Federal Deposit
Insurance Corporation

{{9-30-94 p.A-2463}}
   [¶5216] In the Matter of David R. Chandler, William S. Elliott, W.T. Karns and Chester L. Shrader, Bank of Healdton, Healdton, Oklahoma, Docket No. FDIC-92-265k(7-5-94).

   Board dismisses civil money penalty action against institution-affiliated parties, finding mitigating circumstances for their failure to meet all the requirements of FDI Act Section 32 regarding notice to FDIC of their service as senior executive officers of small, distressed bank.

   [.1] FDI Act Section 32—Civil Money Penalty—Mitigating Factors

In the Matter of
DAVID R. CHANDLER,
WILLIAM S. ELLIOTT,
W.T. KARNS,
CHESTER L. SHRADER,
individually, and as
institution-affiliated parties of
BANK OF HEALDTON
HEALDTON, OKLAHOMA
(Insured State Nonmember Bank)
ORDER DISMISSING PROCEEDING

   WHEREAS, a Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing ("Notice") against David R. Chandler, William S. Elliott, W.T. Karns, and Chester L. Shrader, individually, and as institution-affiliated parties of Bank of Healdton, Healdton, Oklahoma, under section 8(i)(2) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(i)(2), and the Federal Deposit Insurance Corporation's ("FDIC") Rules of Practice and Procedure at 12 C.F.R. Part 303.14; and
   WHEREAS, this matter was the subject of a hearing held on July 20–21, 1993, before Administrative Law Judge Arthur L. Shipe ("ALJ"); and
   WHEREAS, the ALJ's Recommended Decision and Proposed Order, dated February 25, 1994, was submitted to the Board of Directors ("Board") of the FDIC; and
   WHEREAS, the Board has reviewed the record in its entirety.

   [.1] NOW, THEREFORE, the Board, having considered the record and the applicable law, finds and concludes that, in light of the mitigating circumstances identified by the ALJ, no action is warranted. Accordingly, this proceeding is DISMISSED.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 5th day of July, 1994.s

In the Matter of
DAVID R. CHANDLER,
WILLIAM S. ELLIOTT,
W.T. KARNS,
CHESTER L. SHRADER,
individually, and as institution-
affiliated parties of
Bank of Healdton
Healdton, Oklahoma
(Insured State Nonmember Bank)
FDIC 92-265k
Arthur L. Shipe, Administrative Law Judge:
   This proceeding arises from a Notice of Assessment of Civil Money Penalties, issued by the Federal Deposit Insurance Corporation on November 2, 1992. The Notice, issued pursuant to Section 8(i) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(i) ("the Act"), alleges that the above Respondents individually and collectively violated Section 32 of the Act (12 U.S.C. § 1831(i)), and Section 303.14 of the FDIC Rules and Regulations (12 C.F.R. § 303.14), by electing and subsequently permitting Respondents David R. Chandler and William S. Elliott to serve as senior executive officers of the Bank of Healdton, without having properly notified the FDIC as required by Section 32(a).
   The matter was heard before me on July 20 - 21, 1993, in Oklahoma City, Oklahoma, wherein the parties appeared through that above counsel. On the record as a whole, including my observations of the witnesses, documents, and other evidence presented, I recommend the following.

   The Bank of Healdton is a small, rural, state-chartered bank located in south-central Oklahoma. The institution has been a regulatory concern for many years, due to a {{9-30-94 p.A-2464}}serious deterioration in its financial condition throughout the 1980's.
   Beginning in the year 1982, the FDIC, as primary federal regulator, issued the Bank a comprehensive Order to Cease and Desist. The Order was designed to enhance the institution's inadequate levels of capital, it's unacceptable management practices, and outstanding legal violations.
   The institution continued to deteriorate over the next several years, and in 1988 the FDIC supplemented the Cease and Desist Order within a Memorandum of Understanding. The MOU addressed yet additional deficiencies at the bank, which were noted during a comprehensive examination conducted as of July 11, 1988.
   With this brief introduction, we turn to the relevant circumstances which give rise to the instant matter involving the above Respondents.
   The institution was again examined in May of 1989. The Bank showed continued deterioration, demonstrated by it's inadequate capital position, continued net operating losses, and excessive levels of low-quality assets. The Bank was assigned a Uniform Financial Institution Rating of 5.
   Shortly after this examination, the Bank experienced a traumatic change in management. First, at the request of the Oklahoma State Banking Commission, two officers of the Bank, the President and the Chief Executive Officer, both resigned. The resignation of these officers was prompted by concern about their performance, as well as a continuing concern for the safety and soundness of the Bank.
   Second, the entire board of directors, with one exception, resigned from the institution. The state regulator believed that the various board members were also responsible for the existing problems. Director W.T. Karns, a respondent in this proceeding, was the only director not asked to resign.¹
   Immediately following this significant turnover, three new directors were added to the board, including Respondents Chandler and Shrader. After brief recruitment, and considerable expense, the Board retained two new officers to fill the vacant positions of President and CEO.
   The two new officers were brought into the bank during very troubled times. As such, it was both difficult and costly to solicit and retain these individuals, as the institution was critically short of capital, remained very weak, and was in extreme danger of near-term failure. The Board expected to receive a significant cash infusion, which capital the Bank badly needed to continue operations. Based upon this expectation, the Board expended the necessary resources to attract these new officers.
   The prospects of the capital infusion soon collapsed, however, and the board realized that the Bank lacked sufficient capital to maintain is operations. The institution continued to deteriorate dramatically, and immediate efforts were needed to cut costs and reverse capital depletion.
   It became obvious that the bank could no longer afford to support the two new officers. In May of 1990, the various directors elected, with much consternation, to terminate the bank's president, who had been hired only some ten months before. The newly-installed CEO was advanced to the position of bank president, while Director Karns, who at this point began to experience problems with his health, accepted the full-time position of CEO.
   Director Karns accepted this additional responsibility without compensation. His sole objective was to attempt to restore the Bank of Healdton to sound condition, and to instill some confidence in the local community, obviously concerned about the troubles confronting its only bank. Upon acceptance of the CEO position, Director Karns gave written notice to the Oklahoma Banking Commissioner.
   In September of 1990 the Bank again underwent a full-scope examination by FDIC and Oklahoma State Bank examiners. The institution was again assigned a Uniform Financial Institution Rating of 5, and the record reflects that both regulators and management alike considered the institution to present an extremely near-term probability of failure.
   The following month, after the board failed to take corrective action to restore the bank, the FDIC initiated action on October 25, 1990, to terminate the insured status of the

{{9-30-94 p.A-2465}}Bank of Healdton, pursuant to Section 8(a) of the FDI Act.
   In January of 1991, the board of directors grew increasingly concerned. The board obviously needed to immediately install a new Chief Executive Officer to begin the difficult task of raising capital, collecting substandard assets, and assisting in defense of the FDIC insurance termination action. Director Karns, as Chairman of the Board, asked Director Chandler to assume the CEO position, which Director Chandler agreed to accept.
   The record is not completely clear on this point, but it appears that Director Chandler's acceptance of this position was not intended to be permanent in nature. For that matter, given the circumstances of the institution, it was far from certain that the Bank of Healdton would even survive much longer.
   Given the tenuous condition of the bank, and the uncertainty associated with the its future operations, it was not feasible, nor for that matter was it even possible, to promptly retain outside management. Given these circumstances, Director Chandler agreed to accept the position of CEO. As compensation for his services, Respondent Chandler accepted a very modest salary, which attributed substantial savings to the institution during this difficult time.
   Upon assuming this new position, Respondent Chandler directed that the Bank secretary provide written notice to the Oklahoma State Bank Commissioner of his acceptance of the CEO position. This written notice was virtually identical to that which Director Karns gave upon his previous acceptance of the position.
   Approximately four months later, the bank's new president, who was also a member of the board, and who had been with the institution approximately one year, resigned. With this resignation, the Bank of Healdton has seen seven different presidents in only a four year period, and it was quite clear that the institution lacked the strong and continuing leadership that it desperately needed.
   This occurred, of course, while the institution was in the midst of litigating whether its federal deposit insurance should be terminated.
   In February of 1991, the Board promptly elected Respondent William Elliott to the Board of Directors. Because of the weak condition of the Bank, the election of this Respondent was considered temporary, as none of the bank management really expected the institution to survive.
   After considering the various options, the board requested, and Director Elliott agreed, to fill the vacant position of Bank President. President Elliott described his position as being a "month-to-month situation," lasting only so long as the institution remained operational.
   As with Respondent Chandler, Respondent Elliott also notified the Oklahoma Bank Commissioner in writing of his election to this new position.
   In April of 1991, the Bank of Healdton underwent another comprehensive examination by FDIC and state examiners. The results of the examination were again disastrous, and the institution was assessed a CAMEL rating of 5.
   During the course of the examination, the question concerning Section 32 Notification arose. Respondents Elliott and Chandler, having assumed senior executive officer positions within the bank, had not provided written notice to the FDIC as required by this provision.
   On this record it appears that neither Respondent, nor any of the board members for that matter, were aware of the requirement to provide notice in the first place.² Furthermore, it was not completely clear to anyone, the FDIC examiner included, that Respondent Chandler, a pre-existing director of the institution, was even required to provide such Notice.³
   More importantly, however, is the fact that these newly elected officers were intently involved in the management of a very troubled institution, which faced massive op-

{{9-30-94 p.A-2466}}erating problems, threatened termination of deposit insurance, and imminent failure.
   Respondent Chandler immediately took measures to insure compliance by Respondent Elliott. Accordingly, the Bank reduced Respondent Elliott's salary, removed him from the Board of Directors, limited his lending authority, and suspended his decision-making responsibility, until such time that his notice under Section 32 could be approved. Respondent Elliott did, however, retain the title of president, and did continue working in the bank, pending decision by the regional office.
   In May of 1991, Respondents Chandler and Elliott both submitted to the FDIC the notification materials required by Section 32. The Respondents, as well as the entire Board, wanted to insure compliance with the applicable requirements, and made good faith efforts, considering the circumstances under which they were operating.
   Shortly after submitting the above applications, the Bank appeared and participated in the administrative oral hearing, convened under Section 8(a) of the FDI Act, to consider whether the institution's deposit insurance should be terminated. The Board and bank management vigorously defended the action, expending significant money and effort in their attempts to retain the institution's insured status.
   Immediately following the hearing, the FDIC requested that Respondents Chandler and Elliott further supplement their Section 32 notifications with additional materials. The regional office considered the applications to be incomplete, but apparently did not want to immediately disapprove these Respondents, as the future success of the Bank was obviously dependent upon their continued service. The record reflects that it would have been difficult, if not impossible, to replace Respondent Chandler with a qualified executive officer during this trying time.
   For many months the notifications remained pending, allegedly due to their incomplete status. The FDIC eventually requested additional documentation from Respondent Chandler, some of which documentation, it turns out, was actually in the possession of the FDIC Division of Liquidation.
   Respondent Chandler encountered great difficulty in securing access to the needed documents, and after growing somewhat frustrated with the process, requested the Division of Supervision to assist him in procuring the needed loan papers. On this record it appears that the needed documents were never recovered.
   In the meantime the Respondents were continuing their management of the Bank. The Administrative Law Judge issued a decision recommending termination of the institution's insurance, based upon the Bank's critical condition. All of the Respondents, Respondent Chandler in particular, continued their diligent efforts to restore the Bank, which efforts were their primary objective and focus.
   The FDIC Board of Directors issued a final order terminating the institution's deposit insurance. The Board stayed implementation of the order, however, as a result of improvement in the Bank's condition.
   Thereafter, Respondent Chandler succeeded in accomplishing significant reduction in the bank's ORE and nonperforming assets. The overall condition of the institution improved substantially under his leadership, to the point that the FDIC Board of Directors eventually dismissed the Section 8(a) insurance termination proceeding.
   After the condition of the institution stabilized, Respondents Chandler and Elliott resigned from their respective executive positions with the Bank, resuming their roles on the Bank board. Though Respondent Chandler remained very active in the Bank's operations, two new officers were retained, and were properly approved by the FDIC.
   While the Bank of Healdton is not completely restored, it is no longer an imminent threat to the Bank Insurance Fund, due in large part to the efforts of the above Respondents. Both FDIC and State examiners concede that the institution survived rather formidable odds, and the Bank is now healthy enough to be the subject of a proposed acquisition, which will serve to completely remove the Respondents from further involvement with the institution.⁴
   Throughout this entire ordeal the Respondents were primarily concerned about the safety and soundness of the Bank of Healdton. Their actions were not motivated out of any self-interest, but rather, were motivated

{{9-30-94 p.A-2467}}out of their genuine concern for the institution.

   Section 32(a) of the Federal Deposit Insurance Act provides in pertinent part as follows:
   Prior Notice Required. An insured depository institution or depository institution holding company shall notify the appropriate Federal Banking agency of the proposed addition to the board of directors or the employment of any individual as a senior executive officer of such institution or holding company at least 30 days before such addition or employment becomes effective, if the insured depository institution or depository institution holding company - (1) has been chartered less than 2 years in the case of an insured depository institution;
   (2) has undergone a change of control within the preceding 2 years; or
   (3) is not in compliance with the minimum capital requirement applicable to such institution or is otherwise in a troubled condition, as determined by such agency on the basis of such institution's or holding company's most recent report of condition or report of examination or inspection.
   12 U.S.C. § 1831(i).
   Section 32 further provides that the FDIC may issue a notice of disapproval with respect to any notice submitted under paragraph (a), at any time the above conditions are not met. 12 U.S.C. § 1831(i)(3).
   The title "senior executive officer" is defined by FDIC Regulation as "any individual who exercises significant influence over, or participates in, major policymaking decisions of an insured nonmember bank, without regard to title, salary, or compensation." 12 C.F.R. § 303.14(a)(3).
   It cannot be disputed that the Bank of Healdton was a troubled institution, to which the notice requirements of Section 32 must apply. It should be noted, however, that this notification requirement is relatively new, and become effective during the midst of this Bank's troubles.
   Furthermore it should be noted that Respondents did not attempt in any way to conceal the positions held by Chandler and Elliott, for written notice was promptly supplied to the state banking regulator, which notice was presumably required before the enactment of Section 32.
   On this record I must conclude that the service of Respondents Chandler and Elliott, as Chief Executive Officer and President of the Bank of Healdton respectively, indeed violated Section 32 of the Act. For these violations civil money penalties may be assessed.
   Section 8(i) of the Act requires consideration of four factors in determining the assessment of penalties:
   (1) The size of the Respondent's resources;
   (2) The good faith of the Respondents;
   (3) The gravity of the violation; and
   (4) Previous violations, and other matters justice may require.
   I have carefully considered each of the above elements, and have applied them to the facts of the instant situation. I have considered that Section 32 of the Act plays a necessary and important function in the effective regulation and supervision of the banking industry, and that violation of this provision is indeed serious, and must be viewed under the circumstances presented.
   I have considered the good faith of these Respondents, including the fact that the cited violations were unintended, that they were not motivated out of any self-interest, and that they did not result in any quantifiable harm to the Bank or the Bank Insurance Fund. I have considered the efforts that these Respondents undertook to insure compliance with the Act, while simultaneously insuring the continued livelihood of the Bank of Healdton.
   I have considered the history of the violations, including the continuing nature of the noncompliance, and the fact that this continuation was, in part, attributable to the FDIC, which was unable to produce needed documents to complete the notification process.
   Finally, I have considered the financial resources of the Respondents, including the modest salaries and fees they derived from the Bank, when compared with the very difficult {{9-30-94 p.A-2468}}task they assumed in managing and directing this fragile institution.⁵
   After carefully considering all of the required elements, I must conclude that substantial mitigation of the assessed penalties is appropriate, based largely on the mitigating circumstances surrounding the violations. Accordingly, I recommend assessment of the following:

   I enter the following Findings of Fact, Conclusions of Law, and Proposed Order.

CHANDLER NOTICE
   1. Respondent Chandler was appointed as the Chief Executive Officer of the Bank on January 28, 1991, after the institution had experienced significant turnover among its senior executive officers. Admitted. Respondent's Answer ¶5. Petitioner's Exhibit 6.
   2. Prior to his appointment as Chief Executive Officer, Chandler was a director on the Bank's board. Admitted. Respondent's Answer ¶5.
   3. Chandler continued to serve in both capacities throughout all times pertinent to the charges herein. His position as CEO was not, however, intended to be permanent in nature, as the future of the Bank was not certain. Admitted. Respondent's Answer ¶5.
   4. At all times pertinent to the charges herein, Chandler was a licensed and practicing attorney. Admitted. Respondent's Answer ¶6.
   5. During the FDIC examination of the Bank as of April 12, 1991, the Bank and Chandler were informed of Section 32, though its application to Respondent Chandler was uncertain at the time. Admitted. Respondent's Answer ¶7. Tr. 28, 272–273.
   6. On or about May 16, 1991, Chandler submitted a Notice as required by Section 32 of the Act, and Section 303.14 of the FDIC Rules and Regulations, 12 C.F.R. § 303.14 ("Chandler Notice"). Admitted. Respondent's Answer ¶8. Petitioner's Exhibit 12, p. 3–12. Tr. 31.
   7. On or about May 31, 1991, the FDIC informed the Bank that the Chandler Notice was not complete and supplementation would be necessary. Admitted. Respondent's Answer ¶9. Petitioner's Exhibit 12, p. 1–2. Tr. 31.
   8. Between May 31, 1991 and October 23, 1991, Respondent Chandler was unable to provide additional information to supplement the Notice, due to the fact that certain documents were in the possession of the FDIC Liquidation Division. Tr. 126–127.
   9. On or about September 9, 1991, FDIC Regional Director Kenneth L. Walker informed the Bank and the Respondents, including Chandler, that he was prepared to recommend the assessment of civil money penalties for the failure to obtain FDIC approval before permitting Chandler to assume his position as Chief Executive Officer at the Bank. Admitted. Respondent's Answer ¶10. Petitioner's Exhibit 16. Tr. 66–67.
   10. By letter dated October 23, 1991, the Bank supplemented the Chandler Notice, but the supplementation could not fully detail certain loan transactions at a failed institution at which Chandler had been previously associated. Petitioner's Exhibit 18 and 20. Tr. 70.
   11. On or about November 12, 1991, FDIC informed the Bank that the supplemental information Chandler had provided did not address the issues raised by the FDIC. FDIC further informed the Bank that its failure to timely complete and submit the Chandler notice, together with Chandler's continued service as Chief Executive Officer of the Bank, constituted a continuing violation of Section 32. Petitioner's Exhibit 20. Tr. 72.
   12. On or about January 23, 1992, Chandler was reappointed to the position of Chief Executive Officer by the Bank's board of directors. Admitted. Respondent's Answer ¶29. Petitioner's Exhibit 8. Tr. 77, 415–416, 454–455 and 480–481.
   13. Respondents Chandler, Karns and Shrader voted in favor of Chandler's reappointment as Chief Executive Officer of the

{{9-30-94 p.A-2469}}Bank. Petitioner's Exhibit 8. Tr. 454–455 and 480–481.
   14. On or about March 27, 1992, Chandler withdrew the Chandler Notice. Admitted. Respondent's Answer ¶13. Petitioner's Exhibit 34. Tr. 85, 359.
   15. On or about June 11, 1992, Chandler resigned as Chief Executive Officer of the Bank, and resumed his functions on the Board. He remained an active director, closely supervising the bank's affairs. Petitioner's Exhibits 5 (pp. 1, 1-a, 6-a, 6-a-1, 6-b-2, A-1 and B), 39, 47 (pp. 2, 4 and 16). Tr. 139–155, 161–163, 194–201.
   16. After his resignation as Chief Executive Officer on June 11, 1992, Chandler continued to draw the same salary he had received prior to the resignation. Petitioner's Exhibits 5 and 47. Tr. 139.
   17. After resignation as Chief Executive Officer, Chandler continued to have the authority to sign checks on behalf of the Bank, to have the authority to approve daily operating expenses, and to have wire transfer authority. Petitioner's Exhibit 47. Tr. 141.
   18. At the January 1993 meeting of the board of directors, Respondent Chandler indicated that he would not be comfortable serving as only a director if he could not have supervisory authority over the daily activities of the Bank. Petitioner's Exhibit 46, p. 14. Tr. 141.

ELLIOTT NOTICE

   19. On or about February 21, 1991, Respondent Elliott was elected to the board of directors of the Bank, and he was appointed to the position of President. Admitted. Respondent's Answer ¶17. Petitioner's Exhibit 3 (pp. 1-a, 6-a-4 and A-1), Petitioner's Exhibit 4 (pp. 1-a, 1-a-1 and 6-b-1), Petitioner's Exhibit 7.
   20. The FDIC Report of Examination dated April 12, 1991, stated that Elliott was serving in the capacities of director and President in violation of section 32. Petitioner's Exhibit 3 (¶¶1-a, 6-a-4 and A-1).
   21. On or about April 17, 1991 and May 15, 1991, the FDIC received Notices with respect to the election and employment of Elliott ("Elliott Notice"). Petitioner's Exhibit 11. Tr. 30–31.
   22. On or about May 31, 1991, the FDIC advised the Bank that the information provided by the Bank was inadequate and that further supplementation was needed before the Elliott Notice would be considered complete. Petitioner's Exhibit 11. Tr. 30–31.
   23. Neither the Bank nor Elliott provided the requested information to the FDIC. Petitioner's Exhibits 20 and 31, Tr. 82, 90.
   24. On or about November 12, 1991, the FDIC notified the Bank that its failure to timely complete and submit the Elliott Notice, together with Elliott's continued service as Bank President, constituted a continuing violation of section 32. Though Respondent Elliott continued use of the title "President," his duties were limited in the attempt to avoid any continuation of the above violation. Petitioner's Exhibit 20.
   25. On or about January 6, 1992, FDIC Regional Director, Kenneth L. Walker, informed the Bank and the Respondents, including Elliott, that he was prepared to recommend civil money penalties against the Bank's board of directors, and Elliott, for the Bank's failure to obtain FDIC's prior approval before permitting Elliott to assume his position as President of the Bank. Petitioner's Exhibits 22–26. Tr. 73–76.
   26. On or about January 23, 1992, Elliott was reappointed to the position of President by the Bank's board of directors, though this reappointment was largely in title only. Petitioner's Exhibit 8.
   27. Elliott continued to serve as President of the Bank until he resigned on June 11, 1992, at which time he assumed the position of Vice-President of the Bank. This change of titles was at the suggestion of representatives of the FDIC. Petitioner's Exhibit 39. Tr. 87–91.

BOARD OF DIRECTORS

   28. At all times pertinent to the charges herein, Respondents Chandler, Karns and Shrader were members of the Bank's board of directors. Admitted as to Respondents Karns and Shrader. Respondent's Answer ¶26. Petitioner's Exhibits 3, 4, 5, 6, 7, and 8.
   29. Chandler, Karns and Shrader appointed Chandler to the position of Chief Executive Officer of the Bank on January 28, 1991, without providing thirty days prior notice to the FDIC. Petitioner's Exhibit 6.
   30. Chandler, Karns and Shrader appointed Elliott to the position of President of the Bank on February 21, 1991, without providing {{9-30-94 p.A-2470}}thirty days prior notice to the FDIC. Petitioner's Exhibit 7.
   31. It was impractical, if not impossible at this point, to recruit outside management, because of the extreme operating problems faced by the institution.
   32. Chandler, Karns and Shrader allowed Chandler to continue to serve as Chief Executive Officer of the Bank and Elliott to continue to serve as President of the Bank without completing the section 32 notification process. This continued service was at a time in which the Bank was not expected to survive.
   33. Chandler, Karns and Shrader reappointed Chandler as Chief Executive Officer of the Bank and Elliott as President of the Bank on January 23, 1992, after notice from the FDIC that their service in such positions without prior approval by the FDIC was a violation of section 32. Admitted. Respondent's Answer ¶29.

   34. Chandler served as a Chief Executive Officer of the Bank continuously from January 28, 1991 until at least June 11, 1992, approximately 501 days.
   35. During the above time, neither Chandler nor the Bank ever completed the statutorily required section 32 notification process.
   36. Elliott served as President of the Bank, though mostly in title only, continuously from February 21, 1991 until June 11, 1992, approximately 477 days.
   37. Between February 21, 1991 and June 21, 1991, neither Elliott nor the Bank ever completed the statutorily required section 32 notification process.
   38. After notification from the FDIC that Chandler and Elliott were serving as Chief Executive Officer and President of the Bank, respectively, and that the FDIC was considering the assessment of civil money penalties because of such violations of law, Chandler and Elliott not only remained in those positions but were in fact reappointed to them on January 28, 1992.

   39. Chandler has an independent net worth of approximately $18,000, consisting of nonexempt assets. Tr. 220, 226, Petitioner's Exhibit 60.
   40. If his joint or exempt property were included, Respondent Chandler's net worth would increase by $30,000. Tr. 226.
   41. Chandler had adjusted gross income of $36,465 for 1990, $73,166 for 1991 and $58,118 for 1992. Tr. 220–222, Petitioner's Exhibits 57–59.
   42. Chandler is also a specifically employed as a licensed attorney in addition to his employment and functions at the Bank. Admitted. Respondent's Answer ¶6.
   43. Elliott had a negative net worth of $43,726, as of January 18, 1993. Petitioner's Exhibit 61.
   44. Elliott has adjusted gross income for 1990 of $17,995 and for 1991 of $10,882. Tr. 230, Petitioner's Exhibits 62 and 63.
   45. The January 22, 1993, FDIC Report of Examination reflects that Elliott earned a salary of $39,000 and a bonus of $2,000 for 1992. Petitioner's Exhibit 5, p. B.
   46. Karns had a net worth of $312,144 on June 1, 1992. Petitioner's Exhibit 64.
   47. Karns had adjusted gross income of $32,891 for 1990, $45,097 for 1991 and $24,324 for 1992. Tr. 236–238, FDIC Exhibits 65, 66, and 67.
   48. Shrader had a net worth of $221,500 as of October 22, 1991 and approximately the same net worth as of July 22, 1993. Petitioner's Exhibit 68, Tr. 241.
   49. Shader had adjusted gross income of $14,163 for 1991 and $15,726 for 1992. Tr. 241–242, Petitioner's Exhibits 69 and 70.