(This order was terminated by order of the FDIC dated 5-28-04; see ¶16,387.)
[.1] Capital—Increase Required
[.2] Dividends—Dividends Restricted
[.3] Management—Management Plan Required
[.4] Management—Qualifications Specified
[.5] Loans—Extensions of Credit—To Borrowers with Existing Adversely
Classified Credits
[.6] Assets—Charge-off or Collection
[.7] Loan Loss Reserve—Establishment of or Increase Required
[.8] Loans—Risk Position—Reduction of Adversely Classified Lines of Credit
Required
[.9] Technical Exceptions—Correction of Technical Exceptions Required
[.10] Loan Committee—Duties Specified
[.11] Loan Policy—Preparation or Revision of Policy Required
{{7-31-04 p.C-5560}}
[.12] Audit—Program Required
[.13] Violations of Law—Correction of Violations Required
[.14] Profit Plan—Preparation of Plan Required
[.15] Investments and Investment Policy—Investment Policy, Preparation or
Revision Required
[.16] Asset/Liability Management—Preparation or Revision of Asset/Liability
Management Policy Required
[.17] Strategic Plan—Preparation of Required
[.18] Shareholders—Disclosure of Cease and Desist Order Required
[.19] Board of Directors—Committee to Review Compliance with Cease and
Desist Order Required
In the Matter of
SPENCER STATE BANK
SPENCER, WISCONSIN
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-02-091b
Spencer State Bank, Spencer, Wisconsin ("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
regulation 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 s.
220.04(9), Wis. Stats., regarding hearings before the Department of
Financial Institutions for the State of Wisconsin ("WDFI"), 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 WDFI dated August 6, 2002 whereby,
solely for the purpose of this proceeding and without admitting or
denying the charges of unsafe or unsound banking practices or
violations of law and regulation, the Bank consented to the issuance of
an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC and WDFI.
The FDIC and WDFI considered the matter and determined that there was
reason to believe that the Bank had engaged in unsafe or unsound
banking practices and violations of law and regulation. The FDIC and
WDFI, 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 or unsound banking practices:
A. Operating with a board of directors that fails to exercise
adequate supervision over active Bank officers.
B. Operating with management whose policies and practices are
detrimental to the Bank.
C. Operating with an excessive level of adversely classified assets and
failing to timely recognize loan deterioration.
D. Engaging in hazardous lending and lax collection practices,
including, but not limited to:
• 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 perform adequate written analysis to properly
underwrite, monitor and grade lending relationships;
• The failure to enforce loan policy guidelines; and
• The failure to follow acceptable credit administration practices.
E. Operating with an inadequate methodology to accurately determine
the adequacy
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of the allowance for loan and lease losses ("ALLL").
F. Operating with a marginal level of capital protection for the kind
and quality of assets held.
G. Failing to implement and monitor appropriate loan, asset/liability
management and investment policies and practices.
H. Operating without a realistic budget.
I. Operating with a weak net interest margin and exposing the Bank to
undue interest rate risk.
J. Operating with an inadequate audit program.
K. Operating without an effective strategic plan.
L. Violating law or regulation, including:
The preferentially of section 215.4(a)(1) of Regulation O of the Board
of Governors of the Federal Reserve System ("Regulation O"), 12
C.F.R. §215.4(a)(1).
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 30 days from the last day of each calendar quarter, 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
7.5 percent, the Bank shall, within 30 days of the date of the required
determination, submit a plan to the Regional Director of the Chicago
Regional Office of the FDIC ("Regional Director") and the
Administrator, Division of Banking, WDFI ("Administrator"). The
plan shall indicate how the Bank will increase its capital ratio to not
less than 7.5 percent in a timeframe acceptable to the Regional
Director and Administrator. 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.
(b) 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" in the FDIC's Report of Examination dated January 7, 2002
("FDIC Report"), 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 its holding company; or
(v) Any other means acceptable to the Regional Director and the
Administrator; or
(vi) Any combination of the above means.
(c) 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
Registration & Disclosure Section, 550 17th Street, N.W., Washington,
D.C. 20429, and to WDFI, 345 W. Washington Avenue, 4th Floor, P.O. Box
7876, Madison, Wisconsin 53707-7876, for review. Any changes requested
to be made in the materials by the FDIC and WDFI shall be made prior to
their dissemination.
(d) In complying with the provisions of this paragraph, 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.
{{10-31-02 p.C-5562}}
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.
(e) 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. As of the effective date of this ORDER, the Bank shall pay no cash
dividends that would result in a Tier 1 capital ratio of less than 7.5
percent, without the prior written consent of the Regional Director and
Administrator.
[.3]3. (a) Within 30 days from the effective date of this ORDER, the Bank
shall retain a consultant acceptable to the Regional Director and
Administrator. 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 90 days from the
effective date of this ORDER.
(b) The Bank shall provide the Regional Director and Administrator with
a copy of the proposed engagement letter or contract required by this
paragraph for review before it is executed. The contract or engagement
letter, at a minimum, should include:
(i) A description of the work to be performed under the contract
or engagement letter;
(ii) The responsibilities of the consultant;
(iii) An identification of the professional standards covering the work
to be performed;
(iv) Identification of the specific procedures to be used when carrying
out the work to be performed;
(v) The qualifications of the employee(s) who are to perform the work;
(vi) The time frame for completion of the work;
(vii) Any restrictions on the use of the reported findings;
(viii) A provision for unrestricted examiner access to workpapers.
(c) 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, internal audit personnel, and
credit administration related staff members, 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 restoration and
maintenance of 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 the Management
Plan.
(d) The Management Plan shall be submitted to the Regional
Director and Administrator for review and comment upon its completion.
Within 30 days from the receipt of any comments from the Regional
Director and Administrator, and after the adoption of any recommended
changes, the Bank shall approve the Management Plan and record its
approval in the minutes of the board of directors' meeting.
Thereafter, the Bank, its directors, officers, and employees shall
implement and follow the Management Plan.
[.4]4. (a) The Bank shall have and retain qualified management. Such
persons shall be provided the necessary written authority to implement
the provisions of this ORDER. 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
{{10-31-02 p.C-5563}}
effectiveness, liquidity, and sensitivity to market risk.
(b) During the life of this ORDER, the Bank shall notify the Regional
Director and the Administrator, in writing, of any changes in any of
the Bank's management. For purposes of this ORDER, "management"
shall include any "director," as defined in section 303.101(a) of
the FDIC Rules and Regulations, 12 C.F.R. 303.101(a), and any
"senior executive officer," as defined in section 303.101(b) of
the FDIC Rules and Regulations, 12 C.F.R. 303.101(b). Prior to the
addition of any director or the employment of any senior executive
officer, the Bank shall comply with the requirements of section 32 of
the Act, 12 U.S.C. 1831(i), and Subpart F of Part 303 of the FDIC Rules
and Regulations ("Subpart F"), 12 C.F.R. Part 303, Subpart F.
[.5]5. (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" 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.
[.6]6. 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" in the FDIC Report that have not been
previously collected or charged off. Any such charged-off asset shall
not be rebooked without the prior written consent of the Regional
Director and Administrator. 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.
[.7]7. (a) Prior to submission or publication of all Reports of Condition
and Income required by the FDIC and WDFI after the effective date of
this ORDER, the board of directors of the Bank shall review the
adequacy of the Bank's ALLL, provide for an adequate 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 ALLL provided. In making these
determinations, the board of directors shall, at a minimum, consider
the factors discussed in the FDIC Statements of Policy addressing ALLL
methodologies and the Federal Financial Institutions Examination
Council's Instructions for the Reports of Condition and Income.
(b) ALLL entries required by this paragraph shall be made prior to any
Tier 1 capital determinations required by this ORDER.
(c) Within 30 days following the last day of each calendar quarter, the
Bank shall submit to the Regional Director and Administrator copies of
all Reports of Conditions and Income filed with the FDIC and WDFI.
[.8]8. (a) Within 60 days from the effective date of this ORDER, the Bank
shall formulate and submit to the Regional Director and Administrator
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 Report. 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.
(iii) Such plan shall include, but not be limited to:
(iv) Dollar levels to which the Bank shall reduce each asset within 6
and 12 months from the effective date of this ORDER; and
(v) Provisions for the submission of monthly written progress reports
on the plan to the Bank's board of directors for
{{10-31-02 p.C-5564}}
review and notation in minutes of the meetings of the board of directors.
(b) 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 or
WDFI.
(c) Within 30 days from the receipt of any comment from the Regional
Director and Administrator, 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.
[.9]9. Within 60 days from the effective date of this ORDER, the Bank shall
correct the technical exceptions listed in the FDIC Report.
[.10]10. (a) As of the effective date of this ORDER, the Bank's loan
committee shall meet at least monthly and shall include at least three
directors, two of whom are not officers of the bank.
(b) The loan committee shall, at a minimum, perform the following
functions:
(i) 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, which explanation shall address how
said exceptions are in the Bank's best interest and which shall be
reflected in the minutes of the corresponding committee meeting. The
written explanation shall be included in the minutes of the
corresponding loan committee meeting.
(ii) Review and monitor the status of repayment and collection of
overdue and maturing loans, as well as all other loans that were
classified "Substandard" in the FDIC Report, or that are included
on the Bank's internal watch list.
(iii) 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.
(iv) Maintain written minutes of the committee meetings, including a
record of the review and status of the aforementioned loans.
[.11]11. (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 for adequacy and, based upon this review, shall
revise the policy as necessary to strengthen the Bank's loan policy
monitoring procedures.
(b) Revisions to the Bank's loan policy required by this paragraph, at
a minimum, shall include provisions:
(i) Establish 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) Establishing procedures to ensure that all extensions of credit
originated or renewed by the Bank are 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 analysis, notations,
and comments;
(iii) Requiring loan committee or board review and monitoring of the
status of repayment and collection of overdue and maturing loans, as
well as all loans classified "Substandard" in regulatory
examination reports or on the bank's watch list;
(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 or 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,
{{10-31-02 p.C-5565}}
directors, or principal shareholders, or to any
related interest of such person, be thoroughly reviewed for compliance
with all provisions of Regulation O;
(viii) Incorporating limitations on the amount that can be loaned in
relation to established collateral values, including the requirement
that the source of the valuations be identified and which require 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;
(ix) Establishing standards for the institution of collection efforts
by the loan officer or legal counsel, and procedures to ensure timely
recognition of loss through charge-off, where appropriate;
(x) 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, in the FDIC Report, or by the FDIC or
State authority in a 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;
(xi) 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."
(c) 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.
[.12]12. (a) 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 addressing both internal and external audit
procedures. This program shall be consistent with the Interagency
Policy Statement on External Auditing Programs of Banks and Savings
Associations. The steps taken by the Bank to implement the Interagency
Policy Statement shall be recorded in the minutes of the meetings of
the board of directors.
(b) The written audit program shall provide for annual external
audits of the Bank's financial statements and operating procedures to
be performed by an independent public accounting firm acceptable to the
Regional Director and Administrator. The Bank shall provide the
Regional Director and Administrator with a copy of the proposed
engagement letter or contract with the accounting firm before it is
executed. The contract or engagement letter, at a minimum, should
include:
(i) A description of the work to be performed under the contract
or engagement letter;
(ii) The responsibilities of the accounting firm;
(iii) An identification of the professional standards covering the work
to be performed;
(iv) Identification of the specific procedures to be used when carrying
out the work to be performed;
(v) The qualifications of the employee(s) who are to perform the work;
(vi) The time frame for completion of the work;
(vii) Any restrictions on the use of the reported findings; and
(viii) A provision for unrestricted FDIC and WDFI examiner access
to work papers.
(c) During the life of this ORDER, the Bank shall forward copies
of any external audit reports required by this paragraph to the
Regional Director and Administrator within 10 days from the Bank's
receipt of such reports.
[.13]13. Within 90 days from the effective date of this ORDER, the Bank
shall correct the violation of law and regulation listed in the FDIC
Report. In addition, the Bank shall establish procedures to ensure
future compliance with all applicable laws and regulations.
[.14]14. (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 years
2002 and 2003. The plan shall contain formal goals and strategies
consistent with sound banking practices. A copy of the plan shall
{{10-31-02 p.C-5566}}
be submitted to the Regional Director and Administrator 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 the operating assumptions used in preparing the plan.
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.
[.15]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 investment policy for adequacy and shall make the necessary
revisions to address the actual and contemplated condition of the
investment portfolio and any trading account. The revised policy shall,
at a minimum, address the exceptions noted in the FDIC Report and shall
be consistent with:
(i) the FDIC's Supervisory Statement on Investment
Securities and End-User Derivatives Activities, as well as any
future revisions of this policy statement;
(ii) the Federal Financial Institutions Examination Council Supervisory
Policy entitled Selection of Securities Dealers and Unsuitable
Investment Practices; as well as with any future revisions of this
policy statement;
(iii) the Federal Financial Institutions Examination Council's
Instructions for Consolidated Reports of Condition and Income; and
(iv) generally accepted accounting principles.
(b) The revised policy shall be coordinated with the Bank's loan,
liquidity and asset/liability management policies.
[.16]16. (a) Within 60 days from the effective date of this ORDER, the Bank
shall adopt and implement a written plan addressing liquidity, rate
sensitivity objectives and the asset/liability management policy. The
plan shall, at a minimum, address the exceptions noted in the FDIC
Report regarding asset/liability management policies and procedures.
Annually thereafter, the Bank shall review this plan for adequacy and,
based upon such review, shall make appropriate revisions to the plan
that are necessary to strengthen funds management procedures and
maintain adequate provisions to meet the Bank's liquidity needs. The
initial plan shall include, at a minimum, provisions:
(i) Establishing a desirable range for the liquidity ratio;
(ii) Establishing a desirable range for the net non-core funding
dependency ratio as computed in the Uniform Bank Performance Report;
(iii) Establishing procedures for managing the Bank's sensitivity to
interest rate risk which comply with the Joint Agency Statement of
Policy on Interest Rate Risk and the Joint Supervisory Statement on
Investment Securities and End-user Derivative Activities.
(b) A copy of the Bank's initial plan shall be submitted to the
Regional Director and Administrator for review and comment. Within 30
days from the receipt of any comments from the Regional Director and
Administrator, 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.
[.17]17. (a) Within 90 days from the effective date of this ORDER, the Bank
shall formulate and submit to the Regional Director and Administrator
for review and comment a realistic, comprehensive strategic plan
covering at least three years. The plan required by this paragraph
shall contain an assessment of the Bank's current financial condition
and market area, and a description of the operating assumptions that
form the basis for major projected income and expense components.
(b) The written strategic plan shall address, at a minimum, the
following:
(i) Staffing needs;
(ii) Succession of management; and
(iii) Financial goals, including pro forma statements for asset growth,
capital adequacy, and earnings.
(c) The strategic plan shall be submitted to the Regional Director
and Administrator for review and comment. Within 30 days from the
receipt of any comment from the Regional Director or Administrator and
after the consideration of such comments, the
{{10-31-02 p.C-5567}}
Bank shall approve the strategic plan or 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 strategic plan.
(d) Within 30 days of the end of each calendar quarter following the
effective date of this ORDER, the Bank's board of directors shall:
(i) Evaluate the Bank's actual performance in relation to the
strategic plan;
(ii) Revise the strategic plan to reflect the results of the
evaluation; and
(iii) Record the results of the evaluation and revisions to the
strategic plan in the minutes of the board of directors' meeting at
which such evaluation and revision are completed.
(e) Within 30 days after the quarterly evaluation, the Bank shall
submit the revised strategic plan to the Regional Director and
Administrator for review and comment. Within 30 days of receipt of all
such comments from the Regional Director or the Administrator, and
after consideration of all such comments, the Bank shall approve the
revised strategic plan, which approval shall be recorded in the minutes
of a board of directors' meeting. Thereafter, the Bank shall implement
the revised strategic plan.
[.18]18. Following the effective date of this ORDER, the Bank shall send to
the shareholders of Spencer Bancorporation, Inc. or otherwise furnish a
description of this ORDER: (1) in conjunction with the next shareholder
communication of Spencer Bancorporation, Inc.; and (2) in conjunction
with the notice or proxy statement preceding the next meeting of the
shareholders of Spencer Bancorporation, Inc. The description shall
fully describe the ORDER in all material respects. The description and
any accompanying communication, notice, or statement shall be sent to
WDFI, 345 W. Washington Avenue, 4th Floor, P.O. Box 7876, Madison,
Wisconsin 53707-7876, and the FDIC Registration and Disclosure Section,
550 17th Street, N.W., Washington, D.C. 20429, and to for review at
least 20 days prior to dissemination to shareholders. Any changes
requested to be made by WDFI and the FDIC shall be made prior to
dissemination of the description, communication, notice, or statement.
[.19]19. (a) Within 10 days from the effective date of this ORDER, the Bank
shall establish a compliance committee comprised of at least three
directors who are not officers of the Bank. The committee shall monitor
compliance with this ORDER.
(b) Within 30 days from the effective date of this ORDER and every 30
days thereafter, the compliance committee shall submit to the board of
directors for consideration at its next regularly scheduled meeting a
written report detailing the Bank's compliance with this ORDER. The
minutes of the applicable board of directors' meeting shall
incorporate the compliance report and shall note the board's
consideration of the report and any action taken as a result.
Establishment of this committee does not diminish the responsibility of
the entire board of directors to ensure compliance with the provisions
of this ORDER.
20. Within 30 days of each calendar quarter following the
effective date of this ORDER, the Bank shall furnish to the Regional
Director and Administrator 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 Administrator 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 WDFI.
Pursuant to delegated authority.
Dated this 26th day of August, 2002.
