(This order was terminated by order of the FDIC dated 7-1-03; see ¶16,342.)
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.
[.1] Bank Secrecy ActCompliance
[.2] Bank Secrecy ActCorrection of Violations Required
[.3] Bank Secrecy ActCompliance ProgramWritten Plan Required
[.4] Bank Secrecy ActCompliance ProgramEmployee Training
[.5] Bank Secrecy ActCompliance ProgramIndependent Testing Required
[.6] Board of DirectorsProgram to Review Compliance with Cease and Desist
Order Required
[.7] ShareholdersDisclosure of Cease and Desist Order Required
{{9-30-03 p.C-5528}}
In the Matter of
STOCKMANS BANK
ELK GROVE, CALIFORNIA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-02-104b
Stockmans Bank, Elk Grove, California ("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 and/or
regulations alleged to have been committed by the Bank and of its right
to a hearing on the alleged charges under section 8(b)(1) of the
Federal Deposit Insurance Act ("Act"), 12 U.S.C. §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 July 26, 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 regulation, 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 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 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 and unsound banking practices and violations of law
and/or regulations:
(a) operating in violation of section 103.27(a)(1) and
section 103.27(a)(3) of the Rules and Regulations of the Department of
Treasury, 31 C.F.R. §§ 103.27(a)(1) and (3), as more fully
described on page 8 of the Report of Examination dated April 8,
2002; and
(b) operating in violation of section 326.8(c)(1) and section
326.8(c)(2) of the Rules and Regulations of the Federal Deposit
Insurance Corporation, 12 C.F.R. §§ 326.8(c)(1) and (2), as more
fully described on page 9 of the FDIC's Report of Examination dated
April 8, 2002.
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
follows:
[.1]1. Within 30 days of the effective date of this ORDER, the Bank shall
comply in all material respects with the Bank Secrecy Act ("BSA")
and its rules and regulations. Such compliance shall include, but is
not limited to, taking the following measures:
[.2]a. eliminating and/or correcting all violations cited on pages 8 and 9
of the FDIC's Report of Examination of the Bank dated April 8, 2002,
and taking such steps to ensure future compliance with applicable laws
and regulations;
[.3]b. developing, adopting, and implementing a written plan designed to
ensure compliance with all provisions of the BSA. Such plan and
implementation shall be in a form and manner acceptable to the Regional
Director as determined at subsequent examinations and/or visitations;
[.4]c. providing an effective training program to all appropriate personnel
at the Bank (including, but not limited to, tellers, customer service
representatives, lending officers, branch managers and all other
customer contact personnel) by a qualified individual. Written reports
should be provided, which verify the scope, nature and frequency of the
Bank's BSA training efforts. The report should address how management
measures the success of the training program, how objectives of the
training program are met and how oversight of the training is
implemented amongst bank management and other bank employees that are
involved in BSA compliance measures; and
[.5]d. independently testing for compliance with the BSA and 31 C.F.R. Part
103. The independent testing should be conducted on an annual basis in
compliance with the procedures described in the FDIC's "Guidelines
for Monitoring Bank Secrecy Act Compliance." The testing, at a
minimum, should include the following:
(i) a test of the Bank's internal procedures for monitoring BSA;
(ii) a sampling of large currency transactions followed by a review of
the Currency
{{10-31-03 p.C-5529}}
Transaction Reports ("CTR") filings by a senior
executive officer of the Bank. Such review should provide for
confirmation that all transactions requiring the filing of a CTR are
identified and filed on a timely basis;
(iii) a test of the Bank's record-keeping and record retention system
for compliance with the BSA; and
(iv) documentation of the scope of the testing procedures performed and
the findings of the testing. Written reports should be prepared which
document the testing results and provide recommendations for
improvement and shall be presented to the Bank's Board of Directors
and noted in official board minutes.
[.6]2. The Board of Directors shall monitor and confirm the completion of
actions taken by management to comply with the terms of this ORDER. The
Board of Directors shall certify in writing to the Regional Director
when all of the above actions have been accomplished. All actions taken
by the Board of Directors pursuant to this ORDER shall be duly noted in
the minutes of its meetings.
3. Within 30 days of the end of the first quarter following the
effective date of this ORDER, and within 30 days of the end of each
calendar quarter thereafter, the Bank shall furnish written progress
reports to the Regional Director detailing the form and manner of any
actions taken to secure compliance with this ORDER and the results
thereof. Such reports may be discontinued when the corrections required
by this ORDER have been accomplished and the Regional Director has
released the Bank in writing from making further reports.
[.7]4. Following the effective date of this ORDER, the Bank shall send to
its shareholders a copy of this ORDER or a description of this ORDER in
conjunction both with the Bank's next shareholders communication and
with its notice and/or proxy statement preceding the Bank's next
shareholder meeting. If the Bank sends its shareholders a description
of this ORDER rather than a copy of it, 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, at
least fifteen (15) days prior to dissemination to shareholders. Any
changes requested to be made by the FDIC shall be made prior to
dissemination of the description, communication, notice or statement.
This ORDER shall become effective ten (10) days from the date of its
issuance.
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 at San Francisco, California, this 31st day of July
2002.