Attached files
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8-K - FORM 8-K - PSB GROUP INC | k48475e8vk.htm |
Exhibit 99.1
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
AND
STATE OF MICHIGAN
OFFICE OF FINANCIAL AND INSURANCE REGULATION
) | ||||
In the Matter of |
) | STIPULATION AND CONSENT | ||
) | TO THE ISSUANCE OF AN | |||
PEOPLES STATE BANK |
) | ORDER TO CEASE AND DESIST | ||
HAMTRAMCK, MICHIGAN |
) | |||
) | FDIC-09-129b | |||
(Insured State Nonmember Bank) |
) | |||
) | ||||
Subject to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE
AND DESIST (CONSENT AGREEMENT) by the Federal Deposit Insurance Corporation (FDIC) and the
State of Michigan, Office of Financial and Insurance Regulation (OFIR), it is hereby stipulated
and agreed by and among representatives of the FDIC, OFIR, and Peoples State Bank, Hamtramck,
Michigan (Bank) as follows:
1. The Bank has been advised of its right to receive a NOTICE OF CHARGES AND OF HEARING
(NOTICE) detailing the unsafe and unsound banking practices alleged to have been committed by the
Bank and of its right to a hearing on the charges under section 8(b) of the Federal Deposit
Insurance Act (Act), 12 U.S.C. § 1818(b), and under section 2304 of the Banking Code of 1999,
Mich. Comp. Laws § 487.12304, and has knowingly waived that right.
2. The Bank, solely for the purpose of this proceeding and without admitting or denying any of
the charges of unsafe or unsound banking practices, hereby consents and agrees to the issuance of
an ORDER TO CEASE AND DESIST (ORDER) by the FDIC and OFIR.
3. The Bank further stipulates and agrees that such ORDER shall be deemed to be a
cease-and-desist order which has become final and unappealable, and that the ORDER shall become
effective upon its issuance by the FDIC and OFIR and fully enforceable by the FDIC and OFIR
pursuant to the provisions of section 8(i) of the Act, 12 U.S.C. § 1818(i), and section 2311 of the
Banking Code of 1999, Mich. Comp. Laws § 487.12311, respectively, subject only to the conditions
set forth in paragraph 4 of this CONSENT AGREEMENT.
4. In the event the FDIC and OFIR accept this CONSENT AGREEMENT and issue the ORDER, it is
agreed that no action to enforce the ORDER will be taken by the FDIC in the United States District
Court or the appropriate Federal Circuit Court or by OFIR in the appropriate State Circuit Court
unless the Bank, any Bank institution-affiliated party, as that term is defined in section 3(u) of
the Act, 12 U.S.C. § 1813(u), or any of its successors or assigns, has violated or is about to
violate any provision of the ORDER.
5. The Bank hereby waives:
(a) The receipt of a NOTICE;
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(b) All defenses and counterclaims of any kind to this proceeding;
(c) A hearing for the purpose of taking evidence on the allegations in the NOTICE;
(d) The filing of proposed findings of fact and conclusions of law;
(e) A recommended decision of an Administrative Law Judge; and
(f) Exceptions and briefs with respect to such recommended decision.
Dated this 1st day of September 2009.
FEDERAL DEPOSIT INSURANCE CORPORATION, LEGAL DIVISION |
PEOPLES STATE BANK HAMTRAMCK, MICHIGAN |
|||||||||
By:
|
/s/ Louis J. DiPietro | By: | /s/ James B. Jacobs | |||||||
Louis J. DiPietro | James B. Jacobs | |||||||||
Deputy Regional Counsel | Director | |||||||||
OFFICE OF FINANCIAL AND INSURANCE REGULATION | /s/ Michael J. Kowalski | |||||||||
Michael J. Kowalski | ||||||||||
Director | ||||||||||
By:
|
/s/ Stephen R. Hilker | /s/ Longine V. Morawski | ||||||||
Stephen R. Hilker | Longine V. Morawski | |||||||||
Chief Deputy Commissioner Office of Financial and Insurance Regulation State of Michigan |
Director | |||||||||
/s/ Sydney L. Ross | ||||||||||
Sydney L. Ross | ||||||||||
Director |
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/s/ Michael J. Tierney | ||||
Michael J. Tierney | ||||
Director | ||||
/s/ Edward H. Turner | ||||
Edward H. Turner | ||||
Director | ||||
/s/ David L. Wood | ||||
David L. Wood | ||||
Director Comprising the Board of Directors of PEOPLES STATE BANK HAMTRAMCK, MICHIGAN |
||||
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FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
AND
STATE OF MICHIGAN
OFFICE OF FINANCIAL AND INSURANCE REGULATION
) | ||||||
In the Matter of
|
) | ORDER TO CEASE AND DESIST | ||||
) | ||||||
PEOPLES STATE BANK
|
) | FDIC-09-129b | ||||
HAMTRAMCK, MICHIGAN
|
) | |||||
) | ||||||
(STATE CHARTERED
|
) | |||||
INSURED NONMEMBER BANK)
|
) | |||||
) | ||||||
Peoples
State Bank, Hamtramck, Michigan (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 charges under section 8(b) of the
Federal Deposit Insurance Act (Act), 12 U.S.C. § 1818(b), and under section 2304 of the Banking
Code of 1999, Mich. Comp. Laws 487.12304, regarding hearings before the Office of Financial and
Insurance Regulation for the State of Michigan (OFIR), and having waived those rights, entered
into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST (CONSENT
AGREEMENT) with representatives of the Federal Deposit Insurance
Corporation
(FDIC) and the OFIR, dated September 1st, 2009, whereby, solely for the
purpose of this proceeding and without admitting or denying the charges of unsafe or unsound
banking practices, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST (ORDER) by
the FDIC and the OFIR.
The FDIC and the OFIR considered the matter and determined that they had reason to believe
that the Bank had engaged in unsafe or unsound banking practices, and violations of law, a
conclusion which the Banks board of directors does not concur with. The FDIC and the OFIR,
therefore, accepted the CONSENT AGREEMENT and issued the following:
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 or unsound banking practices:
A. | Operating with an inadequate level of capital protection for the kind and quality of assets held. | ||
B. | Engaging in hazardous lending and lax collection practices. | ||
C. | Operating with an excessive level of adversely classified assets, delinquent loans, and nonaccrual loans. |
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D. | Operating with an inadequate allowance for loan and lease losses (ALLL). | ||
E. | Violating laws, rules or regulations. | ||
F. | Operating with management whose policies and practices are detrimental to the Bank. | ||
G. | Operating with a board of directors which has failed to provide adequate supervision over and direction to the management of the Bank to prevent unsafe and unsound banking practices. |
IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its
successors and assigns, take affirmative action as follows:
MANAGEMENT
1. (a) The Bank 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
Bank. Management 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:
(i) | Comply with the requirements of this ORDER; | ||
(ii) | Operate the Bank in a safe and sound manner; |
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(iii) | Comply with applicable laws, rules, and regulations; and | ||
(iv) | Restore all aspects of the Bank to a safe and sound condition, including capital adequacy, asset quality, management effectiveness, earnings, liquidity, and sensitivity to interest rate risk. |
(b) During the life of this ORDER, prior to the addition of any individual to the board of
directors or the employment of any individual as a senior executive officer,
the Bank shall request and obtain the OFIRs written approval. For purposes
of this ORDER, senior executive officer is defined as in section 32 of the
Act (section 32), 12 U.S.C. § 1831(i), and section 303.101(b) of the FDIC
Rules and Regulations, 12 C.F.R. § 303.101(b).
BOARD PARTICIPATION
2. (a) As of the effective date of this ORDER, the board of directors shall assume full
responsibility for the approval of sound policies and objectives and for the supervision of all of
the Banks activities, consistent with the role and expertise commonly expected for directors of
banks of comparable size. The boards participation shall include meetings to be held no less
frequently than monthly at which, at a minimum, the following areas shall be reviewed and approved:
reports of
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income and expenses; new, overdue, renewal, insider, charged off, and recovered loans; investment
activity; adoption or modification of operating policies; individual committee reports; audit
reports; internal control reviews including managements responses; reconciliation of general
ledger accounts; and compliance with this ORDER. Board minutes shall document these reviews and
approvals, including the names of any dissenting directors.
(b) Within 60 days from the effective date of this ORDER, the Banks board of directors
shall have in place a program that will provide for monitoring of the Banks compliance with
this ORDER.
CAPITAL
3. (a) Within 60 days from the effective date of this ORDER, the Bank shall have and maintain
its level of Tier 1 capital as a percentage of its total assets (capital ratio) at a minimum of 8
percent. For purposes of this ORDER, Tier 1 capital and total assets shall be calculated in
accordance with Part 325 of the FDIC Rules and Regulations (Part 325), 12 C.F.R. Part 325.
(b) If, while this ORDER is in effect, the Bank increases capital by the sale of new
securities, the board of directors of the Bank shall adopt and implement a plan for the sale of
such additional securities, including the voting of any
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shares owned or proxies held by or controlled by them in favor of said plan. Should the
implementation of the plan involve public distribution of Bank securities, including a distribution
limited only to the Banks existing shareholders, the Bank shall prepare detailed offering
materials fully describing the securities being offered, including an accurate description of the
financial condition of the Bank and the circumstances giving rise to the offering, and other
material disclosures necessary to comply with Federal 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 materials used in the sale of the securities shall be submitted to the FDIC Registration and
Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 and to the OFIR, 611
West Ottawa Street, Lansing, Michigan 48909, for their review. Any changes requested to be made in
the materials by the FDIC or the OFIR shall be made prior to their dissemination.
(c) In complying with the provisions of this paragraph, the Bank shall provide to any
subscriber and/or purchaser of Bank securities written notice 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 Bank securities. The written notice required
by this paragraph shall be furnished
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within 10 calendar days of the date any material development or change was planned or occurred,
whichever is earlier, and shall be furnished to every purchaser and/or subscriber of the Banks
original offering materials.
LOSS CHARGE-OFF
4. As of the effective date of this Order the Bank shall charge off from its books and records
any loan classified Loss in the Report of Examination dated November 10, 2008, (ROE).
PROHIBITION OF ADDITIONAL LOANS TO CLASSIFIED BORROWERS
5. (a) As of the effective date of this ORDER, the Bank shall not extend, directly or
indirectly, any additional credit to, or for the benefit of, any borrower who is already obligated
in any manner to the Bank on any extensions of credit (including any portion thereof) that has been
charged off the books of the Bank or classified Loss in the ROE, so long as such credit remains
uncollected.
(b) As of the effective date of this ORDER, the Bank shall not extend, directly or indirectly,
any additional credit to, or for the benefit of, any borrower whose loan or other credit has been
classified Substandard, Doubtful, or is listed for Special Mention in the ROE, and is
uncollected unless the Banks board of directors has adopted, prior to such extension of credit, a
detailed written statement giving the reasons why such extension of credit is in the best interest
of
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the Bank. A copy of the statement shall be signed by each Director, and incorporated in the minutes
of the applicable board of directors meeting. A copy of the statement shall be placed in the
appropriate loan file.
REDUCTION OF DELINQUENCIES AND CLASSIFIED ASSETS
6. (a) Within 60 days from the effective date of this ORDER, the Bank shall adopt, implement, and adhere to, a written plan to
reduce the Banks risk position in each asset in excess of $300,000, which is more than 90 days
delinquent or classified Substandard or Doubtful in the ROE. The plan shall include, but not be
limited to, provisions which:
(i) | Prohibit an extension of credit for the payment of interest, unless the Board provides, in writing, a detailed explanation of why the extension is in the best interest of the Bank; | ||
(ii) | Provide for review of the current financial condition of each delinquent or classified borrower, including a review of borrower cash flow and collateral value; | ||
(iii) | Delineate areas of responsibility for loan officers; | ||
(iv) | Establish dollar levels to which the Bank shall reduce delinquencies and classified |
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assets within 6 and 12 months from the effective date of this ORDER; and | |||
(v) | Provide for the submission of monthly written progress reports to the Banks board of directors for review and notation in minutes of the meetings of the board of directors. |
(b)
As used in this paragraph, reduce means to: (1) collect; (2) charge off; (3) sell; or
(4) improve the quality of such assets so as to warrant removal of any adverse classification by
the FDIC and the OFIR.
(c) A copy of the plan required by this paragraph shall be submitted to the Regional
Director of the Chicago Region of the FDIC (Regional Director) and Chief Deputy Commissioner
of the OFIR (Chief Deputy Commissioner) for review.
(d) While this ORDER remains in effect, the plan shall be revised to include assets which
become more than 90 days delinquent after the effective date of this ORDER or are adversely
classified at any subsequent examinations.
DIVIDEND RESTRICTION
7. As of the effective date of this ORDER, the Bank shall not declare or pay any cash dividend
without the prior written consent of the Regional Director and Chief Deputy Commissioner.
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ALLOWANCE
FOR LOAN AND LEASE LOSSES
8. (a) Prior to submission or publication of all Reports of Condition and Income required by
the FDIC after the effective date of this ORDER, the board of directors of the Bank shall review
the adequacy of the Banks ALLL, provide for an adequate ALLL, and accurately report the same. The
minutes of the board meeting at which such review is undertaken shall indicate the findings of the
review, the amount of increase in the ALLL recommended, if any, and the basis for determination of
the amount of ALLL provided. In making these determinations, the board of directors shall consider
the FFIEC Instructions for the Reports of Condition and Income and any analysis of the Banks ALLL
provided by the FDIC or OFIR.
(b) ALLL entries required by this paragraph shall be made prior to any capital determinations
required by this ORDER.
CORRECTION OF VIOLATIONS
9. Within 30 days from the effective date of this ORDER, the Bank shall eliminate and/or
correct all violations of law, rule, and regulations listed on page 21 of the ROE.
SPECIAL MENTION
10. Within 60 days from the effective date of this Order the Bank shall correct all
deficiencies in the loans listed for Special Mention on pages 45 through 51 of the ROE.
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DISCLOSURE TO SHAREHOLDERS
11. Following the effective date of this ORDER, the Bank shall send to its shareholders a
copy or description of this ORDER: (1) in conjunction with the Banks next shareholder
communication; or (2) in conjunction with its notice or proxy statement preceding the Banks next
shareholder meeting. The description shall fully describe this ORDER in all material respects. The
description and any accompanying communication, notice or statement shall be sent to the FDIC
Registration and Disclosure Section 550 17th Street, N.W., Washington, D.C. 20429 and
to Stephen R. Hilker, Chief Deputy Commissioner, Office of Financial and Insurance Regulation, 611
West Ottawa Street, Lansing, Michigan 48909 for review at least 20 days prior to dissemination to
shareholders. Any changes requested to be made by the FDIC and the OFIR shall be made prior to
dissemination of the description, communication, notice or statement.
PROGRESS REPORTS
12. Within 30 days from the end of each calendar quarter following the effective date of this
ORDER, the Bank shall furnish to the Regional Director and Chief Deputy Commissioner written
progress reports signed by each member of the Banks board of directors, detailing the actions
taken to secure compliance with the ORDER and the results thereof.
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The effective date of this ORDER shall be 10 days after the date of its issuance by the FDIC
and the OFIR.
The provisions of this ORDER shall be binding upon the Bank, its institution-affiliated
parties, and any successors and assigns thereof.
The provisions of this ORDER shall remain effective and enforceable except to the extent that,
and until such time as, any provision has been modified, terminated, suspended, or set aside by the
FDIC and the OFIR.
Pursuant to delegated authority.
Dated: September 18, 2009.
/s/ M. Anthony Lowe
|
/s/ Stephen R. Hilker | |||||
M. Anthony Lowe Regional Director Chicago Regional Office Federal Deposit Insurance Corporation |
Stephen R. Hilker Chief Deputy Commissioner Office of Financial and Insurance Regulation State of Michigan |
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