(This order was terminated by order of the FDIC dated 11-3-03; see ¶16,360.)
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] Management—Qualifications Specified
[.2] Capital—Maintain Tier 1 Capital
[.3] Loan Loss Reserve—Establishment of or Increase Required
[.4] Profit Plan—Preparation of Plan Required
[.5] Bank Operations—Conflict of Interest Policy Regarding Insiders
Required
[.6] Assets—Charge-off or Collection
[.7] Loans—Extensions of Credit—To Borrowers with Existing Adversely
Classified Credits
[.8] Loan Policy—Preparation or Revision of Policy Required
[.9] Board of Directors—Internal Review and Grading System Required
[.10] Violations of Law—Correction of Violations Required
[.11] Funds Management and Liquidity—Preparation or Revision of Funds
Management Policy Required
[.12] Bank Operations—Internal Routine and Control Procedures—Written Plan
Required
[.13] Reports of Condition and Income—Amendment Required
[.14] Assets—Special Mention—Eliminate Deficiencies
[.15] Dividends—Dividends Restricted
[.16] Shareholders—Disclosure of Cease and Desist Order Required
In the Matter of
FIRST STATE BANK
PARKIN, ARKANSAS
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-01-144b
First State Bank, Parkin, Arkansas, ("Bank"), having been
advised of its right to a Notice of Charges and of Hearing detailing
the unsafe or unsound banking practices and violations of law 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
{{1-31-04 p.C-5216}}
("FDIC"), dated October 9, 2001, whereby
solely for the purpose of this proceeding and without admitting or
denying the alleged charges of unsafe or unsound banking practices, and
violations of law 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 law and/or regulations. The
FDIC, therefore, accepted the CONSENT AGREEMENT and issued the
following:
ORDER TO CEASE AND DESIST
IT IS HEREBY ORDERED that the Bank, its directors, officers,
employees, agents, and other 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 and violations:
(a) engaging in hazardous lending and lax collection practices;
(b) operating with inadequate capital in relation to the kind and
quality of assets held by the Bank;
(c) operating with a large volume of poor quality loans;
(d) operating with an inadequate loan valuation reserve;
(e) operating with inadequate internal routine and control policies;
(f) operating in such a manner as to produce operating losses;
(g) operating in such a manner as to produce low earnings;
(h) operating in violation of section 39 of the FDI Act, 12 U.S.C.
§1831p-1; sections 323.3(a) and (b) of FDIC Rules and Regulations,
12 C.F.R. §§ 323.3(a) and (b); sections 215.5(c)(4) and 215.4 of
Regulation O of the Board of Governors of the Federal Reserve System,
12 C.F.R. §§ 215.5(c) and 215.4, made applicable to state nonmember
banks by section 18(j)(2) of the Act, 12 U.S.C. §1828(j)(2); section
326.8(b) of the FDIC Rules and Regulations, 12 C.F.R. §326.8(b);
sections 103.28 and 103.29 of United States Treasury Department Rules
and Regulations, 31 C.F.R. §§ 103.28 and 103.29; and section
23-47-203(c)(2) of the Arkansas Banking Code, A.C.A. 23-47-203(c)(2);
(i) operating with management whose policies and practices are
detrimental to the Bank and jeopardize the safety of its deposits; and
(j) operating with a board of directors which has failed to provide
adequate supervision over and direction to the active management of the
Bank.
IT IS FURTHER ORDERED that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
follows:
[.1] 1. (a) During the life of this ORDER, the Bank shall have management
qualified to restore the Bank to a sound condition. Such management
shall include a chief executive officer and an experienced senior
lending officer responsible for supervising the Bank's overall lending
function.
(b) Management shall be assessed on its ability to:
(i) Comply with the requirements of this ORDER;
(ii) Improve and thereafter maintain the Bank in a safe and sound
condition, including asset quality, capital adequacy, liquidity
adequacy, earnings adequacy, and sensitivity to market risks; and
(iii) Comply with all applicable State and Federal laws and
regulations.
(c) (i) During the life of this ORDER, the Bank shall notify the
Regional Director of the Memphis Regional Office ("Regional
Director") and the Commissioner of the State Banking Department for
the State of Arkansas ("Commissioner") in writing of any
resignations and/or terminations of any members of its board of
directors and/or any of its senior executive officer(s) within 15 days
after the event.
(ii) The Bank shall comply with section 32 of the Act, 12 U.S.C.
§1831i.
(d) (i) To ensure both compliance with this ORDER and qualified
management for the Bank, the board of directors, within 60 days from
the effective date of this ORDER shall develop a written policy
("Management Policy") which shall incorporate an analysis of the
Bank's management and staffing requirements and shall, at a minimum
address (1) both the number and type of positions needed to properly
manage the Bank, (2) a clear and concise description of the needed
experience and pay for each job,
{{12-31-01 p.C-5217}}
(3) an evaluation of present
management, (4) a plan to recruit, hire or replace personnel with
requisite ability and experience, (5) a periodic evaluation of
each individual's job performance, and (6) the establishment and
implementation of procedures to periodically review and update the
Management Policy.
(ii) The Management Policy and any subsequent modification thereto
shall be submitted to the Regional Director and the Commissioner for
review and comment. Within 30 days from receipt of any comment, and
after consideration of such comment, the board of directors shall
approve the Management Policy, which approval shall be recorded in the
minutes of the meeting of the board of directors. Thereafter, the Bank
and its directors, officers and employees shall implement and follow
the Management Policy and any modifications thereto.
(iii) During the life of this ORDER, the Bank shall continue to
participate in the Arkansas State Banking Department's monthly
Self-Examination Program and shall certify that all information
submitted is true and correct.
(e) Within 30 days from the effective date of this ORDER, the
board of directors shall establish a committee of the board of
directors with the responsibility to ensure that the Bank complies with
the provisions of this ORDER. At least two-thirds of the members of
such committee shall be independent, outside directors as defined
herein. The committee shall report monthly to the entire board of
directors, and a copy of the report and any discussion relating to the
report or the ORDER shall be included in the minutes of the board of
directors. Nothing contained herein shall diminish the responsibility
of the entire board of directors to ensure compliance with the
provisions of this ORDER.
(f) For the purpose of this ORDER, an "outside director" shall be
an individual:
(i) Who shall not be employed, in any capacity, by the Bank or
its affiliates other than as a director of the Bank or an
affiliate;
(ii) Who shall not own or control more than 5 percent of the voting
stock of the Bank or its holding company;
(iii) Who shall not be indebted to the Bank or any of its affiliates in
an amount greater than 5 percent of the Bank's equity capital and
reserves;
(iv) Who shall not be related to any directors, principal shareholders
of the Bank or affiliates of the Bank; and
(v) Who shall be a resident of, or engage in business in, the Bank's
trade area.
[.2]2. (a) No later than December 31, 2001, the Bank shall have Tier I
capital equal to or greater than eight percent (8%) of the Bank's
adjusted Part 325 total assets. Thereafter, during the life of this
ORDER, the Bank shall maintain Tier I capital equal to or greater than
eight percent (8%) of the Bank's adjusted Part 325 total assets.
(b) Any increase in Tier I capital necessary to meet the requirements
of Paragraph 2(a) of this ORDER may be accomplished by the following:
(i) The sale of new securities in the form of common stock or
non-cumulative perpetual preferred stock; or
(ii) The direct contribution of cash by the directors, shareholders, or
parent Bank holding company of the Bank; or
(iii) Any other method acceptable to the FDIC.
(c) If all or part of the increase in Tier I capital required by
Paragraph 2(a) of this ORDER is 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 or controlled by them in
favor of the plan. Should the implementation of the plan involve a
public distribution of the Bank's securities (including a distribution
limited only to the Bank's existing shareholders), the Bank shall
prepare 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 plan and any materials used in the sale of the
securities shall be submitted to the FDIC, Division of Supervision,
Registration, Disclosure, & Securities Unit Section, 550 17th Street,
N.W., Room F-6043, Washington, D.C. 20429 for review. Any changes
requested to be made
{{12-31-01 p.C-5218}}
in the plan or materials by the FDIC shall be made
prior to their dissemination. If the Regional Director allows any part
of the increase in Tier I capital to be provided by the sale of
non-cumulative perpetual preferred stock, then all terms and conditions
of the issue, including but not limited to, those terms and conditions
relative to the interest rate and any convertibility factor, shall be
presented to the Regional Director for prior approval.
(d) In complying with the provisions of Paragraph 2 of this ORDER, the
Bank shall provide to any subscriber and/or purchaser of the Bank's
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 days from the date such material development or
change was planned or occurred, whichever is earlier, and shall be
furnished to every subscriber and/or purchaser of the Bank's
securities who received or was tendered the information contained in
the Bank's original offering materials.
(e) For purposes of this ORDER the terms "Tier I capital",
"total Capital" and "Part 325 total assets" shall have the
meanings ascribed to them in Part 325 of the FDIC's Rules and
Regulations, respectively, subsections 325.2(t) and 325.2(v), 12 C.F.R.
325.2(t) and (v).
(f) The Bank shall not lend funds directly or indirectly, whether
secured or unsecured, to any purchaser of Bank stock or to any investor
by any other means for any portion of any increase in Tier I capital
required herein.
[.3]3. (a) Within 10 days from the effective date of this Order, the Bank
shall establish and shall thereafter maintain, through charges to
current operating income, an adequate valuation reserve for loan and
lease losses. In determining the adequacy of the valuation reserve for
loan and lease losses, the board of directors of the Bank shall at a
minimum consider the following:
(i) Prevailing instructions contained in the Federal Financial
Institutions Examination Council booklet entitled
"Instructions-Consolidated Reports of Condition and Income";
(ii) The volume and mix of the existing loan portfolio, including the
volume and severity of nonperforming loans and adversely classified
credits, as well as an analysis of net charge-offs experienced on
previously adversely classified loans;
(iii) The extent to which loan renewals and extensions are used to
maintain loans on a current basis and the degree of risk associated
with such loans;
(iv) The trend in loan growth, including any rapid increase in loan
volume within a relatively short time period;
(v) General and local economic conditions affecting the collectibility
of the Bank's loans;
(vi) Previous loan loss experience by loan type, including the trend of
net charge-offs as a percent of average loans over the past several
years;
(vii) Off balance sheet credit risks;
(viii) The overall risk associated with each concentration of credit
together with the degree of risk associated with each related
individual borrower; and
(ix) Any other factors appropriate in determining future valuation
reserves.
(b) Prior to the submission of any Report of Condition or Report
of Income, the board of directors of the Bank shall review the adequacy
of the Bank's valuation reserve for loan and lease losses. The minutes
of the board meetings at which each review is undertaken shall indicate
the results of the review, the amount of any increase to the reserve,
and the basis for the amount of the valuation reserve. The criteria for
the review shall be as set forth in Paragraph 3(a).
(c) Notwithstanding the provisions of Paragraph 3(a) and 3(b) above,
the Bank shall achieve, within 10 days of the effective date of this
ORDER, a valuation reserve for loan and lease losses, after charge off
of loans classified "Loss" as required in Paragraph 6(a) below,
of not less than $722,000, and shall thereafter maintain, through
charges to current operating income, an adequate valuation reserve for
loan and lease losses.
(d) In the event that the Regional Director and/or the Commissioner
determine, at subsequent examinations and/or visitations, that the
Bank's valuation reserve for loan and lease losses is inadequate, the
Bank shall amend its Consolidated Reports of Condition and Income in
accordance with Paragraph 13.
(e) The requirements of Paragraph 3(c) above are not to be construed as
a standard for future operations.
{{12-31-01 p.C-5219}}
[.4]4. (a) No later than January 1, 2002, and within the first 30
days of each calendar year thereafter, the board of directors shall
develop a written profit plan consisting of goals and strategies for
improving the earnings of the Bank for each calendar year. The written
profit plan shall include, at a minimum:
(i) Identification of the major areas in, and means by, which the
board of directors will seek to improve the Bank's operating
performance;
(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 on not less
than a quarterly basis; and
(iv) A description of the operating assumptions that form the basis
for, and adequately support, major projected income and expense
components.
(b) Such written profit plan and any subsequent modification
thereto shall be submitted to the Regional Director and the
Commissioner for review and comment. No more than 30 days after the
receipt of any comment from the Regional Director and/or the
Commissioner, the board of directors shall approve the written profit
plan which approval shall be recorded in the minutes of the board of
directors. Thereafter, the Bank, its directors, officers, and employees
shall follow the written profit plan and/or any subsequent
modification.
(c) In addition to its written profit plan, the Bank shall prepare a
two-year strategic plan, taking into consideration such factors as
competition, legislation, technology, changing markets, and other
relevant factors that may affect the future operations of the Bank. The
strategic plan shall include long-range goals, steps for achieving
those goals, procedures for monitoring performance, and methods for
periodic revisions, if necessary. The strategic plan and any subsequent
revisions thereto shall be submitted to the Regional Director and the
Commissioner for review and comment. The board of directors shall
review the Bank's performance vis-a-vis the strategic plan no less
than quarterly. The results of the review shall be made a part of the
minutes of the board of directors meetings.
[.5]5. No later than December 31, 2001, the Bank shall develop, adopt, and
implement written policies and procedures designed to bring to the
attention of each member of the board conflicts of interest which may
exist in approving loans or other transactions in which officers,
directors, or principal stockholders of the Bank ("Insiders") are
involved. Such policies and procedures shall, at a minimum, ensure that
each member of the board has been apprised of any potential conflict
prior to making a decision and has acted specifically on any loan or
other transaction in which Insiders and/or their business associates
are, directly or indirectly, involved. The results of board
deliberations as to potential conflicts shall be reflected in the
minutes of the meeting.
[.6]6. (a) Within 10 days from the effective date of this ORDER, the Bank
shall eliminate from its books, by charge-off or collection, all assets
classified "Loss" as of May 31, 2001, totaling $566,000, that
have not been previously collected or charged-off. Reduction of these
assets through proceeds of other loans made by the Bank is not
considered collection for the purpose of this paragraph.
(b) Within 90 days from the effective date of this ORDER, the Bank
shall have reduced all adversely classified items, totaling $3,941,000
as of May 31, 2001, to not more than $2,880,000.
(c) Within 180 days from the effective date of this ORDER, the Bank
shall have reduced all adversely classified items as of May 31, 2001,
to not more than $2,483,000.
(d) Within 270 days from the effective date of this ORDER, the Bank
shall have reduced all adversely classified items as of May 31, 2001,
to not more than $1,986,000.
(e) Within 360 days from the effective date of this ORDER, the Bank
shall have reduced all adversely classified items as of May 31, 2001,
to not more than $1,490,000.
(f) The requirements of Paragraphs 4(a), 4(b), 4(c), 4(d), and 4(e) are
not to be construed as standards for future operations. As used in
Paragraphs 4(b), 4(c), 4(d), 4(e), and 4(f) the word "reduce"
means (i) to collect, (ii) to charge-off, or (iii) to sufficiently
improve the quality of assets adversely classified to warrant removing
any adverse classification, as determined by the FDIC.
[.7]7. (a) Beginning with the effective date of this ORDER, the Bank shall
not make
{{12-31-01 p.C-5220}}
any further extension of credit to any borrower whose loans
are charged off, in whole or in part, or are adversely classified
"Loss" or "Doubtful" as of May 31, 2001, and remain
uncollected.
(b) Beginning with the effective date of this ORDER, the Bank shall not
make any further extension of credit to any borrower thereof whose
loans in the aggregate exceed $75,000 and are adversely classified
"Substandard" as of May 31, 2001, unless such extension has been
approved by a majority of the Bank's board of directors in advance and
the Bank's board of directors has detailed in the written minutes of
the meeting how it has affirmatively determined all of the following:
(i) that the extension of credit is in full compliance with the Bank's
loan policy; (ii) that it is necessary to protect the Bank's interest
or that the extension of credit is adequately secured; (iii) that based
upon credit analysis the customer is deemed to be creditworthy; and
(iv) that all necessary loan documentation is on file, including
current financial and cash flow information and satisfactory appraisal,
title, and lien documents. The minutes shall also include the following
information about the extension of credit: (i) The amount adversely
classified as of May 31, 2001; (ii) the current balance; (iii) the
amount of credit requested; (iv) a description of the collateral and
its value securing the credit; and (v) a full description of the
documentation presented to the board of directors including the date of
the borrower's most recent financial information and the borrower's
current income or cash flow data.
(c) Beginning with the effective date of this ORDER, the Bank shall not
renew any loan without the full collection of interest due. The
issuance of separate notes to the borrowing customer or a third party,
the proceeds of which pay interest due, shall not satisfy the
requirements of this paragraph unless these separate notes receive
prior board approval in the same manner as outlined in Paragraph 7(b).
(d) The bank shall establish written plans of action for each borrower
whose adversely classified loan(s) are equal to or greater than
$75,000. The written plans shall be updated monthly, presented to the
Bank's board of directors monthly, and shall be made a part of the
minutes of the board of directors meetings.
[.8]8. (a) No later than December 31, 2001, the Bank shall review its
written loan policy and make whatever changes may be necessary to
provide for the safe and sound administration of all aspects of the
lending function. Proper and adequate loan documentation or evidence
thereof as is required by sound banking practices before disbursement
of the loan proceeds to borrowers or before renewal or extensions of
existing loans shall be part of the review. Such policy shall
provide for identification of primary and secondary sources of
repayment, the establishment of and adherence to realistic amortization
programs, and proper and adequate loan documentation or evidence
thereof as is required by sound banking practices before disbursement
of the loan proceeds to borrowers or before renewal or extensions of
existing loans. Evidence of the review and establishment of procedures
to ensure compliance with the loan policy shall be reduced to writing.
The policy and its implementation shall be in a form and manner
acceptable to the Regional Director and the Commissioner as determined
at subsequent examinations and/or visitations.
(b) Beginning with the effective date of this ORDER, the Bank shall
review and strengthen its collection policies and procedures and adopt
and implement a written loan interest nonaccrual policy which conforms
with requirements contained in Instructions for Preparation of Reports
of Condition and Income published by the Federal Financial Institutions
Examination Council.
(c) Beginning with the effective date of this ORDER, the Bank shall
initiate and implement a program to strengthen its credit files and
correct the technical exceptions as detailed in the "Loans Not
Supported By Proper Documentation" section of the May 31, 2001,
Report of Examination. Within 60 days from the effective date of this
ORDER, the Bank shall eliminate 40 percent of the technical exceptions
cited in the May 31, 2001, Report of Examination. Within 120 days from
the effective date of this ORDER, the Bank shall eliminate 90 percent
of the technical exceptions cited in the May 31, 2001, Report of
Examination. In all future operations, the Bank shall ascertain that
all documents or evidence thereof, properly completed, are obtained
before credit is extended.
[.9]9. (a) Within 30 days of the effective date of this ORDER, the board
shall establish an internal loan review and grading system
{{12-31-01 p.C-5221}}
("System") to periodically review the Bank's loan portfolio and
identify and categorize problem credits. At a minimum the System shall
provide for:
(i) The identification of the overall quality of the loan
portfolio;
(ii) The identification and amount of each delinquent loan;
(iii) An identification or grouping of loans that warrant the special
attention of management;
(iv) For each loan identified, a statement of the amount and an
indication of the degree of risk that the loan will not be fully repaid
according to its terms and the reason(s) why the particular loan merits
special attention;
(v) An identification of credit and collateral documentation
exceptions;
(vi) The identification and status of each violation of law, rule, or
regulation;
(vii) An identification of loans not in conformance with the Bank's
lending policy, and exceptions to the Bank's lending policy;
(viii) An identification of insider loan transactions; and
(ix) A mechanism for reporting periodically, no less than quarterly, to
the board of directors on the status of each loan identified and the
action(s) taken by management.
(b) A copy of the reports submitted to the board, as well as
documentation of the action taken by the Bank to collect or strengthen
assets identified as problem credits, shall be kept with the minutes of
the board of directors.
(c) Within 60 days from the effective date of this ORDER the Bank's
board of directors shall establish and appoint a loan committee to
review and approve in advance all extensions of credit and/or renewals
that when aggregated with all other extensions of credit to that
borrower, either directly or indirectly, exceed or would exceed
$50,000. The review should include financial, income, and cash flow
information, collateral values and lien information, repayment terms,
past performance by the borrower, the purpose of the extension, and
whether the extension complies with the Bank's loan policy and
applicable laws, rules, and regulations. The loan committee shall meet
at least twice monthly and shall maintain written minutes which detail
the information reviewed by the loan committee, its conclusions,
approvals, denials, recommendations, and reasons for the approval of
any credit which does not fully comply with the review requirements set
forth in this paragraph. At least monthly, the loan committee shall
submit its written minutes to the board of directors. At least
two-thirds of the members of the loan committee shall be independent,
outside directors as defined in Paragraph 1(f) of this ORDER.
[.10]10. Within 60 days from the effective date of this ORDER, the Bank
shall eliminate and/or correct all violations of law which are set out
on the Violations of Law and Regulations pages of the May 31, 2001,
Report of Examination. In addition, the Bank shall henceforth comply
with all applicable laws and regulations.
[.11]11. Within 60 days from the effective date of this ORDER, the Bank
shall formulate and adopt a written liquidity and funds management
policy. Such policy shall include the establishment of acceptable
ranges of ratios in the following areas: volatile liability dependence,
total loans to total deposits, and temporary investments to volatile
liabilities. In addition, the liquidity policy shall incorporate a
funds management program which designates acceptable levels for:
volatile liabilities, including borrowings; asset mix, including
temporary funds and investments, long-term investment securities and
classes of obligors, and loans to deposits; and rate-sensitive assets
as a percent of rate-sensitive liabilities. The written liquidity and
funds management policy shall be submitted to the Regional Director and
the Commissioner for review and comment.
[.12]12. Within 90 days from the effective date of this ORDER, the Bank
shall adopt and implement a written policy for the operation of the
Bank in such a manner as to provide internal routine and controls
consistent with safe and sound banking practices. Such policy and its
implementation shall be satisfactory to the Regional Director and the
Commissioner as determined at subsequent examinations and/or
visitations.
[.13]13. (a) Within 30 days from the effective date of this ORDER, the Bank
shall review all Consolidated Reports of Condition and Income filed
with the FDIC on and after May 31, 2001, and shall amend and file
{{12-31-01 p.C-5222}}
with the FDIC amended Consolidated Reports of Condition and Income which
accurately reflect the financial condition of the Bank as of the date
of each such Report.
(b) In addition to the above and during the life of this ORDER, the
Bank shall file with the FDIC Consolidated Reports of Condition and
Income which accurately reflect the financial condition of the Bank as
of the reporting period. In particular such Reports shall include any
adjustment in the Bank's books made necessary or appropriate as a
consequence of any State or FDIC examination of the Bank during that
reporting period.
[.14]14. Within 90 days of the effective date of this ORDER, the Bank shall
sufficiently reduce or otherwise improve assets subject to Special
Mention as of May 31, 2001, to warrant removal from the Special Mention
category. Any action taken shall be reduced to writing and made a part
of the minutes of the board of directors meetings.
[.15]15. While this ORDER is in effect, the Bank shall not declare or
pay any cash dividends on its capital stock or pay any fees, including
director's fees, or bonuses, at any level, without the prior written
approval of the Regional Director and the Commissioner.
[.16]16. Following the effective date of this ORDER, the Bank shall send to
its shareholders or otherwise furnish a description of this ORDER, (i)
in conjunction with the Bank's next shareholder communication, and
also (ii) 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, Division of Supervision, Registration, Disclosure, & Securities
Unit, 550 17th Street, N.W., Room F-6043, Washington, D.C. 20429 for
review at least 20 days prior to dissemination to shareholders. Any
changes requested by the FDIC shall be made prior to dissemination of
the description, communication, notice, or statement.
17. On the fifteenth day of the second month following the effective
date of this ORDER, and on the fifteenth day of every third month
thereafter, the Bank shall furnish written progress reports to the
Regional Director and the Commissioner 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 and the
Commissioner have released the Bank in writing from making further
reports.
The provisions of this ORDER shall be binding upon the Bank, its
directors, officers, employees, agents, successors, assigns, and other
institution-affiliated parties of the Bank.
This ORDER shall become effective 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.
Dated: October 10, 2001.
