Federal Deposit
Insurance Corporation

{{9-30-94 p.C-2852}}
   [¶10,671] In the Mater of University State Bank, Tampa, Florida, Docket No. FDIC-92-302b (11-17-92).

   Bank to cease and desist from such unsafe or unsound practices as failing to provide adequate supervision over the Bank's affairs; operating with management whose policies are detrimental to the Bank; operating with excessive volumes of adversely classified assets; engaging in practices which produce inadequate operating income; and operating without adequate reserve for loan losses. (This order was terminated by order of the FDIC dated 7-14-94; see ¶15,888.)

   [.1] Management—Qualifications—Review
   [.2] Management—Management Plan—Minimum Requirements
   [.3] Budget and Earnings Plan—Preparation Required
   [.4] Allowance for Loan and Lease Losses—Establish/Maintain
   [.5] Assets—Adversely Classified—Eliminate/Reduce
   [.6] Assets—Adversely Classified—Individual Written Plans
   [.7] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

UNIVERSITY STATE BANK
TAMPA, FLORIDA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-92-302b
   University State Bank, Tampa, Florida ("Bank"), having been advised of its right to a written Notice of Charges and of Hearing detailing unsafe or unsound banking practices alleged to have been committed by the Bank and of its right to a hearing regarding such alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with a representative of the Legal Division of the Federal Deposit Insurance Corporation ("FDIC"), dated October 14, 1992, whereby solely for the purpose of this proceeding and without admitting or denying any of the alleged charges of unsafe or unsound banking practices, 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 had engaged in unsafe or unsound banking practices. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

   IT IS HEREBY ORDERED, that the Bank, its institution-affiliated parties, as such term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns cease and desist from the following unsafe or unsound banking practices:
   A. Failing to provide adequate supervision and direction over the affairs of the Bank by the board of directors of the Bank to prevent unsafe or unsound practices;
   B. Operating the Bank with management whose policies and practices are detrimental to the Bank and jeopardize the safety of its deposits;
   C. Operating the Bank with an excessive volume of adversely classified assets and past due loans;
   D. Engaging in practices which produce inadequate operating income; and
   E. Failing to provide and maintain an adequate allowance for loan and lease losses for the volume, kind and quality of loans held by the Bank.
   IT IS FURTHER ORDERED that the Bank and its successors and assigns take affirmative action as follows:

[.1] 1. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall have and retain qualified management. At a minimum, such management shall include a chief executive officer with proven ability in managing a bank of comparable size and with comparable asset problems and shall include a senior lending officer with proven ability in managing a loan portfolio of comparable size, and with an appropriate level of lending, collection, and loan supervision experience necessary to supervise the upgrading of a low quality loan portfolio. Such man- {{1-31-93 p.C-2853}}agement 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 and regulations, and (iv) restore all aspects of the Bank to a safe and sound condition, including asset quality, earnings, and management effectiveness. As long as this ORDER remains in effect, the Bank shall notify the Regional Director of the FDIC's Atlanta Regional Office ("Regional Director") and the Florida State Comptroller ("Comptroller") in writing of any proposed changes in management. Such notification shall be in addition to any application and prior approval requirements established by section 32 of the Act, 12 U.S.C. § 1831i, and implementing regulations, must include the names and qualifications of any replacement personnel, and must be provided at least thirty (30) days prior to the individual's assuming the new position.

   [.2] (b) To ensure both compliance with paragraph 1(a) of this ORDER and the retention of qualified management for the Bank, within thirty (30) days from the effective date of this ORDER, the Bank's board of directors shall appoint an individual or a committee of individuals who are independent with respect to the Bank in order to develop a written analysis and assessment of the Bank's management needs ("Management Plan"), which shall include, at a minimum, a detailed, reasoned evaluation of:

   (i) the composition, policies, lines of delegation, and practices of the Bank's board of directors, all committees of Bank's board of directors, and current operating management;
   (ii) whether each member of the Bank's operating management possesses the ability, experience and other qualifications required to perform present and anticipated duties, including adherence to the Bank's established policies and practices, and maintenance of the Bank in a safe and sound condition;
   (iii) whether each member of current operating management should be retained;
   (iv) whether the Bank needs a plan of action to recruit, hire and compensate any additional or replacement personnel;
   (v) for each member of current operating management who will be retained by the Bank, the terms and conditions of employment, specifically including a review of salaries, bonuses, retainers, appraisal fees, fees paid to Bank officers for their attendance at meetings of the Bank's board of directors or of any committees of the Bank's board of directors, and all other compensation paid to or for the benefit of each such individual, both in relation to the Bank's ability to pay such compensation and in relation to the fair market value of the services rendered to the Bank; and
   (vi) all other salaries, bonuses, stipends, fees or other means of compensation paid directly or indirectly to or for the benefit of every director, officer, and every other institution-affiliated party of the Bank, and any Bank affiliate, to ensure that such payments constitute reasonable compensation for services performed, or to be performed, for or on behalf of the Bank, both in relation to the Bank's ability to pay such compensation and in relation to the fair market value of the services rendered to the Bank.

[.3] 2. (a) Within thirty (30) days from the effective date of this ORDER, the Bank shall prepare a realistic and comprehensive budget and profitability plan for calendar year 1992 and shall submit this budget and profitability plan to the Regional Director and the Comptroller for review and comment.
   (b) As long as this ORDER remains in effect, the Bank shall prepare realistic and comprehensive calendar year budgets and profitability plans on a consolidated basis as of January 1 of each year subsequent to 1992 and shall submit them to the Regional Director and the Comptroller for review and comment no later than January 31 of the budget year.
   (c) In preparing the budgets and profitability plans required by this paragraph 2 of the ORDER, the Bank shall, at a minimum:

   (i) Develop a written plan designed to achieve a ratio of net operating income after tax to average assets which is comparable to the ratio achieved by other banks of similar size and locale;
   (ii) Identify the major areas in, and means by, which the board of directors will seek to improve the Bank's operating performance; and
   (iii) Describe the operating assumptions that form the basis for, and adequately support, major projected income and expense components.

[.4] 3. (a) Within thirty (30) days from the effective date of this ORDER, and concurrently with compliance with the requirements of paragraph 4 of this ORDER, the Bank shall establish and thereafter continually maintain an adequate allowance for loan and lease losses in accordance with the prevailing requirements of the Instructions for the Reports of Condition and Income, by charges against current operating 3(a) of the ORDER, the Bank's board of directors shall, at a minimum, review the adequacy of the Bank's allowance for loan and lease losses prior to the end of each calendar quarter. The review shall include consideration of loans internally classified during the Bank's loan review process, loans adversely classified at FDIC or State of Florida Banking Department examinations of the Bank, and delinquent non-performing loans. The minutes of the board of directors' meeting at which such review in undertaken shall indicate the results of the review, the amount of any recommended increases in the allowance, and the basis for determining the amount of allowance provided.
   (b) Reports of Condition and Income required to be filed by the Bank prior to the effective date of this ORDER and subsequent to March 16, 1992, shall reflect a provision for the allowance for loan and lease losses necessary to comply with paragraph 3(a) of this ORDER. If necessary to comply with this paragraph 3(b) of the ORDER, the Bank shall file amended Reports of Condition and Income within thirty {{7-31-95 p.C-2855}}(30) days from the effective date of this ORDER.

   [.5] 4. Within thirty (30) days from the effective date of this ORDER, the Bank shall eliminate from its books, by collection, charge-off or other proper entries, all assets or portions of assets classified "Loss" by the FDIC as a result of the FDIC's Report of Examination of the Bank as of March 16, 1992, which have not been previously collected or charged off, unless otherwise approved in writing by the Regional Director and the Comptroller. Reduction of these assets through use of proceeds of loans made by the Bank does not constitute collection for the purpose of this paragraph 4 of the ORDER.

[.6] 5. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall submit to the Regional Director and the Comptroller a written plan of action to reduce each asset which was adversely classified by the FDIC as of March 16, 1992, and which aggregated $100,000 or more as of that date. Such plan of action shall be implemented by the Bank and monitored, and progress reports regarding the implementation of such plan shall be submitted by the Bank to the Regional Director and the Comptroller at ninety (90) day intervals concurrently with the other reporting requirements set forth in paragraph 7 of this ORDER.
   (b) Within one-hundred and eighty (180) days from the effective date of this ORDER, the Bank shall reduce the aggregate dollar volume of all remaining assets classified "Substandard" in the FDIC's Report of Examination of the Bank as of March 16, 1992, to not more than $1,800,000; within three-hundred and sixty (360) days from the effective date of this ORDER, the Bank shall reduce such aggregate total to not more than $1,400,000; and within five-hundred and forty (540) days from the effective date of this ORDER, the Bank shall reduce such aggregate total to not more than $900,000. The requirements of this paragraph 5(a) of the ORDER shall not be construed to establish a standard for future operations of the Bank.
   (c) As used in this paragraph 5 of the ORDER, "reduce" means to (i) collect, (ii) charge off, or (iii) improve the quality of such assets sufficiently to warrant removal of any adverse classification by the FDIC.

   [.7] 6. Following the effective date of this ORDER, the Bank shall send to its shareholder or otherwise furnish a description of this ORDER (1) in conjunction with the Bank's next shareholder communication and also (2) 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, Registration and Disclosure Section, Washington, D.C. 20429, and to the Comptroller, for review at least twenty (20) days prior to dissemination to shareholders. Any changes requested to be made by the FDIC or the Comptroller shall be made prior to dissemination of the description, communication, notice, or statement.
   7. Within ninety (90) days from the effective date of this ORDER, and every ninety (90) days thereafter, the Bank shall furnish written progress reports to the Regional Director and the Comptroller detailing the form and manner of any 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 Comptroller 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 of directors of the Bank and made a part of the minutes of the appropriate board meeting.
   8. The provisions of this ORDER shall become effective ten (10) days from the date of its issuance and 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.
   Dated at Atlanta, Georgia, this 17th day of November, 1992.
   Pursuant to delegated authority.