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FDIC Enforcement Decisions and Orders |
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Bank to cease and desist from such unsafe or unsound practices as operating with excessive volumes of adversely classified assets; following hazardous lending and lax collection practices; operating with inadequate capital; operating in violation of applicable laws or regulations; operating with management whose policies are detrimental to the Bank; operating with inadequate loan documentation; engaging in practices which produce inadequate operating income; failing to provide adequate supervision over the Bank's affairs; operating with inadequate allowance for loan and lease losses; failing to submit Reports of Condition and Income in accordance with instructions; operating with inadequate liquidity; and operating with inadequate liquidity. (This order was terminated by order of the FDIC dated 3-2-92; see ¶
[.1] ManagementQualificationsReview
In the Matter of
Sentinel Bank, Hartford, Connecticut ("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 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 counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated October 15, 1991, whereby solely for the purpose of this pro-
{{5-31-92 p.C-1620}}ceeding and without admitting or denying any unsafe or unsound banking practices or violations of law and/or regulations, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.
IT IS HEREBY ORDERED that the Bank and its institution-affiliated parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. section 1813(u), cease and desist from the following unsafe or unsound banking practices and violations of law and/or regulations:
[.1] 1. (a) Within ninety (90) days from the effective date of this ORDER, or within the corrective period prescribed by a Notification to Primary Regulator of Findings issued after March 4, 1991 by the FDIC pursuant to section 8(a) of the Act, 12 U.S.C. section 1818(a) ("Notification to Primary Regulatory"), whichever is earlier, the Bank shall have and retain qualified management. At a minimum, such management shall include an Executive Vice President and a President with proven ability in managing a bank of comparable size and experience in upgrading a low quality loan portfolio and shall have an appropriate level of lending, collection and loan supervision experience for the type and quality of the Bank's loans. Such person shall be provided the necessary written authority to implement the provisions of this ORDER. The qualifications of management shall be assessed on its ability to:
[.2] (c) Within thirty (30) days from the effective date of this ORDER, the Board of Directors shall develop a written analysis and assessment of the Bank's management and staffing needs ("man-
{{1-31-92 p.C-1621}}agement plan"), which shall include, at a minimum:
[.3] 2. (a) Within ten (10) days from the effective date of this ORDER, the Bank shall increase its allowance for loan and lease losses ("Reserve") existing as of March 4, 1991 by $2,950,000 at a minimum.
[.4] 3. (a) Within ninety (90) days from the effective date of this ORDER, the Bank shall increase its Tier 1 capital by not less than $5,400,000. Such increase in Tier 1 capital may be accomplished by:
[.5] 4. (a) Within thirty (30) days from the effective date of this ORDER, the Board of Directors shall develop a written plan of action to lessen the Bank's risk position with respect to each borrower who or which had outstanding principal debt owing to the Bank in excess of $100,000 which was classified "Substandard" or "Doubtful," in whole or in part, as of March 4, 1991. In developing such plan, the Bank shall, at a minimum:
[.6] 5. The Bank shall not extend or renew, directly or indirectly, credit to, or for the benefit of, any borrower who has a loan or other extension of credit with the Bank that has been charged off or classified, in whole or in part, "Loss," "Doubtful," or
[.7] 6. The Bank shall not accrue interest on any loan that is, or becomes, ninety (90) days or more delinquent as to principal or interest, unless the loan is both well secured and in the process of collection. For purposes of this paragraph, "well secured" and "in the process of collection" shall have the same meaning as those terms have in the prevailing Instructions for the Reports of Condition and Income. The Bank shall reverse on its books all previously accrued but uncollected interest on any loan that has ceased to accrue interest pursuant to this provision.
[.8] 7. (a) Within thirty (30) days from the effective date of this ORDER, the Bank shall revise its written loan policy, which revision shall include, at a minimum:
[.9] 8. (a) Within thirty (30) days from the effective date of this ORDER, the Bank shall develop a written profit plan consisting of goals and strategies for improving the earnings of the Bank, which written profit plan shall include, at a minimum:
[.10] 9. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall develop a written funds management policy which shall include, at a minimum:
[.11] 10. The Bank shall not declare or pay any dividends unless:
[.12] 11. Following the effective date of this ORDER, the Bank shall send to its shareholders 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 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, for review at least twenty (20) 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.
[.13] 12. Within ninety (90) days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law and regulations committed by the Bank and remediable by the Bank as described on page 6-b of the joint Connecticut Department of Banking/FDIC's Report of Examination of the Bank as of March 4, 1991.
[.14] 13. (a) Within sixty (60) days from the effective date of this ORDER, the Bank shall correct the technical exceptions, that are remediable by the Bank, on loans noted on pages 2-d through 2-d-2 of the joint Connecticut Department of Banking/ FDIC's Report of Examination of the Bank as of March 4, 1991.
[.15] 14. Within thirty (30) days from the effective date of this ORDER, and, thereafter, within thirty (30) days from the end of each calendar quarter, the Bank shall furnish written progress reports to the Regional Director and the Commissioner detailing the form and manner of any action taken to secure compliance with this ORDER and the results thereof. In addition, the Bank shall furnish such reports on request of either the Regional Director or the Commissioner. 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 Board meeting.
CRITICIZED ASSET REPORT AS OF:_____
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