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FDIC Enforcement Decisions and Orders

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   [11,955] In the Matter of Stockmans Bank, Elk Grove, California, Docket No. 02-104b (7-31-02).

(This order was terminated by order of the FDIC dated 7-1-03; see ¶16,342.)

   A cease and desist order was issued, based on findings by the FDIC that it had reason to believe that respondent had engaged in unsafe and unsound practices.

   [.1] Bank Secrecy Act—Compliance

   [.2] Bank Secrecy Act—Correction of Violations Required

   [.3] Bank Secrecy Act—Compliance Program—Written Plan Required

   [.4] Bank Secrecy Act—Compliance Program—Employee Training

   [.5] Bank Secrecy Act—Compliance Program—Independent Testing Required

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

   [.7] Shareholders—Disclosure of Cease and Desist Order Required
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In the Matter of
STOCKMANS BANK
ELK GROVE, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

FDIC-02-104b

   Stockmans Bank, Elk Grove, California ("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 ("FDIC"), dated July 26, 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 regulation, 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 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 violations of law and/or regulations:

       (a) operating in violation of section 103.27(a)(1) and section 103.27(a)(3) of the Rules and Regulations of the Department of Treasury, 31 C.F.R. §§ 103.27(a)(1) and (3), as more fully described on page 8 of the Report of Examination dated April 8, 2002; and

       (b) operating in violation of section 326.8(c)(1) and section 326.8(c)(2) of the Rules and Regulations of the Federal Deposit Insurance Corporation, 12 C.F.R. §§ 326.8(c)(1) and (2), as more fully described on page 9 of the FDIC's Report of Examination dated April 8, 2002.

   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 of the effective date of this ORDER, the Bank shall comply in all material respects with the Bank Secrecy Act ("BSA") and its rules and regulations. Such compliance shall include, but is not limited to, taking the following measures:

   [.2]a. eliminating and/or correcting all violations cited on pages 8 and 9 of the FDIC's Report of Examination of the Bank dated April 8, 2002, and taking such steps to ensure future compliance with applicable laws and regulations;

   [.3]b. developing, adopting, and implementing a written plan designed to ensure compliance with all provisions of the BSA. Such plan and implementation shall be in a form and manner acceptable to the Regional Director as determined at subsequent examinations and/or visitations;

   [.4]c. providing an effective training program to all appropriate personnel at the Bank (including, but not limited to, tellers, customer service representatives, lending officers, branch managers and all other customer contact personnel) by a qualified individual. Written reports should be provided, which verify the scope, nature and frequency of the Bank's BSA training efforts. The report should address how management measures the success of the training program, how objectives of the training program are met and how oversight of the training is implemented amongst bank management and other bank employees that are involved in BSA compliance measures; and

   [.5]d. independently testing for compliance with the BSA and 31 C.F.R. Part 103. The independent testing should be conducted on an annual basis in compliance with the procedures described in the FDIC's "Guidelines for Monitoring Bank Secrecy Act Compliance." The testing, at a minimum, should include the following:

       (i) a test of the Bank's internal procedures for monitoring BSA;

       (ii) a sampling of large currency transactions followed by a review of the Currency
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       Transaction Reports ("CTR") filings by a senior executive officer of the Bank. Such review should provide for confirmation that all transactions requiring the filing of a CTR are identified and filed on a timely basis;

       (iii) a test of the Bank's record-keeping and record retention system for compliance with the BSA; and

       (iv) documentation of the scope of the testing procedures performed and the findings of the testing. Written reports should be prepared which document the testing results and provide recommendations for improvement and shall be presented to the Bank's Board of Directors and noted in official board minutes.

   [.6]2. The Board of Directors shall monitor and confirm the completion of actions taken by management to comply with the terms of this ORDER. The Board of Directors shall certify in writing to the Regional Director when all of the above actions have been accomplished. All actions taken by the Board of Directors pursuant to this ORDER shall be duly noted in the minutes of its meetings.

   3. Within 30 days of the end of the first 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.

   [.7]4. Following the effective date of this ORDER, the Bank shall send to its shareholders a copy of this ORDER or a description of this ORDER in conjunction both with the Bank's next shareholders communication and with its notice and/or proxy statement preceding the Bank's next shareholder meeting. If the Bank sends its shareholders a description of this ORDER rather than a copy of it, the description shall fully describe this 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, at least fifteen (15) days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice or statement.

   This 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.

   Dated at San Francisco, California, this 31st day of July 2002.

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Last Updated 11/16/2003 legal@fdic.gov