Federal Deposit
Insurance Corporation

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   [¶11,768] In the Matter of First Mountain Bank, Big Bear Lake, California, Docket No. 01-025b (3-1-01).

   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 8-8-02; see ¶16,317.)

   [.1] Compliance Officer—Retain/Give Written Authority

   [.2] Compliance Program—Minimum Requirements

   [.3] Compliance Program—Audit Plan

   [.4] Bank Operations—Monitoring System and Review Procedures Required

   [.5] Bank Operations—Training Program Required

   [.6] Loans—Real Estate—Compliance Required

   [.7] Loan Policy—Preparation or Revision of Policy Required

   [.8] Loan Applications—Review Denied/Withdrawn Applications

   [.9] Bank Operations—Education Plan, Compliance with Law and Regs

   [.10] Violations of Law—Correction of Violations Required

In the Matter of
FIRST MOUNTAIN BANK
BIG BEAR LAKE, CALIFORNIA
Insured State Nonmember Bank
ORDER TO CEASE AND DESIST

FDIC-01-025b

   First Mountain Bank, Big Bear Lake, California ("Bank"), having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violation of laws 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)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. §1818(b)(1), 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 February 28, 2001, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices and violation of laws 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 had committed violations of laws and/or regulations. The FDIC, 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 and unsound banking practices and violation of laws and/or regulations:

   (a) Part 328 of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. Part 328, as more fully
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   described on page 17 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (b) Part 338 of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. Part 338, as more fully described on page 17 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (c) Part 339 of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. Part 339, as more fully described on page 10 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (d) Regulation B of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 202, as more fully described on page 11 and 12 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (e) Regulation CC of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 229, as more fully described on page 18 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (f) Regulation DD of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 230, as more fully described on page 13 through 15 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (g) Regulation E of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 205, as more fully described on page 15 and 18 of the FDIC's Compliance Report of Examination as of August 28, 2000;

   (h) Regulation C of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 203, as more fully described on pages 16 and 17 of the FDIC's Compliance Report of Examination as of August 28, 2000; and

   (i) Regulation Z of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 226, as more fully described on page 17 of the FDIC's Compliance Report of Examination as of August 28, 2000.

   IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its successors and assigns, take affirmative action as follows:

   [.1]1. Within 30 days from the effective date of this ORDER the Bank shall designate a qualified compliance officer and shall advise the Regional Director of its designation. This individual will be provided with the necessary training, authority, resources, and responsibility to effectively administer the Bank's compliance program and to train and supervise personnel in compliance matters. The compliance officer shall report to the board of directors on a monthly basis and such report shall be documented in the minutes of the board of directors' meeting.

   [.2]2. Within 60 days from the effective date of this ORDER, the Bank shall develop and implement written compliance procedures and policies to ensure compliance with all consumer regulations.

   [.3]3. Within 60 days from the effective date of this ORDER, the Bank shall develop and implement a compliance audit and review program that provides for, at a minimum, an annual audit or review to ensure that the Bank's policies, procedures and practices are in compliance with all consumer regulations. Written reports documenting the results and providing recommendations for improvement shall be presented to the board of directors.

   [.4]4. Within 60 days from the effective date of this ORDER, the Bank shall develop and implement an effective monitoring system to include periodic reviews of disclosures and standardized forms, and calculations for various loan and deposit products. The system shall also provide for periodic reviews of document filing and retention procedures, marketing literature and other Bank advertising, as well as a review of the Bank's web site.

   [.5]5. Within 60 days from the effective date of this ORDER, the Bank shall provide for on-going training in consumer compliance laws and regulations for all appropriate personnel, including both operation and lending staff. The Bank shall document the training activities for its recordkeeping purposes. The training should be updated to ensure that appropriate personnel are provided with the most current and up-to-date information. The Bank's actions as required by this paragraph shall be satisfactory to the Regional Director as determined at subsequent examinations and/or visitations.

   [.6]6. Within 60 days from the effective date of this ORDER, the Bank shall conduct a file search of all outstanding real estate secured loans subject to Part 339 of the FDIC's Rules and Regulations, 12 C.F.R. Part 339, to ensure they are in compliance
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   with the requirements of Part 339. The results of the file search shall be documented and presented to the board of directors.

   [.7]7. Within 30 days from the effective date of this ORDER, the Bank shall revise its loan policy to reflect the Bank's current underwriting guidelines and practices and comply with Regulation B of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 202. The revisions to the loan policy shall address the concerns noted on page 6 of the FDIC's Compliance Report of Examination as of August 28, 2000.

   [.8]8. Within 30 days from the effective date of this ORDER, the Bank shall implement and enforce a secondary review process of all denied and withdrawn loan applications to ensure compliance with Regulation B of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 202. In addition, on a quarterly basis, the Bank shall sample consumer and small business loan originations to ensure that they have been made in accordance with the Bank's underwriting guidelines and that any exceptions to policy are sufficiently documented.

   [.9]9. The Bank shall develop and implement a system to test employees on their knowledge of compliance-related laws and regulations to monitor training effectiveness.

   [.10]10. Within 60 days from the effective date of this ORDER, the Bank shall correct all violations of law as described on pages 10 through 18 of the FDIC's Compliance Report of Examination as of August 28, 2000, to the extent correction is within the Bank's capabilities, and implement procedures to prevent their recurrence. The Bank's actions as required by this paragraph shall be satisfactory to the Regional Director as determined at subsequent examination and/or visitations.

   11. Within 30 days of the end of the calendar quarter following the effective date of this ORDER, and within 30 days of the end of each calendar quarter thereafter, the Bank shall furnish written progress reports to the Regional Director detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. 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 further reports.

   This ORDER shall become effective ten (10) days from the date of its issuance.

   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.

   Pursuant to delegated authority.