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   [12,443] In the Matter of First Security Bank & Trust, McLean, Island, Kentucky, Docket No. 05-098b (8-5-05).

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] Management—Qualifications Specified

[.2] Management—Management Plan Required

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

[.4] Dividends—Dividends Restricted

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

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

[.7] Assets—Adversely Classified Assets—Reduction Required

[.8] Loans—Loan Document Exceptions—Correction Required

[.9] Loans—Overdue—Written Plan for Reduction Required

[.10] Loan Committee—Duties Specified

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

[.12] Strategic Plan—Preparation of Required

[.13] Profit Plan—Preparation of Plan Required

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

[.15] Audit—Written Policy Required

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

[.17] Compliance Program—Written Compliance Plan Required

[.18] Progress Report—Written Report Required

In the Matter of
FIRST SECURITY BANK & TRUST, MCLEAN
ISLAND, KENTUCKY
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

FDIC-05-098b

First Security Bank & Trust, McLean, Island, Kentucky ("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, rule, or 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 section 287.690 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. §287.690 (Michie 1981), regarding hearings before the Office of Financial Institutions for the Commonwealth of Kentucky ("KOFI"), 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 KOFI, dated July 25, 2005 whereby, solely for the purpose of this proceeding and without admitting or denying the charges of unsafe or unsound banking practices and violations of law, rule, or regulation, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC and KOFI.

The FDIC and KOFI considered the matter and determined that they had reason to believe that the Bank had engaged in unsafe or unsound banking practices and had violated laws, rules, or regulations. The FDIC and KOFI, therefore, accepted the CONSENT AGREEMENT and issued the following:

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
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or unsound banking practices and violations of law, rule, or regulations:

A. 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;

B. Operating with an inadequate level of capital protection for the kind and quality of assets held.

C. Violating law, rule, or regulation, including:

    • The Commonwealth of Kentucky legal lending limit restrictions as set forth in section 287.280 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. §287.280 (Michie 1981).

    • The recordkeeping requirements of section 215.8 of Regulation O of the Board of Governors of the Federal Reserve System ("Regulation O"), 12 C.F.R. §215.8.

    • The collateral requirements of section 23A of the Federal Reserve Act ("section 23A"), 12 U.S.C. §371c(c)(1).

    • The requirements of section 103.121(b)(2)(ii), 103.121(b)(3)(i)(C), and 103.27(d) of the Treasury Department's Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulation, 31 C.F.R. §103.22.

    • The requirements to maintain an adequate Bank Secrecy Act ("BSA") program as required by section 326.8(b)(2), (c)(2) and (c)(3) of the FDIC Rules and Regulations, 12 C.F.R. §326.8.

D. Operating with an excessive level of adversely classified assets, and delinquent loans.

E. Operating with an inadequate allowance for loans and lease losses for the volume, kind, and quality of loans and leases held.

F. Operating with excessive cost of funds, overhead, occupancy costs, and personnel costs.

G. Operating with inadequate lending policies.

H. Operating with an inadequate audit program.

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

J. Operating with a board of directors which has failed to provide adequate supervision over and direction to the management of the Bank to prevent unsafe or unsound banking practices and violations of law, rule, or regulations.

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

MANAGEMENT

[.1] 1. (a) Within 90 days from the effective date of this ORDER, the Bank shall have and retain qualified management. At a minimum, such management shall include: (i) a chief executive officer with proven ability in managing a bank of comparable size and experience; and (ii) a senior lending officer with an appropriate level of lending, collection, and loan supervision experience for the type and quality of the Bank's loan portfolio. Such person(s) shall be provided with the necessary written authority to implement the provisions of this ORDER. 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, rules, and regulations; and

    (iv) Restore all aspects of the Bank to a safe and sound condition, including asset quality, capital adequacy, earnings, management effectiveness, and liquidity.

(b) During the life of this ORDER, the Bank shall notify the Regional Director and Executive Director in writing of any changes in any of the Bank's directors or senior executive officers. For purposes of this ORDER, "senior executive officer" is defined as in section 32 of the Act ("section 32"), 12 U.S.C. §1831(i), and section 303.101(b) of the FDIC Rules and Regulations, 12 C.F.R.
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§303.101(b) and includes any person identified by the FDIC and KOFI, whether or not hired as an employee, with significant influence over, or who participates in, major policymaking decisions of the Bank.

(c) Prior to the addition of any individual to the board of directors or the employment of any individual as a senior executive officer, the Bank shall comply with the requirements of section 32 and Subpart F of Part 303 of the FDIC Rules and Regulations, 12 C.F.R. §§303.100–303.104. Further, the Bank shall request and obtain the Regional Director's and Executive Director's written approval prior to the addition of any individual to the board of directors and the employment of any individual as a senior executive officer.

MANAGEMENT STAFFING STUDY

[.2] 2. (a) Within 30 days from the effective date of this ORDER, the Bank Board of Directors 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.

(b) The Management Plan shall be developed within 90 days from the effective date of this ORDER. 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 and 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 this paragraph of this ORDER.

(c) The Management Plan shall be submitted to the Regional Director and Executive Director for review and comment upon its completion. Within 30 days from the receipt of any comments from the Regional Director and Executive Director, and after the adoption of any recommended changes, the Board 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 and/or any subsequent modification.

CAPITAL

[.3] 3. (a) Within 60 days from the effective date of this ORDER, the Bank Board of Directors shall develop and begin implementation of a written plan to increase its level of Tier 1 capital as a percentage of its total assets ("capital ratio") to no less than 7.5 percent, and to maintain the Bank's capital ratio at no less than 7.5 percent as determined from its Report of Condition and Income at the end of each calendar quarter. A copy of the plan shall be submitted to the Regional Director of the FDIC's Chicago Regional Office ("Regional Director") and the Executive Director of KOFI ("Executive Director") for review and comment upon completion. 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" as of April 11, 2005 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


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    (v) Any other means acceptable to the Regional Director and Executive Director; 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 Bank Board of Directors 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 said plan. Should the implementation of the plan involve public distribution of 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 other material disclosures necessary to comply with 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 and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 and to the Kentucky Office of Financial Institutions, 1025 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601, for their review. Any changes requested to be made in the materials by the FDIC or KOFI 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. The written notice required by this paragraph shall be furnished within 30 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.

DIVIDEND RESTRICTION

[.4] 4. As of the effective date of this ORDER, the Bank Board of Directors shall not declare or pay any cash dividend without the prior written consent of the Regional Director and Executive Director.

PROHIBITION OF ADDITIONAL LOANS TO CLASSIFIED BORROWERS

[.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 the books of the Bank 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" or is listed for Special Mention 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.

ALLOWANCE FOR LOAN AND LEASE LOSSES

[.6] 6. (a) Within 30 days from the effective date of this ORDER, the Bank shall make an additional provision for loan and lease losses which, after review and consideration by the Board of Directors, reflects the potential for further losses in the remaining loans or leases classified "Substandard" and all other loans and leases in its portfolio. In making this determination, the Board of Directors shall consider the Federal Financial Institutions Examination Council ("FFIEC") Instructions for the Reports of Condition and Income, and any analysis of the Bank's ALLL provided by the FDIC or KOFI.

(b) Prior to submission or publication of all Reports of Condition and Income required by the FDIC after the effective date of this ORDER, the Bank Board of Directors shall review the adequacy of the Bank's ALLL, provide for an adequate ALLL, and accurately report the same. The minutes of
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the board meeting at which such review is undertaken shall indicate the findings of the review, the amount of increase in the ALLL recommended, if any, and the basis for determination of the amount of ALLL provided. In making these determinations, the Board of Directors shall consider the FFIEC Instructions for the Reports of Condition and Income and any analysis of the Bank's ALLL provided by the FDIC or KOFI.

(c) ALLL entries required by this paragraph shall be made prior to any Tier 1 capital determinations required by this ORDER.

REDUCTION OF SUBSTANDARD ASSETS

[.7] 7. (a) Within 90 days from the effective date of this ORDER, the Bank Board of Directors shall adopt and implement a written plan to reduce the Bank's risk position in each asset in excess of $75,000 which is classified "Substandard" in the Joint KOFI/FDIC Report of Examination as of April 11, 2005 ("Joint Report"). A copy of the written plan shall be submitted to the Regional Director and Executive Director for review and comment upon its completion. 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.

(b) Such plan shall include, but not be limited to:

    (i) Dollar levels to which the Bank shall reduce each asset within both six months and twelve months from the effective date of this ORDER; and

    (ii) Provisions for the submission of monthly written progress reports to the Bank's board of directors for review and notation in minutes of the meetings of the board of directors.

(c) 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 KOFI.

(d) Within 30 days from the receipt of any comment from the Regional Director or Executive Director, and after the adoption of any recommended changes, the Board 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.

LOAN DOCUMENTATION EXCEPTIONS

[.8] 8. Within 90 days from the effective date of this ORDER, the Bank shall correct the loan documentation exceptions listed in the Joint Report.

REDUCTION OF DELINQUENCIES

[.9] 9. Within 90 days from the effective date of this ORDER, the Bank Board of Directors shall adopt and implement a written plan for the reduction and collection of delinquent loans. The plan shall include, but not be limited to, provisions which:

(a) prohibit the extension of credit for the payment of interest;

(b) delineate areas of responsibility for collections;

(c) establish acceptable guidelines for the collection of delinquent credits;

(d) establish dollar levels to which the Bank shall reduce delinquencies within six and twelve months from the effective date of this ORDER; and

(e) provide for the submission of monthly written progress reports to the Bank's Board of Directors for review and notation in minutes of the meetings of the board of directors.

(f) A copy of the written plan shall be submitted to the Regional Director and Executive Director upon its completion. As used in this paragraph, "reduce" means to: (1) collect; (2) charge off; or (3) bring payments current.

(g) Within 30 days from receipt of any comment from the Regional Director and Executive Director, and after the adoption of any recommended changes, the Board 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.

LOAN COMMITTEE

[.10] 10. (a) Within 30 days from the effective date of this ORDER, the Bank Board of Directors shall appoint a loan committee which shall meet at least twice monthly. The loan committee shall consist of at least five
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members, a majority of whom are outside directors.

(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. The written explanation shall be included in the minutes of the corresponding committee meeting.

    (ii) Review and monitor the status of repayment and collection of overdue and maturing loans, as well as all loans classified "Substandard" in the Joint Report, or that are included on the Bank's internal watch list.

    (iii) Maintain written minutes of the committee meetings, including a record of the review and status of the aforementioned loans. Such minutes shall be made available at the next Bank board of directors' meeting.

LOAN POLICY

[.11] 11. (a) Within 60 days from the effective date of this ORDER, and annually thereafter, the Bank Board of Directors shall review the Bank's loan policy and procedures for adequacy and, based upon this review, shall make all appropriate revisions to the policy necessary to strengthen lending procedures and abate additional loan deterioration. The revised written loan policy shall be submitted to the Regional Director and Executive Director for review and comment upon its completion.

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

    (i) Establishing review and monitoring 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) Requiring that all extensions of credit originated or renewed by the Bank be 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; 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;

    (iii) Requiring accurate reporting of past due loans to the loan committee on at least a monthly basis; and

    (iv) Incorporating collateral valuation requirements for various acceptable types of collateral, including: (A) maximum loan-to-collateral-value limitations; (B) a requirement that the valuation be completed prior to a commitment to lend funds; (C) a requirement for periodic updating of valuations; and (D) a requirement that the source of valuations be documented in Bank records.

(c) Within 30 days from the receipt of any comments from the Regional Director and Executive Director, and after the adoption of any recommended changes, the Bank Board of Directors shall approve the written loan policy and any subsequent modification thereto, which approval shall be recorded in the minutes of a board of directors' meeting. Thereafter, the Bank shall implement and follow the amended written loan policy.

STRATEGIC PLAN

[.12] 12. (a) Within 90 days from the effective date of this ORDER, the Bank Board of Directors shall formulate and adopt a realistic, comprehensive strategic plan. 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:

    (i) Strategies for pricing policies and asset/liability management; and

    (ii) Financial goals, including pro forma statements for asset growth, capital adequacy, and earnings.


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(c) The Board will submit the strategic plan to the Regional Director and Executive Director for review and comment upon its completion. After consideration of all such comments, the Bank shall approve the plan, which approval shall be recorded in the minutes of a board of directors' meeting.

(d) Within 30 days from the end of each calendar quarter following the effective date of this ORDER, the Bank's Board of Directors shall evaluate the Bank's actual performance in relation to the strategic plan 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.

(e) The strategic plan required by this ORDER shall be revised and submitted to the Regional Director and Executive Director for review and comment 30 days prior to the end of each calendar year for which this ORDER is in effect. Within 30 days of receipt of all such comments from the Regional Director and Executive Director, and after consideration of all such comments, the Bank Board shall approve the revised plan, which approval shall be recorded in the minutes of a board of directors' meeting. Thereafter, the Bank shall implement the revised plan.

BUDGET AND PROFIT PLAN

[.13] 13. (a) Within 90 days from the effective date of this ORDER, the Bank Board of Directors shall adopt and implement a written profit plan and a realistic, comprehensive revised budget for all categories of income and expense for calendar year 2005. The plan required by this paragraph shall contain formal goals and strategies, consistent with sound banking practices, to reduce discretionary expenses and to improve the Bank's overall earnings, and shall contain a description of the operating assumptions that form the basis for major projected income and expense components. A copy of the plan shall be submitted to the Regional Director and Executive Director for review and comment upon its completion.

(b) The written profit plan shall address, at a minimum:

    (i) A meaningful reduction in occupancy costs; and

    (ii) A meaningful reduction in personnel costs.

(c) Within 30 days from the end of each calendar quarter following completion of the profit plan and budget required by this paragraph, the Bank Board of Directors shall evaluate the Bank's actual performance in relation to the plan and budget, record the results of the evaluation, and note any actions taken by the Board in the minutes of the board of directors' meeting at which such evaluation is undertaken.

(d) A written profit plan and budget shall be prepared for each calendar year for which this ORDER is in effect and shall be submitted to the Regional Director and Executive Director for review and comment within 30 days of the end of each year. Within 30 days of receipt of all such comments from the Regional Director and Executive Director, and after adoption of any recommended changes, the Board 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.

CORRECTION OF VIOLATIONS

[.14] 14. (a) Within 90 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all contraventions of policy statements, violations of law, rule, and regulation, including all violations of the BSA and Treasury's Financial Recordkeeping and Reporting regulations, listed in the Joint Report, with the exception of those violations of the Commonwealth of Kentucky's legal lending limit restrictions as set forth in section 287.280 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. §287.280 (Michie 1981).

(b) Within 90 days from the effective date of this ORDER, the Bank shall develop and implement a plan to eliminate the violations of the Commonwealth of Kentucky legal lending limit restrictions as set forth in section 287.280 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. §287.280 (Michie 1981). The plan should include realistic time frames for the resolution and correction of the violations. A copy of the plan shall be submitted to the Regional Director and Executive Director for review and comment upon its completion.

(c) Within 90 days from the effective date of this ORDER, the Bank shall implement procedures to ensure future compliance with
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all applicable policy statements, laws, rules, and regulations.

AUDITS

[.15] 15. Within 90 days from the effective date of this ORDER, the Bank Board of Directors shall adopt and implement a comprehensive written audit program. At a minimum, the audit program shall provide that: (a) the internal auditor make written monthly reports of audit findings directly to the Bank's Board of Directors, which findings, and any action taken as a result of the findings, shall be recorded in the minutes of the meeting of the Board; and (b) the Bank provide the Regional Director and Executive Director with a copy of all external audit reports within 10 days of the Bank's receipt of such report(s). The Bank shall thereafter implement and enforce an effective system of internal and external audits. A copy of the audit program should be submitted to the Regional Director and Executive Director upon its completion.

DISCLOSURE TO SHAREHOLDERS

[.16] 16. Following the effective date of this ORDER, the Bank shall send to its shareholders a copy or description of this ORDER: (1) in conjunction with the Bank's next shareholder communication; and (2) in conjunction with the Bank's 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 communications, notice or statement shall be sent to the FDIC Registration and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429, and to the Kentucky Office of Financial Institutions, 1025 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601, for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC and KOFI shall be made prior to dissemination of the description, communication, notice or statement.

COMPLIANCE WITH ORDER

[.17] 17. (a) Within 30 days from the effective date of this ORDER, the Bank Board of Directors shall have in place a program that will provide for monitoring of the Bank's compliance with this ORDER.

(b) Following the required date of compliance with subparagraph (a) of this paragraph, the Bank Board of Directors shall review the Bank's compliance with this ORDER and record its review in the minutes of each regularly scheduled board of directors' meeting.

PROGRESS REPORTS

[.18] 18. Within 30 days from the end of each calendar quarter following the effective date of this ORDER, the Bank shall furnish to the Regional Director and Executive Director written progress reports signed by each member of the Bank's Board of Directors, detailing the actions taken to secure compliance with the ORDER and the results thereof. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Director and Executive Director have, in writing, released the Bank from making further reports.

CLOSING PARAGRAPHS

The effective date of this ORDER shall be 10 calendar days after its issuance by the FDIC and KOFI.

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 provision has been modified, terminated, suspended, or set aside by the FDIC and KOFI.

Pursuant to delegated authority.

Dated: August 5, 2005.



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Last Updated 11/14/2005 legal@fdic.gov