Each depositor insured to at least $250,000 per insured bank


Home > Regulation & Examinations > Bank Examinations > FDIC Enforcement Decisions and Orders





FDIC Enforcement Decisions and Orders



ED&O Home | Search Form | Text Search | ED&O Help


{{11-08-05 p.C-6085}

   [12,208] In the Matter of Asia-Europe-Americas Bank, Seattle, Washington, Docket No. 04-109B (5-17-04).

   A cease and desist order was issued, based on findings by the FDIC that it had reason to believe that Respondent was engaged in unsafe and unsound practices. (This order was terminated by order of the FDIC dated 11-8-05; see ¶16,444.)

   [.1] Management—Qualifications Specified

   [.2] Management—Comprehensive Review Required

   [.3] Compensation—Employee Compensation Report Required

   [.4] Bank Operations—Expense Reimbursement, Policy Required

   [.5] Board of Directors—Increased Participation in Bank Affairs Required

   [.6] Capital—Tier 1 Capital Increase/Maintain

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

   [.8] Assets—Charge-off or Collection

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

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

   [.11] Loans—Special Mention

   [.12] Strategic Plan—Preparation of Required

   [.13] Profit Plan—Preparation of Plan Required

   [.14] Violations of Law—Corrections of Violations Required

   [.15] Funds Management and Liquidity—Preparation or Revision of Funds Management Policy Required
{{7-31-04 p.C-6086}

   [.16] Bank Secrecy Act— Compliance

   [.17] Holding Company—Written Policy Required

   [.18] Dividends—Dividends Restricted

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

   [.20] Progress Report—Written Report Required

In the Matter of
ASIA-EUROPE-AMERICAS BANK
SEATTLE, WASHINGTON
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

FDIC-04-109B
DFI-04-1

   Asia-Europe-Americas Bank, Seattle, Washington ("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 A CONSENT ORDER ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC") and the Director of Banks, Department of Financial Institutions for the State of Washington ("Washington DFI"), dated May 3, 2004, 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 a CONSENT ORDER ("ORDER") by the FDIC and Washington DFI.

   The FDIC and Washington DFI considered the matter and determined that they 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 and Washington DFI, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER

   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 with management whose policies and practices are detrimental to the Bank and jeopardize the safety of its deposits;

   (b) operating with a board of directors which has failed to provide adequate supervision over and direction to the active management of the Bank;

   (c) operating with an inadequate loan valuation reserve;

   (d) operating with a large volume of poor quality loans;

   (e) engaging in unsatisfactory lending practices;

   (f) operating in such a manner as to produce low earnings;

   (g) operating in violation of the following laws and/or regulations:

       (i) section 23B of the Federal Reserve Act, 12 U.S.C. §371c-1, made applicable to state nonmember insured institutions by section 18(j)(1) of the Act, 12 U.S.C. §1828(j)(1), as more fully described on page 18 of the Joint FDIC/State Report of Examination dated December 1, 2003 ("Report of Examination");

       (ii) section 32 of the Federal Deposit Insurance Act, as more fully described on page 17 of the Report of Examination;

       (iii) sections 215.4(a), 215.4(e) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §§ 215.4(e), made applicable to state nonmember institutions by section 18(j)(2) of the Act, 12 U.S.C. §1828(j)(2), as more fully described on page 18 of the Report of Examination; and

       (iv) Part 323 of the FDIC's Rules and Regulations, 12 C.F.R. Part 323, as more fully described on page 17 of the Report of Examination;

   (h) operating in contravention of the following:

       (i) FDIC's Guidelines for an Environment Risk Program, as more fully described on page 18 of the Report of Examination;


{{7-31-04 p.C-6087}

       (ii) Appendix A to Part 365 of the FDIC's Rules and Regulations, 12 C.F.R. Part 365, Appendix A, as more fully described on pages 18 and 19 of the Report of Examination;

       (iii) the Interagency Policy Statement on the Allowance for Loan and Lease Losses, as more fully described on pages 19 and 20 of the Report of Examination; and

       (iv) Appendix A to Part 364 of the FDIC's Rules and Regulations, as more fully described on page 20 of the Report of Examination.

   (i) operating with inadequate provisions for liquidity;

   (j) paying excessive compensation to the Bank's chief executive officer; and

   (k) operating with inadequate policies governing reimbursement of the chief executive officer's expenses.

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

   [.1]1. The Bank shall have and retain qualified management.

       (a) Each member of management shall have qualifications and experience commensurate with his or her duties and responsibilities at the Bank. Management shall include a chief executive officer with proven ability in managing a bank of comparable size, and experience in upgrading a low quality loan portfolio, improving earnings, and other matters needing particular attention. Management shall also include a senior lending officer with significant appropriate lending, collection, and loan supervision experience and experience in upgrading a low quality loan portfolio. Each member of management shall be provided appropriate written authority from the Bank's board of directors to implement the provisions of this ORDER.

       (b) The qualifications of 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 effectiveness, liquidity, and sensitivity to market risk.

       (c) During the life of this ORDER, the Bank shall notify the Regional Director of the FDIC's San Francisco Regional Office ("Regional Director") and the Director of Banks, Department of Financial Institutions for the State of Washington ("Director of Banks") in writing when it proposes to add any individual to the Bank's board of directors or employ any individual as a senior executive officer. The notification must be received at least 30 days before such addition or employment is intended to become effective and should include a description of the background and experience of the individual or individuals to be added or employed.

   [.2] 2. Within 60 days from the effective date of this ORDER, the Bank's board of directors shall retain a qualified independent outside party that is acceptable to the Regional Director and Director of Banks to conduct a study of the management and personnel structure of the Bank to determine whether additional personnel are needed for the safe and profitable operation of the Bank. Such a study shall include, at a minimum, a review of the duties, responsibilities, qualifications, and remuneration of the Bank officers. The Bank shall formulate a plan to implement the recommendations of the study. The plan shall be acceptable to the Regional Director and Director of Banks as determined at subsequent examinations.

   [.3] 3. (a) Within 120 days from the effective date of this ORDER, the Bank shall adopt an employee compensation report after undertaking a review of compensation paid to any of the Bank's executive officers. At a minimum, the review shall include the following:

       (i) A critical analysis of each individual's background, experience, duties and responsibilities, and an appraisal of each individual's performance compared to the present level of compensation;

       (ii) a comparison of each officer's total compensation with compensation received by officers with similar responsibilities in similar institutions;

       (iii) a determination of whether present executive officers are capable of implementing


{{7-31-04 p.C-6088}

       board directives and policies, operating within the constraints of laws and regulations, and operating the Bank in a prudent manner; and

       (iv) an analysis of compliance with the Interagency Guidelines under Appendix A to Part 364 of the FDIC Rules and Regulations regarding excessive compensation.

   (b) The Bank's board must ensure executive compensation thereafter is reasonable and proportionate to the services performed, and conforms to regulatory guidance.

   (c) For the purposes 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. The compensation plan and its implementation shall be in a form and manner acceptable to the Regional Director and Director of Banks as determined at subsequent examinations and/or visitations.

   [.4] 4. (a) Within 60 days from the effective date of this ORDER, the Bank shall formulate and submit to the Regional Director and the Director of Banks for review and comment a written policy covering expense reimbursements to its directors, officers, and employees. At a minimum, the policy shall include:

       (i) Provisions which specify reasonable limitations for all categories of expenses related to customer entertainment and business development;

       (ii) Provisions which require complete documentation of all expenses related to customer entertainment and business development prior to Bank reimbursement. At a minimum, the Bank shall require the submission of original receipt(s), identification of the person(s) entertained, and the business purpose of the expense;

       (iii) Provisions which prohibit the reimbursement of personal expenses of the Bank's directors, officers, and employees; and

       (iv) Provisions which incorporate those recommendations indicated on Question 6 of the Risk Management Assessment pages, as more fully described on page 16 of the Report of Examination.

   (b) While this ORDER is in effect, the Bank's board of directors shall conduct monthly reviews of all expenses for customer entertainment, business development, and/or any other expense submitted by the Bank's officers and directors, with the results of the reviews stated in the minutes of the meetings of the board of directors at which such reviews are performed. On a monthly basis, the Bank shall seek reimbursement for any expenses paid which are not in conformance with the policy established pursuant to this paragraph.

   (c) Within 30 days from the receipt of any recommended changes to the written policy from the Regional Director and the Director of Banks, and after adopting those changes, the Bank shall adopt the written policy, which approval shall be recorded in the minutes of a board of directors' meeting. Thereafter, the Bank shall implement and follow the written policy.

   [.5] 5. (a) As of the effective date of this ORDER, the board of directors shall increase its participation in the affairs of the Bank, assuming full responsibility for the approval of sound policies and objectives and for the supervision of all of the Bank's activities, consistent with the role and expertise commonly expected for directors of banks of comparable size. This participation shall include meetings to be held no less frequently than monthly at which, at a minimum, the following areas shall be reviewed and approved: reports of income and expenses; new, overdue, renewal, insider, charged-off, and recovered loans; investment activity; operating policies; and individual committee actions. Board minutes shall document these reviews and approvals, including the names of any dissenting directors.

   (b) Within 180 days from the effective date of this Order, the Bank shall increase its board of directors by the addition of at least one independent director who shall have substantial banking background and experience.

   (c) During the life of this ORDER, in the event that a member of the Bank's board of directors resigns or otherwise leaves the board of directors, within 180 days from the date of such departure, the Bank shall replace such director with an independent director.

   [.6] 6. (a) During the life of this ORDER, the Bank shall maintain Tier 1 capital in such an amount as to equal or exceed eight and one-half (8.5) percent of the Bank's total assets.

   (b) The level of Tier 1 capital to be maintained during the life of this ORDER pursuant
{{7-31-04 p.C-6089}

   to Subparagraph 6(a) shall be in addition to a fully funded allowance for loan and lease losses, the adequacy of which shall be satisfactory to the Regional Director and the Director of Banks as determined at subsequent examinations and/or visitations.

   (c) Any increase in Tier 1 capital necessary to meet the requirements of Paragraph 6 of this ORDER may be accomplished by the following:

       (i) the sale of common stock; or

       (ii) the sale of noncumulative perpetual preferred stock; or

       (iii) the direct contribution of cash by the board of directors, shareholders, and/or parent holding company; or

       (iv) any other means acceptable to the Regional Director and the Director of Banks; or

       (v) any combination of the above means. Any increase in Tier 1 capital necessary to meet the requirements of Paragraph 6 of this ORDER may not be accomplished through a deduction from the Bank's allowance for loan and lease losses.

   (d) If all or part of the increase in Tier 1 capital required by Paragraph 6 of this ORDER is accomplished by the sale of new securities by the Bank, the board of directors shall forthwith take all necessary steps to 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 fifteen (15) 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 Unit, Washington, D.C. 20429, for review. Any changes requested to be made in the plan or materials by the FDIC shall be made prior to their dissemination. If the increase in Tier 1 capital is provided by the sale of noncumulative perpetual preferred stock by the Bank, then all terms and conditions of the issue, including but not limited to those terms and conditions relative to interest rate and convertibility factor, shall be presented to the Regional Director and the Director of Banks for prior approval.

   (e) In complying with the provisions of Paragraph 6 of this ORDER, the Bank shall provide to any subscriber and/or purchaser of the Bank's securities, a 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 ten (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.

   (f) For the purposes of this ORDER, the terms "Tier 1 capital" and "total assets" shall have, the meanings ascribed to them in Part 325 of the FDIC Rules and Regulations, 12 C.F.R. §§ 325.2(v) and 325.2(x).

   [.7] 7. (a) As of the effective date of this ORDER, the Bank shall replenish the allowance for loan and lease losses ("ALLL") as directed on page 3 of the Report of Examination and thereafter maintain the ALLL at an adequate level.

   (b) Within 30 days of the effective date of this ORDER, the Bank shall improve its ALLL methodology, correct all deficiencies relating to the ALLL methodology detailed in the Report of Examination, and ensure future compliance with outstanding regulatory statements of policy regarding ALLL.

   (c) Within 30 days from the effective date of this ORDER, the board of directors shall also develop or revise, adopt and implement a comprehensive policy for determining the adequacy of the ALLL. For the purpose of this determination, the adequacy of the ALLL shall be determined after the charge-off of all loans or other items classified "Loss." The policy shall provide for a review of the ALLL at least once each calendar quarter. Said review should be completed prior to the end of each quarter, in order that the findings of the board of directors with respect
{{7-31-04 p.C-6090}

   to the ALLL may be properly reported in the quarterly Reports of Condition and Income. The review shall, at a minimum, focus on the results of the Bank's internal loan review, loan loss experience, trends of delinquent and non-accrual loans, an estimate of potential loss exposure of significant credits, concentrations of credit, and present and prospective economic conditions. A deficiency in the ALLL shall be remedied in the calendar quarter it is discovered, prior to submitting the Report of Condition, by a charge to current operating earnings. The minutes of the board of directors meeting at which such review is undertaken shall indicate the results of the review. Upon completion of the review, the Bank shall increase and maintain its ALLL consistent with the ALLL policy established. Such policy and its implementation shall be satisfactory to the Regional Director and the Director of Banks as determined at subsequent examinations and/or visitations.

   [.8] 8. (a) Within five days from the effective date of this ORDER, the Bank shall eliminate from its books, by charge-off or collection, all assets classified "Loss" and one-half of the assets classified "Doubtful" in the Report of Examination that have not been previously collected or charged off. Elimination 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 the assets classified "Substandard" and "Doubtful" in the Report of Examination that have not previously been charged off to not more than $14,000,000.

   (c) Within 180 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" and "Doubtful" in the Report of Examination that have not previously been charged off to not more than $12,000,000.

   (d) Within 270 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" and "Doubtful" in the Report of Examination that have not previously been charged off to not more than $9,500,000.

   (e) Within 365 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" and "Doubtful" in the Report of Examination that have not previously been charged off to not more than $7,500,000.

   (f) The requirements of subparagraphs 8(a), 8(b), 8(c), 8(d), and 8(e) of this ORDER are not to be construed as standards for future operations and, in addition to the foregoing, the Bank shall eventually reduce the total of all adversely classified assets. Reduction of these assets through proceeds of other loans made by the Bank is not considered collection for the purpose of this paragraph. As used in subparagraphs 8(b), 8(c), 8(d), 8(e) and 8(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 Regional Director and the Director of Banks.

   [.9] 9. (a) Beginning with 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 has a loan or other extension of credit from the Bank that has been charged off or classified, in whole or in part, "Loss" and is uncollected. Subparagraph 9(a) of this ORDER shall not prohibit the Bank from renewing or extending the maturity of any credit in accordance with the Financial Accounting Standards Board Statement Number 15 ("FASB 15").

   (b) Beginning with 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 has a loan or other extension of credit from the Bank that has been classified, in whole or part, "Doubtful" without the prior approval of a majority of the board of directors or the loan committee of the Bank.

   (c) Beginning with 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 has a loan or other extension of credit from the Bank that has been classified, in whole or part, "Substandard" without the prior approval of a majority of the board of directors or the loan committee of the Bank.

   (d) The loan committee or Board shall not approve any extension of credit, or additional credit to a borrower in paragraphs (b) and (c) above without first collecting in cash all past due interest.
{{7-31-04 p.C-6091}

   [.10] 10. (a) Within 120 days from the effective date of this ORDER, the Bank shall revise, adopt, and implement written lending and collection policies to provide effective guidance and control over the Bank's lending function, which policies shall include specific guidelines for placing loans on a non-accrual basis. In addition, the Bank shall obtain adequate and current documentation for all loans in the Bank's loan portfolio. Such policies and their implementation shall be in a form and manner acceptable to the Regional Director and the Director of Banks as determined at subsequent examinations and/or visitations.

   (b) The initial revisions to the Bank's loan policy and practices, required by this paragraph, at a minimum, shall include the following:

       (i) provisions, consistent with FDIC instructions for the preparation of Reports of Condition and Income, under which the accrual of interest income is discontinued and previously accrued interest is reversed on nonaccrual loans;

       (ii) provisions which prohibit the capitalization of interest or loans related expense unless the board of directors supports in writing and records in the minutes of the corresponding board of directors meeting why an exception thereto is in the best interests of the Bank;

       (iii) provisions which require complete loans documentation, realistic repayment terms and current credit information adequate to support the outstanding indebtedness of the borrower. Such documentation shall include current financial information, profit and loss statements or copies of tax returns and cash flow projections;

       (iv) provisions which incorporate limitations on the amount that can be loaned in relation to established collateral values;

       (v) provisions which specify the circumstances and conditions under which real estate appraisals must be conducted by an independent third party;

       (vi) provisions which establish standards for unsecured credit;

       (vii) provisions which establish officer lending limits;

       (viii) provisions that require extensions of credit to any of the Bank's executive officers, directors, or principal shareholders, or to any related interest of such persons, to be approved in advance by a majority of the entire board of directors in accordance with section 215.4(b) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §215.4(b);

       (ix) provisions which prohibit the issuance of standby letters of credit unless the letters of credit are fully secured by readily marketable collateral and/or are supported by current and complete financial information;

       (x) provisions that directors first determine that the lending staff has the expertise necessary to properly supervise construction loans and that adequate procedures are in place to monitor any construction involved before funds are disbursed;

       (xi) provisions which prohibit concentrations of credit in excess of 25 percent of the Bank's total equity capital and reserves to any borrower and that borrower's related interests;

       (xii) provisions which require the preparation of a loan "watch list" which shall include relevant information on all loans which are classified "Substandard" and "Doubtful" in the Report of Examination or by the FDIC or Washington Department of Financial Institutions in subsequent Reports of Examination and all other loans which warrant individual review and consideration by the board of directors as determined by the loan committee or active management. The loan "watch list" shall be presented to the board of directors for review at least monthly with such review noted in the minutes;

       (xiii) provisions which require verification, with proper documentation and the handling officer's signature, that all conditions attached to the loan approval have been satisfied by the borrower prior to the funding of the loan; and

       (xiv) the board of directors shall adopt procedures whereby officer compliance with the revised loan policy is monitored and responsibility for exceptions thereto assigned. The procedures adopted shall be reflected in minutes of a board of directors meeting at which all members are present and the vote of each is noted.

   [.11] 11. Within 90 days of the effective date of this ORDER, the Bank shall correct the following:
{{7-31-04 p.C-6092}

       (a) all exceptions noted for those assets listed as "Special Mention" on pages 41 through 44 of the Report of Examination; and

       (b) all technical exceptions found on pages 46 through 49 of the Report of Examination.

   [.12] 12. Within 120 days of the effective date of this ORDER, the Bank shall develop and submit to the Regional Director and Director of Banks a written three-year strategic plan. Such plan shall include specific goals for the dollar volume of total loans, total investment securities, and total deposits as of January 1, 2004, and December 31, 2006. For each time frame, the plan will also specify the anticipated average maturity and average yield on loans and securities; the average maturity and average cost of deposits; the level of earning assets as a percentage of total assets; and the ratio of net interest income to average earning assets. The plan shall be in a form and manner acceptable to the Regional Director and the Director of Banks as determined at subsequent examinations and/or visitations.

   [.13] 13. Within 120 days from the effective date of this ORDER, the Bank shall formulate and implement a written profit plan. This plan shall be forwarded to the Regional Director and the Director of Banks for review and comment and shall address, at a minimum, the following:

   (a) goals and strategies for improving and sustaining the earnings of the Bank, including:

       (i) an 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; and

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

   (b) coordination of the Bank's loan, investment, and operating policies, and budget and profit planning, with the funds management policy.

   [.14] 14. (a) Except as provided in subparagraph (b) below, within 45 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law and contraventions of statements of policy which are more fully set out on pages 17 through 20 in the Report of Examination.

   (b) With respect to the second violation of Part 323 set forth on page 17 of the Report of Examination and contravention of the FDIC's Guidelines for an Environmental Risk Program set forth on page 18 of the Report of Examination:

       (i) Within 45 days from the effective date of this ORDER, the Bank shall formulate and adopt a plan to address and correct said violation and contravention; and

       (ii) Within 120 days from the effective date of this ORDER, the Bank shall eliminate and/or correct said violation and contravention.

   (c) In addition, the Bank shall take all necessary steps to ensure future compliance with all applicable laws, regulations and policy statements.

   [.15] 15. Within 90 days from the effective date of this ORDER, the Bank shall develop a plan to improve liquidity, which could include a combination of reduced dependency on non-core funding, increased balance sheet liquidity, and enhanced contingent borrowing capacity. Such plan and its implementation shall be in a form and manner acceptable to the Regional Director and the Director of Banks as determined at subsequent examinations and/or visitations.

   [.16] 16. Within 60 days from the effective date of this ORDER, the Bank shall adopt and implement a policy for the operation of the Bank in such a manner as to ensure compliance with the provisions of the Bank Secrecy Act, USA Patriot Act and Part 353 of the FDIC's Rules and Regulations. The Bank shall address, at a minimum, enhanced controls on foreign deposit accounts, periodic Office of Foreign Assets Control checks on third party referral sources used to generate new foreign accounts, and additional training on the reporting and filing of suspicious activity reports. Such policy and its implementation shall be satisfactory to the Regional Director and the Director of Banks as determined at subsequent examinations and/or visitations.

   [.17] 17. Within 60 days from the effective date of this ORDER, the Bank shall develop, adopt, and implement a written policy satisfactory to the Regional Director
{{1-31-05 p.C-6093}

   and the Director of Banks, which policy shall govern the relationship between the Bank and its holding company, and shall limit the payment of any management, consulting, or other fees or funds of any nature, directly or indirectly, to or for the benefit of the Bank's holding company to only those fees or funds paid in connection with services performed by the Bank's holding company on behalf of or for the benefit of the Bank.

   [.18] 18. During the life of this ORDER, the Bank shall not pay cash dividends without the prior written consent of the Regional Director and the Director of Banks.

   [.19] 19. Following the effective date of this ORDER, the Bank shall send to its shareholders or otherwise furnish a description of this ORDER in conjunction with the Bank's next shareholder communication and also 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, Accounting and Securities 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.

   [.20] 20. Within 30 days of the end of the first quarter following the effective date of this ORDER, and within thirty (30) days of the end of each quarter thereafter, the Bank shall furnish written progress reports to the Regional Director and the Director of Banks detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports shall include a copy of the Bank's Report of Condition and the Bank's Report of Income. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director and the Director of Banks have released the Bank in writing from making further reports.

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

   The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.

   Pursuant to delegated authority.

   Dated at San Francisco, California, this 17th day of May, 2004.



ED&O Home | Search Form | Text Search | ED&O Help






Last Updated 2/24/2006 legal@fdic.gov