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FDIC Enforcement Decisions and Orders

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[12,316] In the matter of Beach Bank, Miami Beach, Florida, Docket No. 04-233b (11-1-04)

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.

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

[.2] Compliance Program—Written Compliance Plan Required

[.3] Bank Secrecy Act—Staffing Requirements

[.4] Bank Secrecy Act—Compliance—Directors' Committee to Oversee

[.5] Suspicious Activity Report—Implement Policy

[.6] Bank Secrecy Act—Internal Routine and Controls, Establish

[.7] Customer Due Diligence Program—Minimum Requirements

[.8] KYC Policies and Procedures—Revise

[.9] Audit—Required

[.10] MSB Procedures—Establish

[.11] MSB Procedures—Independent Verification

[.12] Loans—Executive Officers—Review Lending Authority

[.13] Management—Qualifications Specified

[.14] Capital—Tier I Capital Increase/Maintain

[.15] Dividends—Dividends Restricted

[.16] Strategic Plan—Preparation Required

[.17] Budget Plan—Preparation Required

[.18] Funds Management and Liquidity—Preparation or Revision of Funds Managment Policy Required

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

[.20] Progress Report—Written Report Required

In the Matter of
BEACH BANK
MIAMI BEACH, FLORIDA
(Insured State Nonmember Bank
ORDER TO CEASE AND DESIST

FDIC-04-233b

Beach Bank, Miami Beach, Florida ("Bank"), having been advised of its right to a written Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations of law, rules, 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. section 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 a representative of the Legal Division of the Federal Deposit Insurance Corporation ("FDIC"), dated October 27, 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, rules, and/or regulations, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.

The FDIC considered the matter and determined that it had reason to believe that the Bank engaged in unsafe or unsound banking practices and committed violations of law, rules, 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 such term is
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defined in section 3(u) of the Act, 12 U.S.C. Section 1813(u), and its successors and assigns cease and desist from the following unsafe or unsound banking practices and violations of law, rules and/or regulations:

    (a) operating the Bank without an effective Board of Directors ("Board") oversight and executive management supervision to prevent unsafe or unsound practices and violations of law of the Bank Secrecy Act ("BSA"), subchapter II of Chapter 53 of Title 31 of the United States Code;

    (b) operating in violation of section 103.121 of the Rules and Regulations of the Department of the Treasury, 31 C.F.R. §103.121 by failing to implement an effective customer identification program and/or effective "Know Your Customer" ("KYC") policies and procedures;

    (c) operating in violation of Part 353 of the FDIC Rules and Regulations, 12 C.F.R. Part 353 ("Part 353");

    (d) operating in violation of Part 326 of the FDIC Rules and Regulations, 12 C.F.R. Part 326 ("Part 326");

    (e) operating with inadequate internal controls and operating systems with regard to Money Services Businesses ("MSBs"), as that term is defined below;

    (f) operating with inadequate internal BSA routines and controls including, but not limited to, inadequate audit procedures;

    (g) operating the Bank in a manner that will produce operating losses;

    (h) operating with inadequate liquidity in light of the Bank's asset and liability mix;

    (i) operating with a business strategy that will result in unprofitable operations; and

    (j) operating with inadequate equity capital in relation to the volume and types of higher risk exposures at the Bank.

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

DEFINITIONS

For purposes of this ORDER;

    (a) MSB means any deposit account established by the Bank for currency exchangers, check cashers, issuers of traveler's checks, money orders, or stored value cards, the sellers or redeemers of such traveler's checks, money orders, or stored value cards, and money transmitters, as defined at 31 C.F.R. §103.11(uu).

    (b) Payee means the customers of the MSBs's that are the ultimate receivers of cash or value from the MSBs's transactions with the Bank.

    (c) Drawer means any person or entity that is a customer of the MSBs or the drawer of checks or other monetary instruments cashed by the MSBs and/or that directs the MSBs to transmit or transfer funds.

    (d) BSA Rules is the collective reference to the BSA, subchapter II of Chapter 53 of Title 31 of the United States Code, and its implementing rules and regulations at 12 C.F.R. Part 326, 31 C.F.R. Part 103, and Part 353.

    (e) KYC Policies and Procedures is the collective reference to section 103.121 of the Rules and Regulations of the Department of the Treasury, 31 C.F.R. §103.121, also known as the customer identification program ("CIP").

VIOLATIONS

[.1] 1. Beginning with the effective date of this ORDER, the Bank shall take all necessary steps, consistent with the other provisions of this ORDER and sound banking practices, to ensure that the Bank is operated with effective Board and executive management supervision to prevent unsafe or unsound banking practices and violations of law of the BSA, subchapter II of Chapter 53 of title 31 of the United States Code and to adopt and implement appropriate procedures to ensure future compliance with all applicable laws and regulations, including but not limited to, the BSA Rules and the KYC Policies and Procedures.

COMPLIANCE PLAN

[.2] 2. Within sixty (60) days from the effective date of this ORDER, the Bank shall develop and implement a written plan for the continued administration of the Bank's BSA Compliance Program and KYC Policies and Procedures designed to, among other things, ensure and maintain compliance with the BSA Rules ("Compliance Plan"). The Bank shall submit the Compliance Plan to the Regional Director of the FDIC's Atlanta Regional Office, Division of Supervision and Consumer Protection ("Regional Director") and to the Deputy Director of the Florida Office of Financial Regulation ("OFR") (collectively,
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"Supervisory Authorities") for review. Upon receipt of comments from the Supervisory Authorities, if any, the Bank's Board shall review and approve the Compliance Plan. If the Board fails to adopt any of the recommendations from the Supervisory Authorities, it shall provide to the Supervisory Authorities a comprehensive explanation of its rationale for failing to do so. The Board's review and approval shall be recorded in the minutes. Thereafter, the Bank shall implement the Compliance Plan. At a minimum, the Compliance Plan shall:

    (a) provide for a system of internal controls sufficient to comply in all material respects with the BSA Rules, and establish a plan for implementing such internal controls;

    (b) provide for independent testing for compliance by the Bank with the BSA Rules to be conducted by an outside party on an annual basis in compliance with the procedures described in the FDIC's "Guidelines for Monitoring Bank Secrecy Act Compliance" and establish a plan for implementing such testing. 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 Transaction Report ("CTR") filing;

      (iii) a test of the validity and reasonableness of the customer exemptions granted by the Bank;

      (iv) a test of the Bank's recordkeeping system for compliance with BSA; and

      (v) 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 Board and be recorded in appropriate minutes of the Board meeting and retained in the Bank's records.

    (c) provide for a suitable training program to assure that the Board, all appropriate Bank personnel including, without limitation, tellers, customer service representatives, lending officers, private and personal banking officers, and all other customer contact personnel are trained in all aspects of regulatory and internal policies and procedures related to the BSA Rules and the Bank's KYC Policies and Procedures, and establish a plan to implement and document such training; and

    (d) designate a senior Bank official responsible for coordinating and monitoring day-to-day compliance with the BSA Rules and the Bank's KYC Policies and Procedures.

BSA STAFF

[.3] 3. Within thirty (30) days from the effective date of this ORDER, the Bank shall analyze and assess the Bank's staffing needs to provide an adequate number of qualified staff for the Bank's BSA Department. The BSA Department staff shall be evaluated to determine whether these individuals possess the ability, experience, training and other necessary qualifications required to perform present and anticipated duties, including adherence to the Bank's BSA Compliance Program, the requirements of the BSA Rules and the Bank's KYC Policies and Procedures, and the provisions of this ORDER.

DIRECTORS' COMMITTEE

[.4] 4.Within thirty (30) days from the effective date of this ORDER, the Board shall establish a Directors' committee to oversee the Bank's compliance with the BSA Rules and the Bank's KYC Policies and Procedures. At least two-thirds of the members of this committee shall be independent, outside directors. The Directors' committee shall receive comprehensive monthly reports from the qualified officer appointed pursuant to paragraph 2(d) of this ORDER regarding the Bank's compliance with the BSA Rules and the Compliance Plan described in paragraph 2 above. The Directors' committee shall present a report regarding the Bank's compliance to the Board at each regularly scheduled meeting of the Board, which shall be recorded in the appropriate minutes of the Board meeting and retained in the Bank's records. Nothing herein contained shall diminish the responsibility of the entire Board to ensure compliance with the provisions of this ORDER and the Compliance Plan.

SAR AND CTR PROCEDURES

[.5] 5. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall establish and implement monitoring and reporting procedures for Suspicious Activity Reports ("SARs") and CTRs to ensure that
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all appropriate Bank employees are aware of the procedures, including accurate recordkeeping, form completion and the detection and reporting of known and/or suspected criminal activity, and their responsibilities in implementing the procedures.

(b) Within thirty (30) days from the effective date of this ORDER, the Bank shall contract with an independent auditor to conduct a forensic review of all high risk accounts maintained since January 1, 2003, and determine whether SARs should be filed. This forensic review shall be completed within one hundred and eighty (180) days from the effective date of this ORDER.

INTERNAL CONTROLS

[.6] 6. Within sixty (60) days of the effective date of this ORDER and as acceptable to the Supervisory Authorities, the Bank shall develop, adopt, and implement an enhanced system of internal routine and controls to ensure compliance with the BSA Rules including, but not limited to, the monitoring of high-risk and suspicious activities for all types of accounts, customers products, services, and geographic areas. At a minimum, such internal routine and controls shall include:

    (a) regular periodic comparison of actual MSB activity in each MSB account against expected or anticipated activity;

    (b) routine and/or automated procedures and systems for documenting variance between anticipated and actual MSB activity;

    (c) reporting such variances to Bank management, the Supervisory Authorities and/or law enforcement and, as appropriate, the filing of SARs;

    (d) risk based procedures requiring regular review and monitoring of activity that is conducted through the MSB account.

DUE DILIGENCE PROGRAM

[.7] 7. Within sixty (60) days from the effective date of this ORDER and as acceptable to the Supervisory Authorities, the Bank shall develop, adopt, and implement a written customer due diligence program ("Due Diligence Program"). At a minimum, the customer Due Diligence Program shall provide for a risk focused assessment of the customer base of the Bank to determine the appropriate level of enhanced due diligence ("EDD") necessary for those categories of customers that the Bank has reason to believe pose a heightened risk of illicit activities at the Bank including, but not limited to, MSBs, foreign correspondent accounts, and those customers whose transactions require EDD.

    (a) The Due Diligence Program shall provide for, at a minimum;

      (i) proper documentation for MSBs, and foreign correspondent accounts;

      (ii) time limits for Bank personnel to respond to account activity exceptions;

      (iii) time limits for determining if exceptions require a SAR;

      (iv) identification of customers requiring site visitations and frequency of visitations;

      (v) identification and proper risk coding of all MSBs, brokerage and exchange houses, and bearer share accounts;

      (vi) regular, periodic, comprehensive on-site visitations of the foreign correspondent;

      (vii) regular, periodic review and written assessment of the foreign correspondent's anti-money laundering program;

      (viii) regular, periodic review and written assessment of the foreign government's supervision of the foreign correspondent; and

      (ix) compliance with the New York Clearing House guidelines regarding EDD for foreign correspondent banks.

    (b) EDD shall include the following procedures;

      (i) determine the appropriate documentation necessary to confirm the identity and business activity of the customer;

      (ii) understand the normal and expected transactions of the customer; and

      (iii) reasonably ensure the identification and timely, accurate and complete reporting of known or suspected criminal activity against or involving the Bank to law enforcement and the Supervisory Authorities, as required by the suspicious activity reporting provisions of Part 353.

KYC POLICIES AND PROCEDURES

[.8] 8. Within sixty (60) days from the effective date of this ORDER, and as acceptable to the Supervisory Authorities, the Bank shall adopt and implement appropriate KYC Policies and Procedures. The Bank shall establish procedures for identifying and verifying the type and dollar volume of transactions
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in each deposit account that exceeded customer expected levels of cash or wire transfer activity.

INTERNAL AND EXTERNAL AUDITS

[.9] 9. Within sixty (60) days from the effective date of this ORDER, and as acceptable to the Supervisory Authorities, the Bank shall amend its audit policies, procedures, and practices, both with regard to internal and external audits, so that the Bank periodically reviews its compliance with the BSA Rules and the Bank's KYC Policies and Procedures as part of the Bank's routine auditing. The Bank's amended audit policies, procedures, and practices shall include the Bank's MSB activities. The Bank's internal and external audits shall include reviews of all of these areas, with significant exceptions reported directly to the Board.

MSB PROCEDURES

[.10] 10. (a) Within ninety (90) days from the effective date of this ORDER, for any MSBs that remain open, the Bank shall obtain or prepare, as appropriate, the following information regarding each MSB;

    (i) Articles of Incorporation or other organizational or chartering documents;

    (ii) current By-laws or their equivalent;

    (iii) documents establishing the scope of authority for each individual who transacts MSB activity with the Bank;

    (iv) biographical information, including the experience, education, capacity, and integrity of each officer or employee authorized to conduct business for the MSB;

    (v) current credit information of the type on which the Bank would rely in the ordinary course of business if it were extending credit to the MSB;

    (vi) an appropriate credit analysis by the Bank if the agreement between the Bank and the MSB provides for the possibility of an extension of credit to the MSB;

    (vii) an unaudited financial statement of the most recent fiscal quarter and an audited financial statement for the most recent fiscal year;

    (viii) a corporate resolution relating to the existence and operation of the MSB;

    (ix) a site visitation by the Bank to the administrative headquarters and/or operations center of the MSB;

    (x) an assessment by the Bank of foreign government oversight; and

    (xi) an annual independent review from an auditor on the Bank's approved auditor list.

(b) The Bank shall periodically update the information obtained pursuant to paragraph 10(a) and shall retain the information for a period of five (5) years following the closing of the account involving such MSB;

(c) The Bank shall prepare or obtain with regard to each MSB a written description of the institutions, mechanisms, systems, and/or procedures through which such MSB, its agents, and/or its affiliates obtain and process funds that are ultimately deposited into the Bank.

(d) The Bank shall take all reasonable steps to verify the accuracy of the descriptions required by subparagraph 10(c).

(e) The Bank shall obtain certification from an authorized officer of each MSB that the MSB, its agents, and its affiliates operate in conformity with the applicable laws, rules, and regulations of the United States and the State of Florida and the procedures through which such MSB, its agents, and/or its affiliates obtain and/or process funds that are ultimately deposited in the Bank.

(f) The Bank shall adopt and implement a written lending and collection policy to provide effective guidance and control over the any extension of credit for MSB accounts. Such policy shall be in a form and manner acceptable to the Supervisory Authorities as determined at subsequent examinations and/or visitations.

INDEPENDENT VERIFICATION

[.11] 11. Within ninety (90) days from the effective date of this ORDER, the Bank shall develop and implement procedures for routine, periodic independent verification of information provided to the Bank by MSBs regarding said MSB and/or Payees and Drawers.

EXECUTIVE OFFICERS

[.12] 12. Beginning with the effective date of this ORDER, the Bank shall not permit its executive officers to exceed the Bank's lending authorities. Within forty-five (45) days from the effective date of this ORDER, the Bank's Board shall review the Bank's policies regarding lending authority for its executive officers and adopt and implement a procedure to ensure that the Bank's executive officers comply with the Bank's policies
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regarding appropriate lending authority. The Bank shall report all exceptions to that policy to the Board at the next regularly scheduled Board meeting following the exception.

MANAGEMENT

[.13] 13. Within 60 days from the effective date of this ORDER, the Bank shall have and retain qualified management. Each member of management shall have the qualifications and experience commensurate with his or her duties and responsibilities at the Bank. Each member of management shall be provided appropriate written authority from the Bank's Board to implement the provisions of this ORDER. Management shall include the following:

    (a) a chief executive officer with proven ability in managing a bank of comparable size and in effectively implementing lending, investment and operating policies in accordance with sound banking practices; and

    (b) a chief operations officer with a significant amount of appropriate experience in managing the operations of a bank of similar size and complexity in accordance with sound banking practices.

    (c) 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 capital adequacy, earnings, management effectiveness, and liquidity.

    (d) During the life of this ORDER, the Bank shall notify the Supervisory Authorities in writing when it proposes to add any individual to the Bank's Board or employ any individual as a senior executive officer as that term is defined in Part 303 of the FDIC's Rules and Regulations, 12 C.F.R. §303.102. The notification should include a description of the background and experience of the individual or individuals to be added or employed and must be received at least 30 days before such addition or employment is intended to become effective. The Bank may not add any individual to its Board or employ any individual as a senior executive officer unless the OFR Director provides written approval of such individual and the Regional Director does not issue a notice of disapproval pursuant to section 32 of the Act, 12 U.S.C. §1831i.

CAPITAL

[.14] 14. (a) From the effective date of this ORDER, the Bank shall maintain Tier 1 Leverage Capital in such an amount as to equal or exceed seven (7.0%) percent of the Bank's total assets. In the event that the Tier 1 Leverage Capital Ratio falls below seven (7.0%) percent during the life of this ORDER, the Supervisory Authorities shall be notified immediately and capital shall be increased in an amount sufficient to meet the ratio required in this paragraph within ninety (90) days unless such requirement is modified in writing by the Supervisory Authorities.

(b) Additionally, during the life of this ORDER, the Bank shall maintain a Tier 1 risk based capital ratio of at least ten (10%) percent and a total risk based capital ratio of at least twelve (12%) percent as those risk based capital ratios are described in the FDIC Statement of Policy on Risk-based Capital contained in Appendix A to Part 325 of the FDIC's Rules and Regulations, 12 C.F.R. Part 325, Appendix A.

(c) The level of Tier 1 Leverage Capital Ratio to be maintained during the life of this ORDER pursuant to paragraph 14(a) shall be in addition to a fully funded allowance for loan and lease losses ("ALLL"), the adequacy of which shall be satisfactory to the Supervisory Authorities as determined at subsequent examinations and/or visitations.

(d) Any increase in Tier 1 capital necessary to meet the requirements of paragraph 14(a) of this ORDER may be accomplished by the following:

    (i) the sale of common stock;

    (ii) the direct contribution of cash by the Board, shareholders, and/or parent holding company; or

    (iii) any other means acceptable to the Supervisory Authorities.

Any increase in Tier 1 capital necessary to meet the requirements of Paragraph 14 of this ORDER may not be accomplished through a deduction from the Bank's ALLL.

(e) If all or part of any necessary increase in Tier 1 capital required by paragraph 14 of
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this ORDER is accomplished by the sale of new securities, the Board 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 any applicable securities laws. Prior to the implementation of the plan and, in any event, not less than 15 days prior to the dissemination of such materials, the plan and any materials to be used in the sale of the securities shall be submitted to the FDIC, Division of Supervision and Consumer Protection. Accounting and Securities Disclosure Section, 550 17th Street, N.W., Room F-6043, Washington, D.C. 20429, and the OFR, 200 East Gaines Street, Tallahassee, Florida, 32399-0371, for review. Any changes requested to be made in the plan or materials shall be made prior to their dissemination.

(f) In complying with the provisions of paragraph 14 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 that are materially different from the information reflected in any offering materials used in connection with the sale of Bank securities. The written notice required by this Paragraph shall be furnished within 10 days from the date such material developed 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.

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

CASH DIVIDENDS

[.15] 15. The Bank shall not pay cash dividends without the prior written consent of the Supervisory Authorities.

STRATEGIC PLAN

[.16] 16. Within sixty (60) days from the effective date of this ORDER, the Bank shall prepare and submit to the Supervisory Authorities its written strategic plan consisting of long-term goals designed to improve the condition of the bank and its viability and strategies for achieving those goals. The plan shall be in a form and manner acceptable to the Supervisory Authorities, but at a minimum shall cover three years and provide specific objectives for asset growth, market focus, earnings projections, capital needs, and liquidity position.

BUDGET

[.17] 17. (a) Within 30 days from the effective date of this ORDER, the Bank shall formulate and fully implement a written plan and a comprehensive budget for all categories of income and expense for the calendar year ending 2004.The plan and budget required by this paragraph shall include formal goals and strategies. consistent with sound banking practices taking into account the Bank's other written policies, to improve the Bank's net interest margin, increase interest income, reduce discretionary expenses, and improve and sustain earnings of the Bank. The plan shall include a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components. Thereafter, the Bank shall formulate such a plan and budget by November 30th of each subsequent year and submit the plan and budget to the Supervisory Authorities for review and comment by December 15th of each subsequent year.

(b) The plan and budget required by this paragraph shall be acceptable to the Supervisory Authorities as determined at subsequent examinations and/or visitations.

(c) Following the end of each calendar quarter, the Board shall evaluate the Bank's actual performance in relation to the plan required by this paragraph and shall record the results of the evaluation, and any actions taken by the Bank, in the minutes of the Board meeting at which such an evaluation is undertaken.

LIQUIDITY

[.18] 18. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall adopt and implement a written plan addressing liquidity, contingent funding, and
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asset liability management. A copy of the plan shall be submitted to the Supervisory Authorities upon its completion for review and comment. Within 30 days from the receipt of any comments from the Supervisory Authorities, the Bank shall incorporate those recommended changes. Thereafter, the Bank shall implement and follow the plan. Annually during the life of this ORDER, 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.

(b) The initial plan shall include, at a minimum:

    (i) a limitation on the ratio of the Bank's total loans assets;

    (ii) a limitation on the ratio of the Bank's total loans to funding liabilities;

    (iii) identification of a desirable range and measurement of dependence on non-core funding;

    (iv) establishment of lines of credit that would allow the Bank to borrow funds to meet depositor demands if the Bank's other provisions for liquidity proved inadequate;

    (v) a requirement for retention of sufficient investments that can be promptly liquidated to ensure the maintenance of the Bank's liquidity posture at a level consistent with short-term and long-term objectives;

    (vi) establishment of contingency plans to restore liquidity to that amount called for in the Bank's liquidity policy; and

    (vii) establishment of limits for borrowing federal funds and other funds, including limits on dollar amounts, maturities, and specified sources/lenders.

DISCLOSURE TO SHAREHOLDERS

[.19] 19. Following the effective date of this ORDER, the Bank shall send to its shareholders or otherwise furnish a description of this ORDER (i) in conjunction with the Bank's next written shareholder communication; and (ii) in conjunction with its notice or proxy statement preceding the Bank's next shareholder meeting. 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, Division of Supervision and Consumer Protection, Accounting and Securities Disclosure Section, 550 17th Street, Room F-6043 Washington, D.C. 20429, and to the OFR, 200 East Gaines Street, Tallahassee, Florida 32399-0371, for review at least twenty (20) days prior to dissemination to shareholders. Any changes requested to be made by the FDIC or the OFR shall be made prior to dissemination of the description, communication, notice or statement.

PROGRESS REPORTS

[.20] 20. Within ninety (90) days from the effective date of this ORDER, and within thirty (30) days following the end of each calendar quarter while this ORDER is in effect, the Bank shall furnish written progress reports to the Regional Director and to the OFR detailing the form and manner of all actions taken to secure compliance with this ORDER and the results of such actions. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director and the OFR have released the Bank in writing from making further reports. All progress reports and other written responses to this ORDER shall be reviewed by the Board and made a part of the minutes of the appropriate Board meeting.

The effective date of this ORDER shall be ten (10) days from the date of its issuance. This Order shall be binding upon the Bank, its institution-affiliated parties, and its successors and assigns. Further, 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 this 5th day of November, 2004.

The OFR Deputy Director having duly approved the foregoing ORDER, and the Bank, through its Board, having agreed that the issuance of said ORDER by the FDIC shall be binding as between the Bank and the OFR to the same degree and legal effect that such ORDER would be binding upon the Bank if the OFR had issued a separate order that included and incorporated all of the provisions of the foregoing ORDER pursuant to Fla. Stat. Ch. 655, §655.033.

Dated this 1st day of November, 2004.



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