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FDIC Enforcement Decisions and Orders

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{{2-29-00 p.C-4847}}
   [11,677] In the Matter of Highland Community Bank, Chicago, Illinois, Docket No. 99-128c&b (12-13-99)

   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.

   [.1] Bank Records—Restore to a Complete and Accurate State
   [.2] Management—Qualifications Specified
   [.3] Bank Expansion—Restrictions On
   [.4] Software Programming—Resolution of Foreign Currency Problems Required
   [.5] Bank Operations—Data Processing Center—Adequate Staffing Required
   [.6] Board of Directors—Committee to Review Compliance with Cease and Desist Order Required

In the Matter of

HIGHLAND COMMUNITY BANK
CHICAGO, ILLINOIS
(Insured State Nonmember Bank)
TEMPORARY ORDER
TO CEASE AND
DESIST

FDIC-99-128c&b

{{2-29-00 p.C-4848}}
   The Federal Deposit Insurance Corporation ("FDIC") has determined that the unsafe or unsound banking practices which Highland Community Bank, Chicago, Illinois ("Bank") has engaged in or which the FDIC has reason to believe the Bank is about to engage in, as specified in the NOTICE OF CHARGES AND OF HEARING ("NOTICE") attached hereto and incorporated herein by reference, and the continuation thereof by the Bank, results in the Bank's books and records being so incomplete or inaccurate that the FDIC is unable, through the normal supervisory process, to determine the financial condition of the Bank or the details or purpose of any transaction or transactions that may have a material effect on the financial condition of the Bank. The FDIC has further determined that the unsafe or unsound banking practices which the Bank has engaged in or which the FDIC has reason to believe the Bank is about to engage in, as specified in the Notice, and the continuation thereof by the Bank, are likely to cause insolvency or significant dissipation of the assets or earnings of the Bank, or are likely to weaken the condition of the Bank or otherwise prejudice the interests of the depositors of the Bank prior to the completion of the proceedings against the Bank conducted pursuant to section 8(b) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1818(b). Therefore, the FDIC hereby issues this TEMPORARY ORDER TO CEASE AND DESIST ("TEMPORARY ORDER") and hereby gives notice pursuant to sections 8(c)(1) and (3) of the Act, 12 U.S.C. §§1818(c)(1) and (3), that the Bank and its institution-affiliated parties, successors and assigns, be and hereby are ORDERED TO CEASE AND DESIST FROM and take affirmative action, as follows:

   [.1]1. The Bank shall immediately allocate the necessary resources to return the Bank's books and records to a complete and accurate state. By January 31, 1999, the Bank shall restore its books and records to a complete and accurate state and shall continue to maintain accurate books and records. All accounts that are presently unreconciled or out of balance must be corrected and written documentation of the correction or reconciliation shall be retained for future regulatory review. All account differences originating prior to the October 5, 1999 cutoff date specified by the Bank in its December 2, 1999 correspondence with the FDIC that are unresolved by January 31, 1999 shall be charged off from the Bank's books.

   [.2]2. During the life of this TEMPORARY ORDER, the Bank shall have and retain qualified management. Each member of management shall have the qualifications and experience commensurate with his or her duties and responsibilities at the Bank. The qualification of Bank management shall be assessed on its ability to (i) comply with the requirements of this TEMPORARY ORDER; (ii) ensure that the Bank's electronic or automated information systems result in the Bank's books and records being in and remaining in a complete and accurate state; and (iii) operate the Bank in a safe and sound manner.

   [.3]3. The Bank shall not, without the prior approval of the Regional Director of the FDIC's Chicago Regional Office ("Regional Director"), establish or acquire any additional branch office or engage in any new line of business, including but not limited to, the providing of depository services for the City of Chicago relating to its parking facilities at O'Hare International Airport and the providing of depository services for vendors at O'Hare International Airport.

   [.4]4. By January 31, 1999, the Bank's foreign currency software programming problems must be identified, resolved and appropriate adjustments posted to the Bank's general ledger. By January 31, 1999, the Bank must develop an action plan to reflect Bank management's strategies to prevent similar problems from recurring.

   [.5]5. By January 31, 1999, the Bank must provide for adequate staffing and oversight of the Bank's Data Processing Center. The adequacy of staffing will be assessed on: (i) management depth and succession; (ii) the ability to appropriately review daily reports; and (iii) experience in the types of computer systems used by the Bank.

   [.6]6. Within one week from the effective date of this TEMPORARY ORDER, the Bank shall establish a compliance committee comprised of at least four directors who are not officers of the Bank. The committee shall meet weekly, maintain formal written minutes of record, and monitor the Bank's compliance with this TEMPORARY ORDER. The committee shall submit to the Bank's Board of Directors, for consideration at the Board's regular meeting, a written report detailing the Bank's compliance with this TEMPORARY ORDER. During the life {{10-31-00 p.C-4849}}of this TEMPORARY ORDER, regular Board of Director meetings shall be held at least bi-weekly.
   7. During the life of this TEMPORARY ORDER and within three days following each meeting of the Bank's Board of Directors as required in paragraph 6, above, the Board shall submit a written report to the Regional Director detailing the Bank's compliance with this TEMPORARY ORDER.
   No more than 60 days from the effective date of this TEMPORARY ORDER, the Bank shall send to its shareholders a description of this TEMPORARY ORDER. The description shall fully describe this TEMPORARY 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, 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.
   This TEMPORARY ORDER shall be effective immediately upon service on the Bank and shall remain in full force and effect, pending the completion of the administrative proceedings instituted pursuant to the foregoing NOTICE.
   Pursuant to delegated authority.
   Dated at Washington, D.C., this 13th day of December, 1999.

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