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[¶11,940] In the Matter of Banco Financiero de Puerto Rico, Ponce, Puerto Rico,
Docket No. 02-047b (6-10-02).
A cease and desist order was issued, based on findings by the FDIC that
it had reason to believe that respondent had engaged in unsafe and
unsound practices. (This order terminated by order of the FDIC
dated 2-6-03; see ¶16,329.)
[.1] Strategic Plan—Preparation of Required
[.2] Management—Qualifications Specified
[.3] Management—Management Report Required
[.4] Capital—Maintaining a "Well Capitalized" Level Required
[.5] Loan Loss Reserve—Establishment of or Increase Required
[.6] Assets—Charge-off or Collection
[.7] Loans—Concentration of Credit—Reduction Required
[.8] Loans—Extensions of Credit—To Borrowers with Existing Adversely
Classified Credits
[.9] Assets—Criticized Assets, Individual Plans Required
[.10] Loan Review and Grading System—Establishment of Required
[.11] Violations of Law—Correction of Violations Required
[.12] Reports of Condition and Income—Amendment Required
[.13] Dividends—Dividends Restricted
[.14] Golden Parachute Payments—Prohibited
[.15] Interest Rate Risk Policy—Minimum Requirements
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[.16] Board of Directors—Compensation Reviewed
[.17] Shareholders—Disclosure of Cease and Desist Order Required
[.18] Board of Directors—Committee to Review Compliance with Cease and
Desist Order Required
In the Matter of
BANCO FINANCIERO de PUERTO RICO
PONCE, PUERTO RICO
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-02-047b
BANCO FINANCIERO de PUERTO RICO, Ponce, Puerto Rico ("Insured
Institution"), having been advised of its right to a Notice of
Charges and of Hearing detailing the unsafe or unsound banking
practices and violations of law and/or regulations alleged to have been
committed by the Insured Institution and of its right to a hearing on
the alleged charges under section 8(b)(1) of the Federal Deposit
Insurance Act ("Act"), 12 U.S.C. §1818(b)(1), and having
waived those rights, entered into a STIPULATION AND CONSENT TO THE
ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT")
with counsel for the Federal Deposit Insurance Corporation
("FDIC"), dated June 6, 2002, whereby, solely for the purpose of
this proceeding and without admitting or denying the alleged charges of
unsafe or unsound banking practices and violations of law and/or
regulations, the Insured Institution 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 Insured Institution had engaged in unsafe or unsound
banking practices and had committed violations of law 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 Insured Institution, its directors,
officers, employees, agents, and other "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 or unsound banking practices and violations:
(a) Engaging in hazardous lending and lax collection practices with
respect to commercial loans;
(b) Operating the Insured Institution with inadequate capital in
relation to the kind and quality of assets held by the Insured
Institution;
(c) Operating the Insured Institution with an excessive volume of poor
quality assets;
(d) Operating the Insured Institution with an inadequate allowance for
loan and lease losses;
(e) Operating the Insured institution in such a manner so as to produce
unsatisfactory earnings;
(f) Operating the Insured Institution in such a manner as to produce
operating losses;
(g) Operating the Insured Institution with management whose policies
and practices are detrimental to the Insured Institution and jeopardize
the safety of its deposits;
(h) Operating the Insured Institution with a board of directors which
has failed to provide adequate supervision over and direction to the
active management of the Insured Institution;
(i) Failing to provide the Insured Institution with operational
personnel who have experience that is adequate to ensure safe and sound
operation of the Insured Institution and to ensure compliance with
applicable laws and regulations; and
(j) Engaging in violations of applicable Federal and Commonwealth of
Puerto Rico laws and/or regulations, as more fully set forth on pages
20-23 of the Joint Report of Examination of the Insured Institution as
of June 30, 2001 (the "Joint Report of Examination") by the FDIC
and the Office of the Commissioner of Financial Institutions for the
Commonwealth of Puerto Rico ("COFI").
IT IS FURTHER ORDERED that the Insured Institution take
AFFIRMATIVE action as follows:
[.1]1. (a) Within 60 days from the effective date of this ORDER, and within
the first 30 days of each calendar year thereafter, the
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board of directors of the Insured Institution shall develop an adequate written
Strategic Plan ("Strategic Plan"). At a minimum, the Strategic
Plan will establish objectives for the Insured Institution's earnings
performance, asset growth, balance sheet mix, liability structure, and
capital adequacy, together with strategies for achieving those
objectives. The Strategic Plan will also identify capital, funding, and
managerial resources needed to accomplish its objectives. Specific
contents of the Plan should include, at a minimum, the following:
(i) the types and kinds of loans and composition of the loan
portfolio;
(ii) allowable levels of past due loans by type of loan;
(iii) capital levels required to support each of the Insured
Institution's business lines;
(iv) realistic and comprehensive budgets and projected income and
expense levels;
(v) a description of the operating assumptions that form the basis for,
and adequately support, major projected income and expense components.
(b) Such written Strategic Plan developed pursuant to paragraph
1(a) and any subsequent modification thereto shall be submitted
promptly to the Regional Director of the New York Regional Office
("Regional Director") and the Commissioner of COFI
("Commissioner") for review and comment. Within 30 days after the
receipt of any comment from the Regional Director and the Commissioner,
the board of directors shall approve the Strategic Plan, which approval
shall be recorded in the minutes of the meeting of the board of
directors of the Insured Institution. Thereafter, the Insured
Institution shall follow the written Strategic Plan and/or any
subsequent modification thereto.
[.2]2.(a) The Insured Institution shall have and retain qualified
management. Each member of management shall have qualifications and
experience commensurate with his or her duties and responsibilities at
the Insured Institution. Such management shall include an experienced
chief executive officer. The qualifications of management shall be
assessed on its ability to:
(i) comply with the requirements of this ORDER;
(ii) improve and thereafter maintain the Insured Institution in a safe
and sound manner, including asset quality, capital adequacy and
earnings adequacy;
(iii) comply with all applicable Federal and Commonwealth of Puerto
Rico laws and regulations and FDIC and FFIEC policy statements;
(iv) restore all aspects of the Insured Institution to a safe and sound
condition, including capital adequacy, asset quality, management
effectiveness and earnings.
(b) During the life of this ORDER, the Insured Institution shall
notify the Regional Director and the Commissioner in writing of any
resignations and/or terminations of any members of its board of
directors and/or any of its executive officers.
(i) the Insured Institution shall comply with section 32 of the
Act, 12 U.S.C. §1831i, which includes a requirement that the Insured
Institution shall notify the Regional Director in writing at least 30
days prior to any individual assuming a new position as a senior
executive officer or any additions to its board of directors.
[.3]3.(a) To ensure both compliance with this ORDER and to facilitate
having and retaining qualified management, the board of directors of
the Insured Institution shall, within 60 days from the effective date
of this ORDER, undertake an in-depth analysis and review of the Insured
Institution's managerial requirements and make a written report
("Management Report") on the Insured Institution's management
needs. The Management Report shall incorporate an analysis of the
Insured Institution's management and staffing requirements and shall,
at a minimum:
(i) provide a review of the composition, policies and practices
of the Insured Institution's current operating management;
(ii) provide a recommendation of whether current operating management
should be changed, or the terms and conditions under which current
operating management should be continued;
(iii) provide an evaluation of each Insured Institution officer
indicating whether these officials possess the ability, experience and
other qualifications required to perform present and anticipated
duties, including adherence to the Insured Institution's established
policies and practices
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and maintenance of the Insured Institution in a
safe and sound condition;
(iv) identify both the number and type of positions needed to properly
supervise the Insured Institution's lending functions, giving
appropriate consideration to the Insured Institution's loan volume,
customer base and the number of problem credits;
(v) provide a clear and concise description of the general duties and
responsibilities for each Insured Institution officer and their key
support staff;
(vi) identify the skills, experience and compensation required for each
position;
(vii) establish a plan providing for periodic evaluation of each
individual's job performance; and
(viii) provide for periodic review of the Insured Institution's
management and updating of lending policies and procedures.
(b) The board of directors of the Insured Institution shall obtain
the services of an outside consultant, acceptable to the FDIC and COFI,
who is knowledgeable in the area of bank management, lending,
collections and personnel evaluation to assist the board of directors
in reviewing the Insured Institution's management needs and preparing
the Management Report. The acceptability of the consultant shall be
based on the consultant's ability to advise the Insured Institution in
each of the areas identified in paragraph 3(a).
(c) Within 60 days from the effective date of this ORDER, the board of
directors of the Insured Institution, with assistance of the outside
consultant, shall prepare a written plan of implementation
("Plan") addressing the findings of the Management Report. The
Plan shall specify the actions to be taken by the board of directors
and the time frames for each action.
(d) Within 90 days from the effective date of this ORDER, the board of
directors of the Insured Institution shall prepare a written report
("Written Report") which shall contain (1) a recitation
identifying the recommendations made by the outside consultant which
have been incorporated in the Management Report and Plan; (2) a
recitation identifying the recommendations made by the outside
consultant which were not incorporated in the Management Report and
Plan and the reasons for not including such recommendations; and (3) a
copy of any report prepared by the outside consultant.
(e) Promptly after preparation of the Management Report, Plan, and
Written Report, but no later than 95 days from the effective date of
this Order, a copy of the Management Report, Plan, and Written Report
shall be submitted to the Regional Director and the Commissioner for
review and comment. Within 30 days from receipt of any comment, and
after consideration of such comment, the board of directors of the
Insured Institution shall approve the Management Report and Plan, which
approval shall be recorded in the minutes of the meeting of the board
of directors. It shall remain the responsibility of the board to fully
implement the Plan within the specified time frames. In the event the
Plan, or any portion thereof, is not implemented, the board of
directors shall immediately advise the Regional Director, in writing,
of the specific reasons for deviating from the Plan.
[.4]4.(a) Within 90 days from the effective date of this ORDER, the Insured
Institution shall be "well capitalized". Thereafter, during the
life of this ORDER, the Insured Institution shall maintain a "well
capitalized" level.
(b) For the purposes of this ORDER, the term "well capitalized"
shall have the meaning ascribed to it in section 38(b)(1)(A) of the
Act.
(c) Any increase in capital necessary to meet the requirements of
paragraph 4(a) of this ORDER may be accomplished by the following:
(i) the sale of new securities in the form of common stock or
non-cumulative perpetual preferred stock; or
(ii) the direct contribution of cash by the directors of the Insured
Institution; or
(iii) any combination of the above or other method acceptable to the
FDIC.
(d) If all or part of the increase in capital required by
paragraph 4(a) of this ORDER is accomplished by the sale of new
securities, the board of directors of the Insured Institution shall
forthwith 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 Insured Institution
securities (including a distribution limited only to the Insured
Institution's existing shareholders), the Insured Institution shall
prepare offering materials
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fully describing the securities being
offered, including an accurate description of the financial condition
of the Insured Institution and the circumstances giving rise to the
offering, and any other material disclosures necessary to comply with
Federal and State 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 plan and any materials used in the
sale of the securities shall be submitted to the FDIC, Registration and
Disclosure Section, Washington, D.C. 20429. Any changes requested to be
made in the plan or materials by the FDIC shall be made prior to their
dissemination.
(e) In complying with the provisions of paragraph 4 of this ORDER, the
Insured Institution shall provide to any subscriber and/or purchaser of
Insured Institution securities written noticed 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 Insured Institution securities. The written
notice required by this paragraph shall be furnished within 10 calendar
days from the date such material development or change was planned or
occurred, whichever is earlier, and shall be furnished to every
subscriber and/or purchaser of Insured Institution securities who
received or was tendered the information contained in the Insured
Institution's original offering materials.
(f) The Insured Institution shall not lend funds directly or
indirectly, whether secured or unsecured, to any purchaser of Insured
Institution stock or to any investor by any other means in order to
achieve "well capitalized" status.
[.5]5.(a) Within 30 days from the effective date of this ORDER, the board
of directors of the Insured Institution shall review the adequacy of
the Insured Institution's allowance for loan and lease losses. This
review shall focus particular attention upon: (i) results of the
Insured Institution's internal loan review; (ii) loan loss experience;
(iii) an estimate of potential loss exposure on each significant
credit; (iv) concentrations of credit in the Insured Institution; and
(v) present and prospective economic conditions.
(b) Immediately upon completing the review required by paragraph 5(a)
of this ORDER,, the Insured Institution's board of directors shall
adopt a method of computing the balance of the Insured Institution's
allowance for loan and lease losses that gives consideration to the
volume and composition of the loan portfolio not subject to criticism,
as well as to the volume and composition of criticized loans,
including, but not limited to, the factors referenced in paragraph
5(a). Thereafter, the Insured Institution's board of directors shall,
during the first month of each quarter, reevaluate the allowance for
loan and lease losses and make such additional provisions for loan and
lease losses that are necessary to maintain the allowance at an
adequate level relative to the volume of risk in the Insured
Institution's loan portfolio. All such additional provisions for loan
and lease losses shall be made in the first month of the calendar
quarter in which the deficiency in the allowance is identified, but as
of the end of the preceding calendar quarter, and shall be reflected in
the Report of Condition and the Report of Income filed in the calendar
quarter in which the deficiency is identified with respect to the
preceding calendar quarter. The minutes of the board of directors of
the Insured Institution shall reflect that such reevaluation has been
performed, and documentary proof of the method employed in determining
the level of the allowance shall be maintained for future regulatory
review.
(c) All increases in the allowance for loan and lease losses, with the
exception of recoveries credited directly to the allowance, shall be
accomplished by charges to operating earnings through the provision for
loan and lease losses.
[.6]6. Within 10 days from the effective date of this ORDER, the Insured
Institution shall eliminate from its books, by collection or
charge-off, all items or portions of items classified "Loss" and
fifty (50%) percent of all items or portions of items classified
"Doubtful" as a result of the Joint Report of Examination of the
Insured Institution, which have not been previously charged off or
collected. In addition, and so long as this ORDER remains in effect,
the Insured Institution shall, within 30 days from the receipt of any
subsequent report of examination of the Insured Institution from the
FDIC or COFI, eliminate from its books, by collection or charge-off,
all items or portions of items classified "Loss" and fifty (50%)
percent of all
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items or portions of items classified "Doubtful"
in said report of examination. Elimination of these items through the
use of the proceeds of loans or other extensions of credit made by the
Insured Institution does not constitute collection for the purposes of
this ORDER.
[.7]7.(a) Within 180 days from the effective date of this ORDER, the
Insured Institution shall reduce the remaining total of all items
classified "Doubtful", and "Substandard" as a result of the
Joint Report of Examination to not more than 50 percent of Tier 1
capital and allowance for loan and lease losses, and, within 360 days
from the effective date of this ORDER, the Insured Institution shall
reduce the total of such items to no more than 25%.
(b) As used in this ORDER, the word "reduce" means (1) to
collect, (2) to charge-off, or (3) to improve the quality of adversely
classified assets sufficiently to warrant removing any adverse
classification as determined in the Joint Report of Examination.
Reduction of these items through the use of the proceeds of loans or
other extensions of credit made by the Insured Institution does not
constitute collection for the purposes of this ORDER.
(c) The requirements of paragraphs 6 and 7 are not to be construed as
standards for future operations and, in addition to the foregoing, the
Insured Institution shall eventually reduce the total of all adversely
classified items.
[.8]8.(a) Immediately upon the effective date of this ORDER, the Insured
Institution shall not extend, either directly or indirectly, any new or
additional credit (which, for the purposes of this ORDER, shall include
the granting of renewals or extensions, or the capitalizing of accrued
interest), to or for the benefit of any borrower who is obligated in
any manner to the Insured Institution on any extension of credit, or
portion thereof, which has been charged off the books of the Insured
Institution, in whole or in part, or to any affiliate or related
interest of, or other person or entity associated with, any such
borrower ("charged off borrower"), so long as any portion of such
extension of credit, whether that portion was charged off, remains
uncollected.
(b) Immediately upon the effective date of this ORDER, the Insured
Institution shall not extend, either directly or indirectly, any new or
additional credit, to or for the benefit of any borrower who is
obligated in any manner to the Insured Institution on any loan or other
extension of credit that has been adversely classified, in whole or in
part, as a result of the Joint Report of Examination of the Insured
Institution, or as a result of any subsequent examination of the
Insured Institution by the FDIC or COFI, or to any affiliate or related
interest of, or other person or entity associated with, any such
borrower ("classified borrower"), so long as such loan or other
extension of credit remains classified or uncollected. This paragraph
8(b) shall not prohibit the Insured Institution from renewing all or
any part of an extension of credit to a classified borrower, after
collection in cash of interest due on the entire extension of credit.
(c) All documentation related to the Insured Institution's decision to
extend credit to a charged off or classified borrower shall be
maintained by the Insured Institution.
[.9]9.(a) Within 30 days from the effective date of this ORDER, the Insured
Institution's board of directors shall adopt and implement a written
program with regard to each asset which equals or exceeds $100,000
criticized in the Joint Report of Examination, so as to eliminate the
basis of criticism of each such asset. This program shall include, at a
minimum, an assessment of the status of each criticized asset, the
proposed action for eliminating the basis of criticism, and the time
frame for its accomplishment. Once all such programs are adopted, a
copy of the program for each criticized asset which equals or exceeds
$100,000 shall be forwarded to the Regional Director and the
Commissioner. Furthermore, while this ORDER is in effect, the Bank's
board of directors shall, within 30 days following receipt of any
Report of Examination of the Bank from the FDIC or COFI, adopt and
implement written programs, as specified above, for any assets
criticized in said Reports, and forward copies of such programs to the
Regional Director and the Commissioner. For the purposes of this ORDER,
the term "criticized asset" means any asset, or portion thereof,
scheduled as "Special Mention", "Substandard", or
"Doubtful" in any Report of Examination of the Bank by the FDIC
or COFI.
(b) The Insured Institution's board of directors shall conduct a
review of each program adopted pursuant to paragraph 9(a) of
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this ORDER on at least a monthly basis, to determine:
(i) the status of each criticized asset;
(ii) management's adherence to each written program;
(iii) the status and effectiveness of each written program; and
(iv) the need to revise each written program and/or take other actions.
The board shall send quarterly progress reports on the status of
each criticized asset equal to or exceeding $100,000 to the Regional
Director and the Commissioner.
[.10]10.(a) Within 30 days from the effective date of this ORDER, the
board of directors of the Insured Institution shall adopt and implement
an internal loan review and grading system ("System") to
periodically review the Insured Institution's loan portfolio and
identify and categorize problem credits. At a minimum, the System shall
provide for:
(i) identifying the overall quality of the loan portfolio;
(ii) the identification and amount of each delinquent loan;
(iii) an identification or grouping of loans that warrant the special
attention of management;
(iv) for each loan identified, a statement of the amount and an
indication of the degree of risk that the loan will not be fully repaid
according to its terms and the reason(s) why the particular loan merits
special attention;
(v) an identification of credit and collateral documentation
exceptions;
(vi) the identification and status of each violation of law, rule or
regulation;
(vii) an identification of loans not in conformance with the Insured
Institution's lending policy, and exceptions to the Insured
Institution's lending policy;
(viii) an identification of insider loan transactions;
(ix) a mechanism for reporting periodically, but in any event no less
than quarterly, to the board of directors on the status of each loan
identified and the action(s) taken by operating management; and
(x) guidelines for (1) ensuring that all significant loans are reviewed
by individuals who are not part of, or influenced by anyone associated
with, the loan review process, (2) establishing frequency of
reviews, and (3) determining scope of review for significant loans
and those with major credit risks.
(b) A copy of the reports submitted to the board of directors, as
well as documentation of the action taken by the Insured Institution to
collect or strengthen assets identified as problem credits, shall be
kept with the minutes of the board of directors.
(c) Within 60 days from the effective date of this ORDER the
Insured Institution's board of directors shall establish and appoint a
committee to review and approve in advance all extensions of credit
and/or renewals that, when aggregated with all other extensions of
credit to that borrower, either directly or indirectly, exceed or would
exceed $100,000. The review shall include financial, income and, cash
flow information, collateral values and lien information, repayment
terms, past performance by the borrower, the purpose of the extension,
and whether the extension complies with the Insured Institution's loan
policy and applicable laws, rules, and regulations. The loan committee
shall meet at least monthly and shall maintain written minutes
which detail the information reviewed by the loan committee, its
conclusions, approvals, denials, recommendations, and reasons for the
approval of any credit which does not fully comply with the review
requirements set forth in this paragraph. At least monthly, the loan
committee shall submit its written minutes to the board of
directors.
[.11]11. Within 60 days from the effective date of this ORDER, the Insured
Institution shall eliminate and/or correct all violations of law and/or
regulations, as described on pages 20-23 of the Joint Report of
Examination of the Insured Institution. In addition, the Insured
Institution shall take all steps necessary to ensure future compliance
with all applicable Federal and Commonwealth of Puerto Rico laws and
regulations.
[.12]12.(a) Within 30 days from the effective date of this ORDER, the
Insured Institution
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shall review all Reports of Condition and Income
filed with the FDIC on and after September 30, 2000 and shall amend and
file with the FDIC amended Reports of Condition and Income which
accurately reflect the financial condition of the Insured Institution
as of the date of each such Report.
(b) In addition to the above and during the life of this ORDER,
the Insured Institution shall file with the FDIC, Consolidated Reports
of Condition and Income which accurately reflect the financial
condition of the Insured Institution as of the reporting period. In
particular such reports shall include any adjustment in the Insured
Institution's books made necessary or appropriate as a consequence of
any FDIC or COFI examination of the Insured Institution during that
reporting period and the results of the Joint Report of Examination of
the Insured Institution.
[.13]13. The Insured Institution shall not declare or pay dividends in any
amount except as follows:
(a) That such declarations and payments are made in accordance with
applicable Commonwealth of Puerto Rico and Federal laws and
regulations;
(b) That after payment of such dividends, the Insured Institution shall
remain "well capitalized";
(c) That such declaration and payment of dividends shall be approved in
advance by the board of directors of the Insured Institution; and
(d) That such declaration and payment of dividends shall be approved in
advance, in writing, by the Regional Director.
[.14]14. Immediately upon the effective date of this ORDER, the Insured
Institution shall:
(a) not enter into any agreements with present and former
officers of the Insured Institution which constitute "golden
parachute payments", as defined in section 18(k)(4) of the Act, 12
U.S.C. §1828(k)(4);
(b) rescind all agreements or portions of agreements with present and
former officers of the Insured Institution which constitute "golden
parachute payments";
(c) cease making any payments to present and former officers of the
Insured Institution which constitute "golden parachute payments";
and
(d) take whatever legal steps are necessary to obtain reimbursement
from all former officers of the Insured Institution of any payments
which have already been made to them and which constitute "golden
parachute payments".
[.15]15. Within 30 days from the effective date of this ORDER, the Insured
Institution shall maintain its interest rate risk ("IRR")
exposure within the limits and parameters established and approved by
the Insured Institution's board of directors and in accordance with
safe and sound banking practices, including holding, at a minimum,
monthly meetings of the Insured Institution's Asset/Liability
Committee ("ALCO"). Reports of the Insured Institution's IRR and
liquidity positions shall be presented at least monthly to the board of
directors. The minimum time periods set forth in this paragraph are not
to be construed so as to prevent more frequent analyses, ALCO meetings,
and reports to the Insured Institution's board of directors. In
appropriate circumstances, prudent banking will dictate that more
frequent analyses of the Insured Institution's IRR and liquidity
positions take place, that more frequent ALCO meetings be held, and/or
more frequent reports be made by management to the Insured
Institution's board of directors.
[.16]16. Within 60 days from the effective date of this ORDER, and
thereafter on an annual basis, the Insured Institution shall review the
total compensation (both current and deferred) being paid to Insured
Institution directors to determine whether the compensation received by
each such person is reasonable in relation to the services provided to
the Insured Institution. The minutes of the board meeting at which such
review is undertaken shall indicate the results of the review and the
basis for determination of the reasonableness of the compensation. For
the purpose of this paragraph, "compensation" refers to any and
all salaries, bonuses, and other benefits of every kind and nature
whatsoever, whether paid directly or indirectly.
[.17]17. Following the effective date of this ORDER, the Insured
Institution shall send to its shareholders or otherwise furnish a
description of this ORDER (i) in conjunction with the Bank's next
shareholder communication, and also (ii) in conjunction with its
notice or proxy statement preceding the Insured Institution's next
shareholder meeting. The description shall fully describe the ORDER in
all material respects. The description and any accompanying
communication, statement, or notice shall be sent to the FDIC,
Registration and Disclosure Section, Washington, D.C. 20429, and the
Department for review at least 20 days prior to dissemination to
shareholders. Any changes requested to be made by the FDIC and the
Commissioner shall be made prior to dissemination of the description,
communication, notice, or statement.
[.18]18. The Insured Institution's board of directors shall appoint a
committee (the "Compliance Committee") composed of at least
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three directors who are not now and have never been involved in the daily
operations of the Insured Institution, and whose composition is
acceptable to the Regional Director, to monitor the Insured
Institution's compliance with this ORDER. Within 30 days from the
effective date of this ORDER, and at monthly intervals thereafter, such
Compliance Committee shall prepare and present to the Insured
Institution's board of directors a written report of its findings,
detailing the form, content, and manner of any action taken to ensure
compliance with this ORDER and the results thereof, and any
recommendations with respect to such compliance. Such progress reports
shall be included in the minutes of the meeting of the Insured
Institution's board of directors. Nothing contained herein shall
diminish the responsibility of the entire board of directors to ensure
compliance with the provisions of this ORDER.
19. By the 30th day after the end of the calendar quarter following the
effective date of this ORDER, and by the 15th day after the end of
every calendar quarter thereafter, the Insured Institution shall
furnish written progress reports to the Regional Director detailing the
form, content, and manner of any actions taken to secure compliance
with this ORDER, and the results thereof.
The effective date of this ORDER shall be immediately upon the date of
issuance.
The provisions of this ORDER shall be binding upon the Insured
Institution, its successors, assigns, directors, officers, employees,
agents, and other institution-affiliated parties.
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: June 10, 2002
