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   [11,940] In the Matter of Banco Financiero de Puerto Rico, Ponce, Puerto Rico, Docket No. 02-047b (6-10-02).

   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 terminated by order of the FDIC dated 2-6-03; see ¶16,329.)

   [.1] Strategic Plan—Preparation of Required

   [.2] Management—Qualifications Specified

   [.3] Management—Management Report Required

   [.4] Capital—Maintaining a "Well Capitalized" Level Required

   [.5] Loan Loss Reserve—Establishment of or Increase Required

   [.6] Assets—Charge-off or Collection

   [.7] Loans—Concentration of Credit—Reduction Required

   [.8] Loans—Extensions of Credit—To Borrowers with Existing Adversely Classified Credits

   [.9] Assets—Criticized Assets, Individual Plans Required

   [.10] Loan Review and Grading System—Establishment of Required

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

   [.12] Reports of Condition and Income—Amendment Required

   [.13] Dividends—Dividends Restricted

   [.14] Golden Parachute Payments—Prohibited

   [.15] Interest Rate Risk Policy—Minimum Requirements
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   [.16] Board of Directors—Compensation Reviewed

   [.17] Shareholders—Disclosure of Cease and Desist Order Required

   [.18] Board of Directors—Committee to Review Compliance with Cease and Desist Order Required

In the Matter of
BANCO FINANCIERO de PUERTO RICO
PONCE, PUERTO RICO
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

FDIC-02-047b

   BANCO FINANCIERO de PUERTO RICO, Ponce, Puerto Rico ("Insured Institution"), 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 Insured Institution 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 June 6, 2002, 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 Insured Institution 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 Insured Institution 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 Insured Institution, 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 with respect to commercial loans;

   (b) Operating the Insured Institution with inadequate capital in relation to the kind and quality of assets held by the Insured Institution;

   (c) Operating the Insured Institution with an excessive volume of poor quality assets;

   (d) Operating the Insured Institution with an inadequate allowance for loan and lease losses;

   (e) Operating the Insured institution in such a manner so as to produce unsatisfactory earnings;

   (f) Operating the Insured Institution in such a manner as to produce operating losses;

   (g) Operating the Insured Institution with management whose policies and practices are detrimental to the Insured Institution and jeopardize the safety of its deposits;

   (h) Operating the Insured Institution with a board of directors which has failed to provide adequate supervision over and direction to the active management of the Insured Institution;

   (i) Failing to provide the Insured Institution with operational personnel who have experience that is adequate to ensure safe and sound operation of the Insured Institution and to ensure compliance with applicable laws and regulations; and

   (j) Engaging in violations of applicable Federal and Commonwealth of Puerto Rico laws and/or regulations, as more fully set forth on pages 20-23 of the Joint Report of Examination of the Insured Institution as of June 30, 2001 (the "Joint Report of Examination") by the FDIC and the Office of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico ("COFI").

   IT IS FURTHER ORDERED that the Insured Institution take AFFIRMATIVE action as follows:

   [.1]1. (a) Within 60 days from the effective date of this ORDER, and within the first 30 days of each calendar year thereafter, the
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   board of directors of the Insured Institution shall develop an adequate written Strategic Plan ("Strategic Plan"). At a minimum, the Strategic Plan will establish objectives for the Insured Institution's earnings performance, asset growth, balance sheet mix, liability structure, and capital adequacy, together with strategies for achieving those objectives. The Strategic Plan will also identify capital, funding, and managerial resources needed to accomplish its objectives. Specific contents of the Plan should include, at a minimum, the following:

       (i) the types and kinds of loans and composition of the loan portfolio;

       (ii) allowable levels of past due loans by type of loan;

       (iii) capital levels required to support each of the Insured Institution's business lines;

       (iv) realistic and comprehensive budgets and projected income and expense levels;

       (v) a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components.

   (b) Such written Strategic Plan developed pursuant to paragraph 1(a) and any subsequent modification thereto shall be submitted promptly to the Regional Director of the New York Regional Office ("Regional Director") and the Commissioner of COFI ("Commissioner") for review and comment. Within 30 days after the receipt of any comment from the Regional Director and the Commissioner, the board of directors shall approve the Strategic Plan, which approval shall be recorded in the minutes of the meeting of the board of directors of the Insured Institution. Thereafter, the Insured Institution shall follow the written Strategic Plan and/or any subsequent modification thereto.

   [.2]2.(a) The Insured Institution shall have and retain qualified management. Each member of management shall have qualifications and experience commensurate with his or her duties and responsibilities at the Insured Institution. Such management shall include an experienced chief executive officer. The qualifications of management shall be assessed on its ability to:

       (i) comply with the requirements of this ORDER;

       (ii) improve and thereafter maintain the Insured Institution in a safe and sound manner, including asset quality, capital adequacy and earnings adequacy;

       (iii) comply with all applicable Federal and Commonwealth of Puerto Rico laws and regulations and FDIC and FFIEC policy statements;

       (iv) restore all aspects of the Insured Institution to a safe and sound condition, including capital adequacy, asset quality, management effectiveness and earnings.

   (b) During the life of this ORDER, the Insured Institution shall notify the Regional Director and the Commissioner in writing of any resignations and/or terminations of any members of its board of directors and/or any of its executive officers.

       (i) the Insured Institution shall comply with section 32 of the Act, 12 U.S.C. §1831i, which includes a requirement that the Insured Institution shall notify the Regional Director in writing at least 30 days prior to any individual assuming a new position as a senior executive officer or any additions to its board of directors.

   [.3]3.(a) To ensure both compliance with this ORDER and to facilitate having and retaining qualified management, the board of directors of the Insured Institution shall, within 60 days from the effective date of this ORDER, undertake an in-depth analysis and review of the Insured Institution's managerial requirements and make a written report ("Management Report") on the Insured Institution's management needs. The Management Report shall incorporate an analysis of the Insured Institution's management and staffing requirements and shall, at a minimum:

       (i) provide a review of the composition, policies and practices of the Insured Institution's current operating management;

       (ii) provide a recommendation of whether current operating management should be changed, or the terms and conditions under which current operating management should be continued;

       (iii) provide an evaluation of each Insured Institution officer indicating whether these officials possess the ability, experience and other qualifications required to perform present and anticipated duties, including adherence to the Insured Institution's established policies and practices
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       and maintenance of the Insured Institution in a safe and sound condition;

       (iv) identify both the number and type of positions needed to properly supervise the Insured Institution's lending functions, giving appropriate consideration to the Insured Institution's loan volume, customer base and the number of problem credits;

       (v) provide a clear and concise description of the general duties and responsibilities for each Insured Institution officer and their key support staff;

       (vi) identify the skills, experience and compensation required for each position;

       (vii) establish a plan providing for periodic evaluation of each individual's job performance; and

       (viii) provide for periodic review of the Insured Institution's management and updating of lending policies and procedures.

   (b) The board of directors of the Insured Institution shall obtain the services of an outside consultant, acceptable to the FDIC and COFI, who is knowledgeable in the area of bank management, lending, collections and personnel evaluation to assist the board of directors in reviewing the Insured Institution's management needs and preparing the Management Report. The acceptability of the consultant shall be based on the consultant's ability to advise the Insured Institution in each of the areas identified in paragraph 3(a).

   (c) Within 60 days from the effective date of this ORDER, the board of directors of the Insured Institution, with assistance of the outside consultant, shall prepare a written plan of implementation ("Plan") addressing the findings of the Management Report. The Plan shall specify the actions to be taken by the board of directors and the time frames for each action.

   (d) Within 90 days from the effective date of this ORDER, the board of directors of the Insured Institution shall prepare a written report ("Written Report") which shall contain (1) a recitation identifying the recommendations made by the outside consultant which have been incorporated in the Management Report and Plan; (2) a recitation identifying the recommendations made by the outside consultant which were not incorporated in the Management Report and Plan and the reasons for not including such recommendations; and (3) a copy of any report prepared by the outside consultant.

   (e) Promptly after preparation of the Management Report, Plan, and Written Report, but no later than 95 days from the effective date of this Order, a copy of the Management Report, Plan, and Written Report 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 of the Insured Institution shall approve the Management Report and Plan, which approval shall be recorded in the minutes of the meeting of the board of directors. It shall remain the responsibility of the board to fully implement the Plan within the specified time frames. In the event the Plan, or any portion thereof, is not implemented, the board of directors shall immediately advise the Regional Director, in writing, of the specific reasons for deviating from the Plan.

   [.4]4.(a) Within 90 days from the effective date of this ORDER, the Insured Institution shall be "well capitalized". Thereafter, during the life of this ORDER, the Insured Institution shall maintain a "well capitalized" level.

   (b) For the purposes of this ORDER, the term "well capitalized" shall have the meaning ascribed to it in section 38(b)(1)(A) of the Act.

   (c) Any increase in capital necessary to meet the requirements of paragraph 4(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 of the Insured Institution; or

       (iii) any combination of the above or other method acceptable to the FDIC.

   (d) If all or part of the increase in capital required by paragraph 4(a) of this ORDER is accomplished by the sale of new securities, the board of directors of the Insured Institution shall forthwith 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 Insured Institution securities (including a distribution limited only to the Insured Institution's existing shareholders), the Insured Institution shall prepare offering materials
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   fully describing the securities being offered, including an accurate description of the financial condition of the Insured Institution and the circumstances giving rise to the offering, and any other material disclosures necessary to comply with Federal and State 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, Registration and Disclosure Section, Washington, D.C. 20429. Any changes requested to be made in the plan or materials by the FDIC shall be made prior to their dissemination.

   (e) In complying with the provisions of paragraph 4 of this ORDER, the Insured Institution shall provide to any subscriber and/or purchaser of Insured Institution securities written noticed 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 Insured Institution securities. The written notice required by this paragraph shall be furnished within 10 calendar 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 Insured Institution securities who received or was tendered the information contained in the Insured Institution's original offering materials.

   (f) The Insured Institution shall not lend funds directly or indirectly, whether secured or unsecured, to any purchaser of Insured Institution stock or to any investor by any other means in order to achieve "well capitalized" status.

   [.5]5.(a) Within 30 days from the effective date of this ORDER, the board of directors of the Insured Institution shall review the adequacy of the Insured Institution's allowance for loan and lease losses. This review shall focus particular attention upon: (i) results of the Insured Institution's internal loan review; (ii) loan loss experience; (iii) an estimate of potential loss exposure on each significant credit; (iv) concentrations of credit in the Insured Institution; and (v) present and prospective economic conditions.

   (b) Immediately upon completing the review required by paragraph 5(a) of this ORDER,, the Insured Institution's board of directors shall adopt a method of computing the balance of the Insured Institution's allowance for loan and lease losses that gives consideration to the volume and composition of the loan portfolio not subject to criticism, as well as to the volume and composition of criticized loans, including, but not limited to, the factors referenced in paragraph 5(a). Thereafter, the Insured Institution's board of directors shall, during the first month of each quarter, reevaluate the allowance for loan and lease losses and make such additional provisions for loan and lease losses that are necessary to maintain the allowance at an adequate level relative to the volume of risk in the Insured Institution's loan portfolio. All such additional provisions for loan and lease losses shall be made in the first month of the calendar quarter in which the deficiency in the allowance is identified, but as of the end of the preceding calendar quarter, and shall be reflected in the Report of Condition and the Report of Income filed in the calendar quarter in which the deficiency is identified with respect to the preceding calendar quarter. The minutes of the board of directors of the Insured Institution shall reflect that such reevaluation has been performed, and documentary proof of the method employed in determining the level of the allowance shall be maintained for future regulatory review.

   (c) All increases in the allowance for loan and lease losses, with the exception of recoveries credited directly to the allowance, shall be accomplished by charges to operating earnings through the provision for loan and lease losses.

   [.6]6. Within 10 days from the effective date of this ORDER, the Insured Institution shall eliminate from its books, by collection or charge-off, all items or portions of items classified "Loss" and fifty (50%) percent of all items or portions of items classified "Doubtful" as a result of the Joint Report of Examination of the Insured Institution, which have not been previously charged off or collected. In addition, and so long as this ORDER remains in effect, the Insured Institution shall, within 30 days from the receipt of any subsequent report of examination of the Insured Institution from the FDIC or COFI, eliminate from its books, by collection or charge-off, all items or portions of items classified "Loss" and fifty (50%) percent of all
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   items or portions of items classified "Doubtful" in said report of examination. Elimination of these items through the use of the proceeds of loans or other extensions of credit made by the Insured Institution does not constitute collection for the purposes of this ORDER.

   [.7]7.(a) Within 180 days from the effective date of this ORDER, the Insured Institution shall reduce the remaining total of all items classified "Doubtful", and "Substandard" as a result of the Joint Report of Examination to not more than 50 percent of Tier 1 capital and allowance for loan and lease losses, and, within 360 days from the effective date of this ORDER, the Insured Institution shall reduce the total of such items to no more than 25%.

   (b) As used in this ORDER, the word "reduce" means (1) to collect, (2) to charge-off, or (3) to improve the quality of adversely classified assets sufficiently to warrant removing any adverse classification as determined in the Joint Report of Examination. Reduction of these items through the use of the proceeds of loans or other extensions of credit made by the Insured Institution does not constitute collection for the purposes of this ORDER.

   (c) The requirements of paragraphs 6 and 7 are not to be construed as standards for future operations and, in addition to the foregoing, the Insured Institution shall eventually reduce the total of all adversely classified items.

   [.8]8.(a) Immediately upon the effective date of this ORDER, the Insured Institution shall not extend, either directly or indirectly, any new or additional credit (which, for the purposes of this ORDER, shall include the granting of renewals or extensions, or the capitalizing of accrued interest), to or for the benefit of any borrower who is obligated in any manner to the Insured Institution on any extension of credit, or portion thereof, which has been charged off the books of the Insured Institution, in whole or in part, or to any affiliate or related interest of, or other person or entity associated with, any such borrower ("charged off borrower"), so long as any portion of such extension of credit, whether that portion was charged off, remains uncollected.

   (b) Immediately upon the effective date of this ORDER, the Insured Institution shall not extend, either directly or indirectly, any new or additional credit, to or for the benefit of any borrower who is obligated in any manner to the Insured Institution on any loan or other extension of credit that has been adversely classified, in whole or in part, as a result of the Joint Report of Examination of the Insured Institution, or as a result of any subsequent examination of the Insured Institution by the FDIC or COFI, or to any affiliate or related interest of, or other person or entity associated with, any such borrower ("classified borrower"), so long as such loan or other extension of credit remains classified or uncollected. This paragraph 8(b) shall not prohibit the Insured Institution from renewing all or any part of an extension of credit to a classified borrower, after collection in cash of interest due on the entire extension of credit.

   (c) All documentation related to the Insured Institution's decision to extend credit to a charged off or classified borrower shall be maintained by the Insured Institution.

   [.9]9.(a) Within 30 days from the effective date of this ORDER, the Insured Institution's board of directors shall adopt and implement a written program with regard to each asset which equals or exceeds $100,000 criticized in the Joint Report of Examination, so as to eliminate the basis of criticism of each such asset. This program shall include, at a minimum, an assessment of the status of each criticized asset, the proposed action for eliminating the basis of criticism, and the time frame for its accomplishment. Once all such programs are adopted, a copy of the program for each criticized asset which equals or exceeds $100,000 shall be forwarded to the Regional Director and the Commissioner. Furthermore, while this ORDER is in effect, the Bank's board of directors shall, within 30 days following receipt of any Report of Examination of the Bank from the FDIC or COFI, adopt and implement written programs, as specified above, for any assets criticized in said Reports, and forward copies of such programs to the Regional Director and the Commissioner. For the purposes of this ORDER, the term "criticized asset" means any asset, or portion thereof, scheduled as "Special Mention", "Substandard", or "Doubtful" in any Report of Examination of the Bank by the FDIC or COFI.

   (b) The Insured Institution's board of directors shall conduct a review of each program adopted pursuant to paragraph 9(a) of
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   this ORDER on at least a monthly basis, to determine:

       (i) the status of each criticized asset;

       (ii) management's adherence to each written program;

       (iii) the status and effectiveness of each written program; and

       (iv) the need to revise each written program and/or take other actions.

   The board shall send quarterly progress reports on the status of each criticized asset equal to or exceeding $100,000 to the Regional Director and the Commissioner.

   [.10]10.(a) Within 30 days from the effective date of this ORDER, the board of directors of the Insured Institution shall adopt and implement an internal loan review and grading system ("System") to periodically review the Insured Institution's loan portfolio and identify and categorize problem credits. At a minimum, the System shall provide for:

       (i) identifying 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 Insured Institution's lending policy, and exceptions to the Insured Institution's lending policy;

       (viii) an identification of insider loan transactions;

       (ix) a mechanism for reporting periodically, but in any event no less than quarterly, to the board of directors on the status of each loan identified and the action(s) taken by operating management; and

       (x) guidelines for (1) ensuring that all significant loans are reviewed by individuals who are not part of, or influenced by anyone associated with, the loan review process, (2) establishing frequency of reviews, and (3) determining scope of review for significant loans and those with major credit risks.

   (b) A copy of the reports submitted to the board of directors, as well as documentation of the action taken by the Insured Institution 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 Insured Institution's board of directors shall establish and appoint a 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 $100,000. The review shall 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 Insured Institution's loan policy and applicable laws, rules, and regulations. The loan committee shall meet at least 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.

   [.11]11. Within 60 days from the effective date of this ORDER, the Insured Institution shall eliminate and/or correct all violations of law and/or regulations, as described on pages 20-23 of the Joint Report of Examination of the Insured Institution. In addition, the Insured Institution shall take all steps necessary to ensure future compliance with all applicable Federal and Commonwealth of Puerto Rico laws and regulations.

   [.12]12.(a) Within 30 days from the effective date of this ORDER, the Insured Institution
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   shall review all Reports of Condition and Income filed with the FDIC on and after September 30, 2000 and shall amend and file with the FDIC amended Reports of Condition and Income which accurately reflect the financial condition of the Insured Institution as of the date of each such Report.

   (b) In addition to the above and during the life of this ORDER, the Insured Institution shall file with the FDIC, Consolidated Reports of Condition and Income which accurately reflect the financial condition of the Insured Institution as of the reporting period. In particular such reports shall include any adjustment in the Insured Institution's books made necessary or appropriate as a consequence of any FDIC or COFI examination of the Insured Institution during that reporting period and the results of the Joint Report of Examination of the Insured Institution.

   [.13]13. The Insured Institution shall not declare or pay dividends in any amount except as follows:

   (a) That such declarations and payments are made in accordance with applicable Commonwealth of Puerto Rico and Federal laws and regulations;

   (b) That after payment of such dividends, the Insured Institution shall remain "well capitalized";

   (c) That such declaration and payment of dividends shall be approved in advance by the board of directors of the Insured Institution; and

   (d) That such declaration and payment of dividends shall be approved in advance, in writing, by the Regional Director.

   [.14]14. Immediately upon the effective date of this ORDER, the Insured Institution shall:

   (a) not enter into any agreements with present and former officers of the Insured Institution which constitute "golden parachute payments", as defined in section 18(k)(4) of the Act, 12 U.S.C. §1828(k)(4);

   (b) rescind all agreements or portions of agreements with present and former officers of the Insured Institution which constitute "golden parachute payments";

   (c) cease making any payments to present and former officers of the Insured Institution which constitute "golden parachute payments"; and

   (d) take whatever legal steps are necessary to obtain reimbursement from all former officers of the Insured Institution of any payments which have already been made to them and which constitute "golden parachute payments".

   [.15]15. Within 30 days from the effective date of this ORDER, the Insured Institution shall maintain its interest rate risk ("IRR") exposure within the limits and parameters established and approved by the Insured Institution's board of directors and in accordance with safe and sound banking practices, including holding, at a minimum, monthly meetings of the Insured Institution's Asset/Liability Committee ("ALCO"). Reports of the Insured Institution's IRR and liquidity positions shall be presented at least monthly to the board of directors. The minimum time periods set forth in this paragraph are not to be construed so as to prevent more frequent analyses, ALCO meetings, and reports to the Insured Institution's board of directors. In appropriate circumstances, prudent banking will dictate that more frequent analyses of the Insured Institution's IRR and liquidity positions take place, that more frequent ALCO meetings be held, and/or more frequent reports be made by management to the Insured Institution's board of directors.

   [.16]16. Within 60 days from the effective date of this ORDER, and thereafter on an annual basis, the Insured Institution shall review the total compensation (both current and deferred) being paid to Insured Institution directors to determine whether the compensation received by each such person is reasonable in relation to the services provided to the Insured Institution. The minutes of the board meeting at which such review is undertaken shall indicate the results of the review and the basis for determination of the reasonableness of the compensation. For the purpose of this paragraph, "compensation" refers to any and all salaries, bonuses, and other benefits of every kind and nature whatsoever, whether paid directly or indirectly.

   [.17]17. Following the effective date of this ORDER, the Insured Institution 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 Insured Institution'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, Registration and Disclosure Section, Washington, D.C. 20429, and the Department for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC and the Commissioner shall be made prior to dissemination of the description, communication, notice, or statement.

   [.18]18. The Insured Institution's board of directors shall appoint a committee (the "Compliance Committee") composed of at least
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   three directors who are not now and have never been involved in the daily operations of the Insured Institution, and whose composition is acceptable to the Regional Director, to monitor the Insured Institution's compliance with this ORDER. Within 30 days from the effective date of this ORDER, and at monthly intervals thereafter, such Compliance Committee shall prepare and present to the Insured Institution's board of directors a written report of its findings, detailing the form, content, and manner of any action taken to ensure compliance with this ORDER and the results thereof, and any recommendations with respect to such compliance. Such progress reports shall be included in the minutes of the meeting of the Insured Institution's 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.

   19. By the 30th day after the end of the calendar quarter following the effective date of this ORDER, and by the 15th day after the end of every calendar quarter thereafter, the Insured Institution shall furnish written progress reports to the Regional Director detailing the form, content, and manner of any actions taken to secure compliance with this ORDER, and the results thereof.

   The effective date of this ORDER shall be immediately upon the date of issuance.

   The provisions of this ORDER shall be binding upon the Insured Institution, its successors, assigns, directors, officers, employees, agents, and other institution-affiliated parties.

   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: June 10, 2002

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