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FDIC Enforcement Decisions and Orders {{11-30-04 p.C-5010}} 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 11-22-02; see ¶16,323.)
[.1] Capital—Increase Required
[.2] Management—Management Plan Required
[.3] Management—Qualifications Specified
[.4] Board of Directors—Outside Directors Added to Board
[.5] Dividends—Dividends Restricted
[.6] Loans—Extensions of Credit—To Borrowers with Existing Adversely
Classified Credits
[.7] Assets—Adversely Classified Assets—Reduction Required
[.8] Loan Loss Reserve—Establishment of or Increase Required
[.9] Loans—Risk Position—Written Plan Required
[.10] Technical Exceptions—Correction of Technical Exceptions Required
[.11] Loan Concentration—Reduction Required
[.12] Loans—Comply with Written Policy
[.13] Loan Review Committee—Establish
[.14] Loan Policy—Preparation or Revision of Policy Required
[.15] Audit—Required
[.16] Audit—Internal Audit—Minimum Procedures Specified
[.17] Bank Operations—Internal Controls, Correction of Weaknesses Required
[.18] Profit Plan—Preparation of Plan Required
[.19] Shareholders—Disclosure of Cease and Desist Order Required
[.20] Board of Directors—Committee to Review Compliance with Cease and Desist Order Required
In the Matter of
The Bank of Calhoun County, Hardin, Illinois ("Bank"),
having been advised of its right to a NOTICE OF CHARGES AND OF HEARING
detailing the unsafe or unsound banking practices alleged to have been
committed by the Bank, and of its right to a hearing on the charges
under section 8(b) of the Federal Deposit Insurance Act ("Act"),
12 U.S.C. §1818(b), and under 38 Ill. Adm. Code, section 392.30,
regarding hearings before the Office of Banks and Real Estate for the
State of Illinois ("OBRE"), and having waived those rights,
entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO
CEASE AND DESIST ("CONSENT AGREEMENT") with representatives of
the Federal Deposit Insurance Corporation ("FDIC") and OBRE dated
November 6, 2000, whereby, solely for the purpose of this proceeding
and without admitting or denying the charges of unsafe or unsound
banking practices, the Bank consented to the issuance of an ORDER TO
CEASE AND DESIST ("ORDER") by the FDIC and OBRE.
The FDIC and OBRE considered the matter and determined that there was
reason to believe that the Bank had engaged in unsafe or unsound
banking practices. The FDIC and OBRE, therefore, accepted the CONSENT
AGREEMENT and issued the following:
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 or unsound banking practices:
A.— Engaging in hazardous lending and lax collection practices,
including, but not limited to the following:
– The failure to obtain proper loan documentation;
– The failure to obtain adequate collateral;
– The failure to establish and monitor collateral margins of
secured borrowers;
– The failure to establish and enforce adequate loan repayment
programs;
– The failure to obtain current and complete financial
information;
– The failure to enforce loan policy guidelines;
– The failure to consider diversification of risk when extending
credit; and
– The failure to follow acceptable credit administration
practices.
B. — Operating with an inadequate level of capital protection for
the kind and quality of assets held.
C. — Operating with a high level of adversely classified assets,
assets listed for "Special Mention," delinquent loans, and
nonaccrual loans.
D. — Operating with excessive loan losses.
E. — Operating with an inadequate allowance for loan and lease losses
("ALLL") for the volume, kind, and quality of loans and leases
held.
F. — Operating with inadequate internal routines and controls.
G. — Operating with weak lending guidelines and practices.
H. — Operating with an inadequate audit program.
I. — Operating with management whose policies and practices are
detrimental to the Bank and which jeopardize the safety of its
deposits.
J. — Operating with a board of directors that has failed to exercise
adequate supervision over active Bank officers.
K. — Operating without an acceptable management succession plan.
L. — Failing to implement and monitor appropriate Bank policies.
M. — Failing to implement timely corrective measures to resolve
continuing asset concerns.
N. — Operating with negative earnings.
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
follows:
[.1] 1. (a) Within 90 days from the effective date of this ORDER, the Bank
shall develop and submit to the FDIC and OBRE,
a plan to maintain its Tier 1 leverage capital ratio at a level not less than 7 percent of
total assets.
(b) Within 30 days from the last day of each calendar quarter following
the effective date of this ORDER, the Bank shall determine from its
Report of Condition and Income its level of Tier 1 capital as a
percentage of its total assets ("capital ratio") for that
calendar quarter. If the capital ratio is less than 7 percent, the Bank
shall, within 60 days of the date of the required determination,
increase its capital ratio to not less than 7 percent calculated as of
the end of that preceding quarterly period. Should the Bank determine
to increase its capital ratio through a stock issuance, same shall be
accomplished within 90 days of the date of the required determination,
subject to Federal and state securities registration or exemption
requirements and applicable waiting periods and any required review and
approval by the FDIC Registration and Disclosure Section and OBRE. For
purposes of this ORDER, Tier 1 capital and total assets shall be
calculated in accordance with Part 325 of the FDIC Rules and
Regulations ("Part 325"), 12 C.F.R. Part 325.
(c) Any such increase in Tier 1 capital may be accomplished by the
following:
(i) the sale of common stock and noncumulative perpetual
preferred stock constituting Tier 1 capital under Part 325; or
(ii) The elimination of all or part of the assets classified
"Loss" as of April 25, 2000, without loss or liability to the
Bank, provided any such collection on a partially charged-off asset
shall first be applied to that portion of the asset which was not
charged off pursuant to this ORDER; or
(iii) The collection in cash of assets previously charged off; or
(iv) The direct contribution of cash by the directors and/or the
shareholders of the Bank; or
(v) Any other means acceptable to the Regional Director of the Chicago
Regional Office of the FDIC ("Regional Director") and the
Commissioner of Banks and Real Estate for the State of Illinois
("Commissioner"); or
(vi) Any combination of the above means.
(d) If all or part of the increase in capital required by this
paragraph is to be accomplished by the sale of new securities, the
board of directors of the Bank shall adopt and implement a plan for the
sale of such additional securities, including the voting of any shares
owned or proxies held by or controlled by them in favor of the plan.
Should the implementation of the plan involve a public distribution of
the Bank securities, including a distribution limited only to the
Bank's existing shareholders, the Bank shall prepare detailed offering
materials fully describing the securities being offered, including an
accurate description of the financial condition of the Bank and the
circumstances giving rise to the offering, and any other material
disclosures necessary to comply with the Federal securities laws. Prior
to the implementation of the plan and, in any event, not less than 20
days prior to the dissemination of such materials, the materials used
in the sale of the securities shall be submitted to the FDIC at
Washington, D.C., and to OBRE for review. Any changes requested to be
made in the materials by the FDIC and OBRE shall be made prior to their
dissemination.
(e) In complying with the provisions of this paragraph of the ORDER,
the Bank shall provide to any subscriber and/or purchaser of Bank
securities written notice of any planned or existing development or
other changes which are materially different from the information
reflected in any offering materials used in connection with the sale of
Bank securities. The written notice required by this paragraph shall be
furnished within 10 calendar days of the date any material development
or change was planned or occurred, whichever is earlier, and shall be
furnished to every purchaser and/or subscriber of the Bank's original
offering materials.
(f) The capital ratio analysis required by this paragraph shall not
negate the responsibility of the Bank and its board of directors for
maintaining throughout the year an adequate level of capital protection
for the kind, quality and degree of market depreciation of assets held
by the Bank.
[.2] 2. (a) Within 30 days from the effective date of this ORDER, the Bank
shall retain a bank consultant acceptable to the Regional Director and
Commissioner. The consultant shall develop a written analysis and
assessment of the Bank's management and staffing needs ("Management
Plan") for the purpose of providing qualified management for the
Bank. The Management Plan shall be developed within 60 days from the
effective date of this ORDER. The Management Plan shall include, at a
minimum:
(i) Identification of both the type and number of officer
positions needed to properly manage and supervise the affairs of the
Bank;
(ii) Identification and establishment of such Bank committees as are
needed to provide guidance and oversight to active management;
(iii) Evaluation of all Bank officers to determine whether these
individuals possess the ability, experience and other qualifications
required to perform present and anticipated duties, including adherence
to the Bank's established policies and practices, and to restore and
maintain the Bank in a safe and sound condition; and
(iv) A plan to recruit and hire any additional or replacement personnel
with the requisite ability, experience and other qualifications to fill
those officer or staff member positions identified by this paragraph of
this ORDER.
(b) The Management Plan shall be submitted to the Regional
Director and Commissioner for review and comment upon its completion or
receipt. Within 30 days from the receipt of any comment from the
Regional Director or Commissioner and after the adoption of any
recommended changes, the Bank shall approve the Management Plan and any
subsequent modifications, which approval shall be recorded in the
minutes of a board of directors' meeting. Thereafter, the Bank, its
directors, officers, and employees shall implement and follow the
Management Plan and any subsequent modification.
[.3] 3. (a) Within 90 days from the effective date of this ORDER, the Bank
shall have and retain qualified management. At a minimum, such
management shall include: (i) a new chief lending officer who shall
have an appropriate level of lending, collection, and loan supervision
experience for the type and quality of the Bank's loan portfolio; and
(ii) any other positions as appropriate. Such persons shall be provided
the necessary written authority to implement the provisions of this
ORDER. The qualifications of management shall be assessed on its
ability to:
(i) Comply with the requirements of this ORDER;
(ii) Operate the Bank in a safe and sound manner;
(iii) Comply with applicable laws and regulations; and
(iv) Restore all aspects of the Bank to a safe and sound condition,
including asset quality, capital adequacy, earnings, management
effectiveness, and liquidity.
(b) During the life of this ORDER, the Bank shall notify the
Regional Director and the Commissioner, in writing, of any changes in
any of the Bank's management. For purposes of this ORDER,
"management" is defined as members of the board of directors and
"senior executive officers," as that term is defined in
section 32 of the Act ("section 32"), 12 U.S.C. §1831(i), and
section 303.101(b) of the FDIC Rules and Regulations, 12 C.F.R.
§303.101(b). Prior to the addition of any individual to the board of
directors or the employment of any individual as a senior executive
officer, the Bank shall comply with the requirements of section 32 and
Subpart F of Part 303 of the FDIC Rules and Regulations ("Subpart
F"), 12 C.F.R. Part 303, Subpart F.
[.4] 4. Within 90 days from the effective date of this ORDER, the Bank shall
add one new independent director. By March 31, 2001, the Bank shall add
an additional independent director. Thereafter, the Bank shall maintain
a board of directors that is composed of at least three independent
directors. For purposes of this ORDER, a person who is an independent
director shall be any individual: (a) who is not an officer of the Bank
or any subsidiary of the Bank or any of its affiliated organizations;
(b) who does not own more than 5 percent of the outstanding shares of
the Bank; (c) who is not related by blood or marriage to an officer or
director of the Bank or to any shareholder owning more than 5 percent
of the Bank's outstanding shares, and who does not otherwise share a
common financial interest with such officer, director or shareholder;
and (d) who is not indebted to the Bank directly or indirectly by
blood, marriage or common financial interest, including the
indebtedness of any entity in which the individual has a substantial
financial interest in an amount exceeding 5 percent of the Bank's
total Tier 1 capital and ALLL; or (e) who is deemed to be an
independent director for purposes of this ORDER by the Regional
Director and Commissioner. After compliance with sec
tion 32 and Subpart F, the addition of any new Bank directors required by this paragraph
may be accomplished, to the extent permissible by state statute or the
Bank's bylaws, by means of appointment or by election at a regular or
special meeting of the Bank's shareholders.
[.5] 5. As of the effective date of this ORDER, the Bank shall pay no cash
dividends which would result in a Tier 1 capital ratio of less than 7
percent, without the prior written consent of the Regional Director and
Commissioner.
[.6] 6. (a) As of the effective date of this ORDER, the Bank shall not
extend, directly or indirectly, any additional credit to, or for the
benefit of, any borrower who is already obligated in any manner to the
Bank on any extensions of credit (including any portion thereof) that
has been charged off or classified "Loss" so long as such credit
remains uncollected.
(b) As of the effective date of this ORDER, the Bank shall not extend,
directly or indirectly, any additional credit to, or for the benefit
of, any borrower whose loan or other credit has been classified
"Substandard" or is listed for Special Mention and is uncollected
unless the Bank's board of directors has adopted, prior to such
extension of credit, a detailed written statement giving the reasons
why such extension of credit is in the best interest of the Bank. A
copy of the statement shall be placed in the appropriate loan file and
shall be incorporated in the minutes of the applicable board of
directors' meeting.
[.7] 7. As of the effective date of this ORDER, the Bank shall eliminate
from its books, by charge-off or collection, all assets or portions of
assets classified "Loss" as of April 25, 2000, that have not been
previously collected or charged off. Any such charged-off asset shall
not be rebooked without prior written notification to the Regional
Director and Commissioner. Elimination or reduction of these assets
with the proceeds of other Bank extensions of credit is not considered
collection for the purpose of this paragraph.
8. (a) Within 30 days from the effective date of this ORDER, the Bank
shall replenish its ALLL by an expense entry in an amount equal to not
less than $336,000.
[.8] (b) Within 60 days from the effective date of this ORDER, the Bank
shall make an additional provision for loan and lease losses which,
after review and consideration by the board of directors, reflects the
potential for further losses in the remaining loans and/or leases
classified "Substandard" and all other loans and leases in its
portfolio. In making this determination, the board of directors shall
consider the Bank's average losses over the last five years; loans
past due over 90 days; nonaccrual credits; concentrations of credit;
and other non-classified credits.
(c) Prior to submission or publication of all Reports of Condition and
Income required by the FDIC and OBRE after the effective date of this
ORDER, the board of directors of the Bank shall review the adequacy of
the Bank's ALLL and accurately report the same. The minutes of the
board meeting at which such review is undertaken shall indicate the
findings of the review, the amount of increase in the reserve
recommended, if any, and the basis for determination of the amount of
reserve provided.
(d) Within 30 days following the last day of each calendar quarter, the
Bank shall submit to the Regional Director and Commissioner copies of
all Reports of Condition and Income filed with the FDIC and OBRE,
including those Reports filed pursuant to this paragraph.
(e) ALLL entries required by this paragraph shall be made prior to any
Tier 1 capital determinations required by this ORDER.
[.9] 9. (a) Within 60 days from the effective date of this ORDER, the Bank
shall formulate and submit to the Regional Director and Commissioner
for review and comment, a written plan to reduce the Bank's risk
position in each asset in excess of $50,000 which is classified
"Substandard" in the FDIC and OBRE Reports of Examination as of
April 25, 2000. In developing such plan, the Bank shall, at a minimum:
(i) Review the financial position of each such borrower,
including source of repayment, repayment ability, and alternative
repayment sources; and
(ii) Evaluate the available collateral for each such credit, including
possible actions to improve the Bank's collateral position.
(b) Such plan shall include, but not be limited to:
(i) Dollar levels to which the Bank shall reduce each asset
within six months from the effective date of this ORDER; and
(ii) Provisions for the submission of monthly written progress reports
to the
Bank's board of directors for review and notation in minutes of
the meetings of the board of directors.
(c) As used in this paragraph, "reduce" means to: (1)
collect; (2) charge off; or (3) improve the quality of such assets so
as to warrant removal of any adverse classification by the FDIC and
OBRE.
(d) Within 30 days from the receipt of any comment from the Regional
Director and Commissioner, and after the adoption of any recommended
changes, the Bank shall approve the written plan, which approval shall
be recorded in the minutes of a board of directors' meeting.
Thereafter, the Bank shall implement and follow this written plan.
10. Within 60 days from the effective date of this ORDER, the Bank
shall correct all deficiencies in the loans listed for "Special
Mention" in the FDIC and OBRE Reports of Examination of April 25,
2000.
[.10] 11. Within 60 days from the effective date of this ORDER, the Bank, to
the extent possible, shall correct the technical exceptions listed in
the FDIC and OBRE Reports of Examination of April 25, 2000.
[.11] 12. Within 90 days from the effective date of this ORDER, the Bank
shall formulate and submit to the Regional Director and Commissioner
for review and comment a written plan to reduce the loan concentration
of credit identified in the FDIC and OBRE Reports of Examination as of
April 25, 2000 to not more than 25 percent of the Bank's total Tier 1
capital. Such plan shall prohibit any additional advances that would
increase the concentration or create new concentrations and shall
include, but not be limited to:
(a) Dollar levels to which the Bank shall reduce each concentration
within 6 and 12 months from the effective date of this ORDER; and
(b) Provisions for the submission of monthly written progress reports
to the Bank's board of directors for review and notation in minutes of
the meetings of the board of directors. As used in this paragraph,
"reduce" means to: (1) collect; (2) charge off; or (3) sell or
participate portions of the concentration to other interested buyers
outside the Bank. Within 30 days from receipt of any comment from the
Regional Director and Commissioner, and after the adoption of any
recommended changes, the Bank shall approve the plan, which approval
shall be recorded in the minutes of a board of directors' meeting.
Thereafter, the Bank shall implement and follow the plan.
[.12] 13. Within 90 days from the effective date of this ORDER, the Bank
shall implement and monitor compliance with written loan plan
guidelines previously established by the Bank, to reduce the volume of
its delinquent loans. Corrective measures to implement and monitor
compliance shall include, at a minimum, provisions which: (1) prohibit
the extension of credit for the payment of interest; (2) prohibit the
extension and/or renewal of loan terms and loan payments, especially in
regard to classified borrowers, without prior board approval; (3)
delineate areas of responsibility for loan officers; and (4) establish
acceptable guidelines for the collection of delinquent credits.
Corrective measures shall include, but not be limited to the following:
(a) Dollar levels to which the Bank shall reduce delinquencies
within 6 and 12 months from the effective date of this ORDER; and
(b) Provisions for the submission of monthly written progress reports
to the Bank's board of directors for review and notation in minutes of
the meetings of the board of directors.
[.13] 14. As of the effective date of this ORDER, the Bank's loan committee
shall meet on a regular basis and shall include at least one director
who is "independent" as that term is defined in this ORDER.
Within 90 days from the effective date of this ORDER, the loan
committee shall include at least two directors who are
"independent" as that term is defined in this ORDER. The loan
committee shall, at a minimum, perform the following functions:
(a) Evaluate, grant, and/or approve loans in accordance with the
Bank's loan policy amended to comply with this ORDER. The loan
committee shall provide a thorough, written explanation of any
deviations from the loan policy. Such explanation(s) shall address how
said exceptions are in the Bank's best interest, and shall be
reflected in the minutes of the corresponding committee meeting.
(b) Review and monitor the status of repayment and collection of
overdue and
maturing loans, as well as all other loans classified
"Substandard" in the FDIC and OBRE Reports of Examination as of
April 25, 2000, or that are included on the Bank's internal watch
list.
(c) Review and give prior written approval for all advances, renewals,
or extensions of credit to any borrower or the borrower's related
interests when the aggregate volume of credit extended to the borrower
and the borrower's related interests exceeds $50,000. For purposes of
this ORDER, the term "related interest" is defined pursuant to
section 215.2(n) of Regulation O of the Board of Governors of the
Federal Reserve System ("Regulation O"), 12 C.F.R. §215.2(n).
(d) Review all applications for new loans and renewals of existing
loans to Bank directors, executive officers, and their related
interests, and prepare a written opinion as to whether the credit is in
conformance with the Bank's loan policy and all applicable laws and
regulations. Such applications, renewals, and written opinions shall be
referred to the Bank's board of directors for consideration.
(e) Maintain written minutes of the committee meetings which include a
record of the review and status of the aforementioned loans. Such
minutes shall be made available for review at the next Bank board of
directors' meeting.
[.14] 15. (a) Within 60 days from the effective date of this ORDER, and
annually thereafter, the board of directors of the Bank shall review
the Bank's loan policy and procedures for adequacy and, based upon
this review, shall make all appropriate revisions to the policy
necessary to strengthen lending procedures. The revised written loan
policy and any subsequent modifications shall be submitted to the
Regional Director and Commissioner for review and comment.
(b) Revisions to the Bank's loan policy required by this paragraph, at
a minimum, shall include provisions:
(i) Establishing review and monitoring procedures to ensure that
all lending personnel are adhering to established lending procedures
and that the directorate is receiving timely and fully documented
reports on loan activity, including any deviations from established
policy;
(ii) Requiring that all extensions of credit originated or renewed by
the Bank be supported by current credit information and collateral
documentation, including lien searches and the perfection of security
interests; have a clearly defined and stated purpose, and have a
predetermined and realistic repayment source and schedule. Credit
information and collateral documentation shall include current
financial information, profit and loss statements or copies of tax
returns, and cash flow projections, and shall be maintained throughout
the term of the loan with loan officer notations and comments;
(iii) Requiring loan committee review and monitoring of the status of
repayment and collection of overdue and maturing loans, as well as
those loans which were classified "Substandard" in the FDIC and
OBRE Reports of Examination as of April 25, 2000;
(iv) Requiring the establishment and maintenance of a loan grading
system and internal loan watch list;
(v) Requiring a written plan to lessen the risk position in each line
of credit identified as a problem credit on the Bank's internal loan
watch list;
(vi) Prohibiting the capitalization of interest, taxes, insurance
premiums, or other loan related expenses unless the board of directors
provides, in writing, a detailed explanation of why said deviation is
in the best interest of the Bank;
(vii) Requiring that extensions of credit to any of the Bank's
executive officers, directors, or principal shareholders, or to any
related interest of such person, be thoroughly reviewed for compliance
with all provisions of Regulation O, section 37 of the Illinois Banking
Act, 205 ILCS 5/37, and 38 Ill. Adm. Code, section 340;
(viii) Requiring prior written approval by the Bank's board of
directors for any extension of credit, renewal, or disbursement in an
amount which, when aggregated with all other extensions of credit to
that person and related interests of that person, exceeds $50,000;
(ix) Requiring a nonaccrual policy in accordance with the Federal
Financial Institutions Examination Council's Instructions for the
Consolidated Reports of Condition and Income;
(x) Requiring accurate reporting of past due loans to the loan
committee and board on at least a monthly basis;
(xi) Addressing concentrations of credit and diversification of risk,
including goals for portfolio mix, establishment of limits within loan
and other asset categories, and development of a tracking and
monitoring system for the economic and financial condition of specific
geographic locations, industries, and groups of borrowers;
(xii) Establishing standards for extending unsecured credit;
(xiii) Establishing limitations on the amount that can be loaned in
relation to established collateral values, including the requirement
that the source of the valuation be identified and the requirement that
such collateral valuations shall be completed prior to the disbursement
of loan proceeds and be performed on a periodic basis over the term of
the loan;
(xiv) Establishing standards for the institution of collection efforts
by the loan officer or legal counsel;
(xv) Establishing guidelines for timely recognition of loss through
charge-off;
(xvi) Prohibiting the extension of a maturity date, advancement of
additional credit or renewal of a loan to a borrower whose obligations
to the Bank were classified "Substandard" or "Loss,"
whether in whole or in part, as of April 25, 2000, by the FDIC or OBRE
and in any subsequent Report of Examination, without the full
collection in cash of accrued and unpaid interest, unless the loans are
well secured and/or are adequately supported by current and complete
financial information, and the renewal or extension has first been
approved in writing by a majority of the Bank's board of directors;
(xvii) Establishing officer lending limits and limitations on the
aggregate level of credit to any one borrower which can be granted
without the prior approval of the Bank's loan committee;
(xviii) Requiring that collateral appraisals be completed prior to the
making of secured extensions of credit. In addition, periodic
collateral valuations shall be performed for all secured "problem
loans";
(xix) Prohibiting the payment of any overdraft in excess of $2,500
without the prior written approval of the Bank's loan committee, and
imposing appropriate limitations on the use of Cash Items account;
(xx) Establishing limitations on the maximum volume of loans in
relation to total assets; and
(xxi) Establishing review and monitoring systems for dealer floor plan
loans, dealer indirect lines, and dealer reserve accounts.
(c) Within 60 days from the receipt of any comments from the
Regional Director and Commissioner, and after the adoption of any
recommended changes, the board of directors shall approve the written
loan policy and any subsequent modification thereto, which approvals
shall be recorded in the minutes of a board of directors' meeting.
Thereafter, the Bank shall implement and follow the written loan policy
and any subsequent modifications thereto. The Bank shall inform the
Regional Director and Commissioner, in writing, of the manner in which
it intends to implement this policy and ensure compliance therewith.
[.15] 16. Within 60 days from the effective date of this ORDER, the Bank
shall retain an independent public accounting firm acceptable to the
Regional Director and Commissioner. The Bank shall contract with the
accounting firm to conduct an audit of the Bank's year-end 2000
financial statements. In addition, the Bank shall require, as part of
its agreement with the accounting firm, that the audit report be
completed by February 15, 2001. The Bank shall submit the audit report
to the Regional Director and Commissioner immediately upon receipt.
[.16] 17. Within 90 days from the effective date of this ORDER, the Bank's
board of directors shall adopt and implement a comprehensive written
audit program. The Bank shall thereafter implement and enforce an
effective system of internal and external audits. The internal auditor
shall make written monthly reports of audit findings directly to the
Bank's board of directors. The minutes of the meetings of the board of
directors shall reflect consideration of these reports and describe any
action taken as a result thereof. A copy of the audit program should be
submitted to the Regional Director and Commissioner upon its
completion.
[.17] 18. Within 90 days from the effective date of this ORDER, the Bank
shall correct the deficiencies in internal routines and controls which
are listed in the FDIC and OBRE Reports of Examination as of April 25,
2000. Additionally, policies and
procedures shall be established to prevent the recurrence of any deficiency so noted.
[.18] 19. (a) Within 90 days from the effective date of this ORDER, the Bank
shall implement a written profit plan with realistic, comprehensive
budgets for all categories of income and expense for calendar year
2001. The plan required by this paragraph shall contain formal goals
and strategies, consistent with sound banking practices, to reduce
discretionary expenses and to improve the Bank's overall earnings, and
shall contain a description of the operating assumptions that form the
basis for major projected income and expense components. A copy of the
plan shall be submitted to the Regional Director and Commissioner upon
its completion.
(b) The written profit plan shall, at a minimum:
(i) Address strategies to improve the Bank's earnings, both
short term and long term; and
(ii) Identify all assumptions used in preparing the plan.
(c) Prior to the end of each calendar quarter, the Bank's board
of directors shall evaluate the Bank's actual performance in relation
to the plan and budget required by this paragraph and record the
results of the evaluation, and any actions taken by the Bank, in the
minutes of the board of directors' meeting at which such evaluation is
undertaken.
(d) The written profit plan and budget required by this ORDER shall be
prepared and submitted to the Regional Director and Commissioner for
review and comment 30 days prior to the end of each calendar year for
which this ORDER is in effect. Within 30 days of receipt of all such
comments from the Regional Director and Commissioner and after adoption
of any recommended changes the Bank shall approve the plan, which
approval shall be recorded in the minutes of a board of directors'
meeting. Thereafter, the Bank shall implement and follow the plan.
[.19] 20. Following 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 (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, notice, or statement shall be sent to the FDIC
Registration and Disclosure Section, 550 17th Street, N.W., Washington,
D.C. 20429, and to OBRE, 500 E. Monroe, Suite 900, Springfield,
Illinois 62701, for review at least 20 days prior to dissemination to
shareholders. Any changes requested to be made by the FDIC and OBRE
shall be made prior to dissemination of the description, communication,
notice, or statement.
[.20] 21. (a) Within 30 days from the effective date of this ORDER, the
Bank's board of directors shall develop, adopt, and implement a
program that will provide for monitoring of the Bank's compliance with
this ORDER.
(b) Following the required date of compliance with subparagraph (a)
above, the Bank's board of directors shall review the Bank's
compliance with this ORDER and record its review in the minutes of each
regularly scheduled monthly board of directors' meeting.
22. Within 30 days of each calendar quarter following the
effective date of this ORDER, the Bank shall furnish to the Regional
Director and Commissioner written progress reports, signed by each
member of the Bank's board of directors, detailing the form and manner
of any actions taken to secure compliance with this ORDER. Such reports
may be discontinued when the corrections required by this ORDER have
been accomplished and the Regional Director and Commissioner have, in
writing, released the Bank from making further reports.
The effective date of this ORDER shall be 10 days after issuance of the
ORDER.
The provisions of this ORDER shall be binding upon the Bank, its
institution-affiliated parties, and any successors and assigns thereof.
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 and OBRE.
Pursuant to delegated authority.
Dated this 16th day of November, 2000.
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Last Updated 2/20/2005 | legal@fdic.gov |
