[¶12,026] In the Matter of Community Bank, Blountsville, Alabama, Docket No.
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. (This order was terminated by order of the
FDIC dated 3-24-05; see ¶16,415.)
In the Matter of
COMMUNITY BANK BLOUNTSVILLE, ALABAMA (Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
Community Bank, Blountsville, Alabama ("Bank"), having been
advised of its right to a Notice of Charges and of Hearing detailing
the unsafe or unsound banking practices 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 March 4, 2003 whereby
solely for the purpose of this proceeding and without admitting or
denying 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:
ORDER TO CEASE AND DESIST
IT IS HEREBY ORDERED that the Bank, 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:
a) operating with a board of directors which has failed to provide
adequate supervision over and direction to the active management of the
b) operating with a board of directors and management which has failed
to adequately supervise and control lending to insiders of the Bank;
c) failing to accurately reflect the Bank's financial condition on its
books and records.
IT IS FURTHER ORDERED that the Bank, its institution-affiliated
parties, and its successors and assigns, take affirmative action as
[.1] 1) Within thirty (30) days of the effective date of this ORDER, the
Bank's board of directors shall develop a written plan specifying the
duties, responsibilities, levels of authority, and reporting lines of
the Bank's executive officers to ensure proper supervision of the
Bank's operations. The term "executive officer" shall have the
same meaning as specified in section 215.2(e)(1) of Regulation O of the
Board of Governors of the Federal Reserve System, 12 C.F.R.
§215.2(e)(1). The plan shall outline the types of internal controls
and reporting mechanisms that will be put in place to ensure that
executive officers are complying with Bank policies and procedures;
performing duties and carrying out responsibilities as set forth in the
plan; and operating within the levels of authority set forth in the
plan. Upon its completion, the plan shall be submitted to the Regional
Director of the FDIC's Atlanta Regional Office ("Regional
Director") and the Superintendent of Banks, Alabama Banking
Department ("Superintendent") for review and comment. Within 15
days from the receipt of any comments from the Regional Director and
Superintendent, the Bank's board of directors shall review and
consider any recommended changes, revise the 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 plan and/or any subsequent modification.
[.2] 2) During the life of this ORDER, the Bank shall not make or renew any
loan to any current or former executive officer or director, or alter
any of the terms of any loan to any current or former executive officer
or director including, but not limited to, releasing any collateral
securing those loans, without the prior written consent of the Regional
Director and the Superintendent. The terms "former executive officer
or director" in this paragraph shall refer to any executive officer,
as defined in Paragraph 1 above, or director who served in such
capacities at any time between January 1, 1998 and the present.
[.3]3) Within ninety (90) days of the effective date of this ORDER, the
Bank shall amend its books and records, including all year-end
financial statements and year-end Consolidated Reports of Condition and
Income for the years 2000 through the present
to reflect the actual
value of the Bank's premises and fixed assets.
[.4]4) Simultaneously with the execution of the CONSENT AGREEMENT by the
board of directors, the Bank shall provide to its sole shareholder,
Community Bancshares, Inc. ("CBI"), a copy of this ORDER and a
summary fully describing this ORDER in all material respects for
inclusion by CBI in its next communication with its shareholders and in
order for CBI to meet its disclosure obligations under the federal
securities laws and the rules and regulations thereunder, including,
without limitation, disclosure in CBI's Statement on Schedule 14A, and
its annual and quarterly reports on Forms 10K and 10-Q, respectively.
The Bank shall simultaneously provide a copy of such summary to the
FDIC Registration and Disclosure Section, 550 17th Street, N.W.,
Washington, D.C. 20429 for its review and comment prior to the
effective date of this ORDER. The Bank shall promptly forward to CBI
any changes in the summary required by the FDIC.
This ORDER shall become effective 10 calendar days from the date
of its issuance.
Pursuant to delegated authority.
Dated at Atlanta, Georgia, this 12th day of March, 2003.