank. [.13] 14. Within 60 days after the effective date of this ORDER, the board of directors shall establish a committee of the board of directors charged with the responsibility of ensuring that the Bank complies with the provisions of this ORDER. At least 50 percent of the members of such committee shall be directors not employed in any capacity by the Bank other than as a director. The committee shall report monthly to the full board of directors; and, a copy of the report and any discussion relating to the report or the ORDER shall be noted in the records of the board of directors. The establishment of this committee shall not diminish the responsibility or liability of the entire board of directors to ensure compliance with the provisions of this ORDER.
[.14] 15. After 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 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, Washington, D.C. 20429, 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. |
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Last Updated 7/7/2005 | legal@fdic.gov |