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FDIC Enforcement Decisions and Orders

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{{5-31-99 p.C-4702}}
   [11,606] In the Matter of Timothy R. McConnell, Victory State Bank, Columbia, South Carolina, Docket No. 99-015pcad (3-24-99)

   A Prompt Corrective Action was issued dismissing Respondent from any position of management at the Bank.
   [.1] Prompt Corrective Action—Order of Dismissal
In the Matter of

VICTORY STATE BANK
COLUMBIA, SOUTH CAROLINA
(Insured State Nonmember Bank)
PROMPT CORRECTIVE
ACTION DIRECTIVE
ORDERING DISMISSAL

FDIC-99-015pcad

   Victory State Bank, Columbia, South Carolina ("Bank"), is a critically undercapitalized insured depository institution as that term is defined in section 38(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1831o(b)(1), and section 325.103 of the Federal Deposit Insurance Corporation ("FDIC") Rules and Regulations, 12 C.F.R. §325.103, based upon the State of South Carolina Board of Financial Institutions Report of Examination of the Bank dated November 9, 1998, which shows its capital levels to be:

    a) a total risk-based capital ratio of 4.81 percent,
    b) a Tier 1 risk-based capital ratio of 3.53 percent,
    c) a leverage ratio of 1.91 percent, and
    d) a tangible equity to total assets ratio of 1.91 percent.
   The FDIC has determined that the continued employment of Timothy R. McConnell ("Respondent McConnell"), the Bank's president, chief executive officer and chairman of the board of directors, would not materially strengthen the Bank's ability to become adequately capitalized because:
    a) Respondent McConnell has not demonstrated the ability to restore a troubled institution to a safe and sound condition,
    b) Respondent McConnell has drawn compensation from the Bank from 1991 to 1998 which was excessive in relation to his contribution, expertise and services performed which excessive compensation has contributed to the Bank's losses and depletion of capital,
    c) the financial condition of the Bank has deteriorated under Respondent McConnell's management and control of the Bank.
   Furthermore, the FDIC has reason to believe that Respondent McConnell has misused Bank funds and has caused the Bank to engage in a preferential and hazardous lending transaction with Respondent McConnell and that, unless Respondent McConnell is dismissed, such transactions could be similarly repeated, and could further weaken the condition of the Bank, and/or otherwise prejudice the interests of the depositors. This is evidenced by the fact that during 1998, Respondent McConnell used the Bank's public relations funds for unauthorized purposes, and in January 1999, Respondent McConnell made or caused the Bank to make an unsecured loan to himself in the amount of $33,740.57 to repay those unauthorized advances. The foregoing loan was made on preferential terms and was made without evidence of a sufficient source of repayment, in violation of an outstanding cease and desist order and contrary to the requirements of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 215. The purpose of the loan was to repay Bank funds which Respondent McConnell had used for his own personal purposes. Subsequent to that extension of credit, the FDIC has reasonable cause to believe that Respon- {{10-31-99 p.C-4703}}dent McConnell has attempted to cause the Bank to make an additional extension of credit to him, in violation of the outstanding cease and desist order.
   The Bank having received a NOTICE OF INTENT TO ISSUE A PROMPT CORRECTIVE ACTION DIRECTIVE ORDERING DISMISSAL ("NOTICE") detailing the actions which will be required to be taken by the Bank and/or the proscriptions which will be imposed on the Bank pursuant to section 38 of the Act, 12 U.S.C. §1831o, and section 308.201(a) of the FDIC Rules of Practice and Procedure, 12 C.F.R. §308.201(a), and the Bank having filed a response to the NOTICE pursuant to section 308.201(c) of the FDIC Rules of Practice and Procedure, 12 C.F.R. §308.201(c), and the FDIC having considered said response, the FDIC hereby issues this PROMPT CORRECTIVE ACTION DIRECTIVE ORDERING DISMISSAL pursuant to the provisions of section 38 of the Act, 12 U.S.C. §1831o, and section 308.201(d) of the FDIC Rules of Practice and Procedures, 12 C.F.R. §308.201(d).

PROMPT CORRECTIVE ACTION
DIRECTIVE ORDERING DISMISSAL

   [.1] IT IS HEREBY DIRECTED that the Bank shall dismiss Timothy R. McConnell from office as the Bank's president, chief executive officer and chairman of the board of directors and from any other position of management at the Bank.
   IT IS FURTHER DIRECTED that this PROMPT CORRECTIVE ACTION DIRECTIVE ORDERING DISMISSAL shall become effective immediately upon its receipt by the Bank.
   Each provision of this PROMPT CORRECTIVE ACTION DIRECTIVE ORDERING DISMISSAL shall be binding upon the Bank, its directors, officers, employees, agents, successors, assigns, and other institution-affiliated parties of the Bank.
   Within ten (10) calendar days from his/her receipt of a copy of this PROMPT CORRECTIVE ACTION DIRECTIVE ORDERING DISMISSAL as required by section 308.203(a) of the FDIC Rules of Practice and Procedures, 12 C.F.R. §308.203(a), Respondent McConnell may file a written request for reinstatement pursuant to section 308.203(b) of the FDIC Rules of Practice and Procedure, 12 C.F.R. §308.203(b). Within such written response Respondent McConnell may request an informal hearing before the FDIC under section 308.203(b)(2) of the FDIC Rules of Practice and Procedure, 12 C.F.R. §308.203(b)(2). If Respondent McConnell desires to present oral testimony or witnesses at the hearing, he shall include a request to do so with the request for an informal hearing, and such request shall specify the names of the witnesses and the general nature of their expected testimony.
   Each provision of this PROMPT CORRECTIVE ACTION DIRECTIVE ORDERING DISMISSAL shall remain effective and enforceable except to the extent that, and until such time as, any provision shall be modified, terminated, suspended, or set aside by the FDIC.
   Pursuant to delegated authority.
   Dated at Washington, D.C., this 24th day of March, 1999.

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