Attached files
file | filename |
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10-K - FORM 10-K - DEARBORN BANCORP INC /MI/ | k49058e10vk.htm |
EX-23 - EX-23 - DEARBORN BANCORP INC /MI/ | k49058exv23.htm |
EX-21 - EX-21 - DEARBORN BANCORP INC /MI/ | k49058exv21.htm |
EX-13 - EX-13 - DEARBORN BANCORP INC /MI/ | k49058exv13.htm |
EX-31.1 - EX-31.1 - DEARBORN BANCORP INC /MI/ | k49058exv31w1.htm |
EX-32.2 - EX-32.2 - DEARBORN BANCORP INC /MI/ | k49058exv32w2.htm |
EX-32.1 - EX-32.1 - DEARBORN BANCORP INC /MI/ | k49058exv32w1.htm |
EX-31.2 - EX-31.2 - DEARBORN BANCORP INC /MI/ | k49058exv31w2.htm |
Exhibit 99
DEARBORN BANCORP, INC.
FORM 10-K (continued)
FORM 10-K (continued)
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
AND
STATE OF MICHIGAN
WASHINGTON, D.C.
AND
STATE OF MICHIGAN
OFFICE OF FINANCIAL AND INSURANCE REGULATION FOR THE STATE OF
MICHIGAN (OFIR)
LANSING, MICHIGAN
MICHIGAN (OFIR)
LANSING, MICHIGAN
) | ||||||
In the Matter of
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) | |||||
) | ||||||
) | CONSENT ORDER | |||||
FIDELITY BANK
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) | |||||
DEARBORN, MICHIGAN
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) | FDIC-09-422b | ||||
) | ||||||
) | ||||||
(STATE CHARTERED
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) | |||||
INSURED NONMEMBER BANK)
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) | |||||
) | ||||||
Fidelity Bank, Dearborn, Michigan (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
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 § 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 A CONSENT ORDER (STIPULATION)
with representatives of the Federal Deposit Insurance Corporation (FDIC) and the OFIR dated
January 22, 2010,
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whereby, solely for the purpose of this proceeding and without admitting or denying the charges of
violations of law and unsafe or unsound banking practices relating to weaknesses in capital and
asset quality, the Bank consented to the issuance of a CONSENT ORDER (ORDER) by the FDIC and the
OFIR.
The FDIC and the OFIR considered the matter and determined to accept the STIPULATION.
Having also determined that the requirements for issuance of an order under 12 U.S.C. §
1818(b) and under section 2304 of the Banking Code of 1999, Mich. Comp. Laws 487.12304, have been
satisfied, the FDIC and OFIR HEREBY ORDER 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 take affirmative action as follows:
MANAGEMENT
1. (a) Within 60 days from the effective date of this ORDER, the Bank shall have and retain
qualified management
(b) 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; | ||
(iii) | Comply with applicable laws, rules, and |
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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. |
(c) 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 written approval of the chief Deputy Commissioner of the OFIR (Chief Deputy
Commissioner). 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).
MANAGEMENT PLAN
2. (a) Within 30 days from the effective date of this ORDER, the Bank shall retain a bank
consultant acceptable to the Regional Director of the FDICs Chicago Regional Office (Regional
Director) and Chief Deputy Commissioner, who will develop a written analysis and assessment of the
Banks management needs (Management Study) for the purpose of providing qualified management for
the Bank.
(b) The Bank shall provide the Regional Director and
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Chief Deputy Commissioner with a copy of the proposed engagement
letter or contract with the consultant for review.
(c) The Management Study shall be developed within 90
days from the effective date of this ORDER. The Management
Study shall include, at a minimum:
(i) | Identification of both the type and number of officer positions needed to properly manage and supervise the affairs of the Bank, including but not limited to the loan department; | ||
(ii) | Identification and establishment of such Bank committees as are needed to provide guidance and oversight to active management; | ||
(iii) | Evaluation of executive management and executive loan staff to determine whether these individuals possess the ability, experience and other qualifications required to perform present and anticipated duties, including adherence to the Banks established policies and practices, and restoration and maintenance of the Bank in a safe and sound condition; |
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(iv) | Evaluation of all senior executive managements compensation, including salaries, director fees, and other benefits. | ||
(v) | A plan to recruit and hire any additional or replacement personnel with the requisite ability, experience and other qualifications to fill those officer or staff member positions identified by this paragraph of this ORDER. |
(d) Within 30 days after receipt of the Management Study the Bank shall formulate a plan
to implement the recommendations of the Management Study.
(e) A copy of the plan required by this paragraph shall be submitted to the Regional
Director and Chief Deputy Commissioner.
BOARD PARTICIPATION
3. (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. This 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
income and
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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; and compliance with this ORDER. Board
minutes shall document these reviews and approvals, including the names of any dissenting
directors.
(b) Within 30 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
4. (a) Within 120 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 9.0 percent and its level of qualifying total capital as a percentage of risk-weighted
assets (total risk based capital ratio) at a minimum of 12.0 percent. For purposes of this ORDER,
Tier 1 capital, qualifying total capital, total assets, and risk-weighted 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
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directors of the Bank shall adopt and implement a plan for the sale of such additional securities,
including the voting of any 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 48933, 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
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materials used in connection with the sale of Bank securities. The written notice required by this
paragraph shall be furnished 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
5. As of the effective date of this Order the Bank shall charge off from its books and records
any loan classified Loss and for any collateral dependent loan, the amount by which the loan
exceeds the fair value less cost to sell, should be charged-off, pursuant to the Report of
Examination of the Bank dated April 6, 2009 (ROE).
PROHIBITION OF ADDITIONAL LOANS TO CLASSIFIED BORROWERS
6. (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. Notwithstanding the preceding sentence, additional funds may be advanced or extended
to such a borrower for the purpose of protecting or preserving the Banks interest in the
collateral underlying an extension of credit if the
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Banks board of directors has adopted, prior to such advance or extension of credit, a detailed
written statement giving the reasons why the failure to extend such credit would be detrimental to
the best interest of 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.
(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 the Bank. The board of directors minutes shall reflect the approval or denial of 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
7. (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
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of $1,000,000 which is more than 90 days delinquent or is 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 target dollar levels to which the Bank shall reduce delinquencies and classified assets within 6 and 12 months from the effective date of this ORDER; and | ||
(vi) | 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)
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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 and Chief Deputy Commissioner.
(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.
LENDING AND COLLECTION POLICIES
8. (a) Within 60 days from the effective date of this ORDER, the Bank shall revise, adopt,
and implement written lending and collection policies to provide effective guidance and control
over the Banks lending function. In addition, the Bank shall obtain adequate and current
documentation for all loans in the Banks loan portfolio. Such documentation shall include
obtaining re-appraisals or re-evaluations of real estate collateral securing adversely classified
and delinquent loans, consistent with the collateral monitoring requirements of Appendix A to Part
365 of the FDIC Rules and Regulations, 12 C.F.R. Part 365, Appendix A; Appendix A to Part 364 of
the FDIC Rules and Regulations, 12 C.F.R. Part 364, Appendix A; and the Interagency Policy
Statement on Appraisal and Evaluation
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Guidelines.
(b) At a minimum, the revisions to the Banks loan policy and practices required by this
paragraph shall incorporate the items discussed in the ROE.
(c) Copies of the policies and revisions thereto required by this paragraph shall be submitted
to the Regional Director and the Chief Deputy Commissioner.
LIQUIDITY PLAN
9. (a) Within 60 days of the effective date of this ORDER, the Bank shall revise its written
contingency funding plan (Liquidity Plan). The Liquidity Plan shall identify sources of liquid
assets to meet the Banks contingency funding needs over time horizons of one month, two months,
and three months. At a minimum, the Liquidity Plan shall be prepared in conformance with the
Liquidity Risk Management Guidance found at FIL-84-2008 and include provisions to address the
issues identified in the ROE.
(b) On each Monday the Bank is open for business during the life of this ORDER the Bank shall
submit to the Regional Director and Chief Deputy Commissioner a liquidity analysis report as of the
close of business on the previous Friday, in a format that is acceptable to the Regional Director
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and the Chief Deputy Commissioner.
(c) A copy of the plan required by this paragraph shall be submitted to the Regional
Director and Chief Deputy Commissioner.
DIVIDEND RESTRICTION
10. 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.
ALLOWANCE FOR LOAN AND LEASE LOSSES
11. (a) Within 30 days of the effective date of this ORDER the Bank shall increase its
Allowance for Loan and Lease Losses (ALLL) consistent with the analysis provided in the ROE.
(b) After the effective date of this ORDER, and prior to the submission of all Reports of
Condition and Income required by the FDIC, 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
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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 Chief Deputy Commissioner.
(c) ALLL entries required by this paragraph shall be made prior to any capital determinations
required by this ORDER.
PROFIT PLAN AND BUDGET
12. (a) Within 90 days from the effective date of this ORDER, the Bank shall revise and
adhere to a written profit plan and a realistic, comprehensive budget for all categories of income
and expense. The plans required by this paragraph shall contain formal goals and strategies,
consistent with sound banking practices, to reduce discretionary expenses and to improve the Banks
overall earnings; shall contain a description of the operating assumptions that form the basis for
major projected income and expense components; and shall identify the major areas in, and means by
which, earnings will be improved and expenses reduced.
(b) Within 30 days from the end of each calendar quarter following completion of the profit
plans and budgets required by this paragraph, the Banks board of directors shall evaluate the
Banks actual performance in relation to the plan and budget, record the results of the evaluation,
and note any actions taken by the Bank in the minutes of the board of directors meeting at which
such evaluation is undertaken.
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(c) A written profit plan and budget shall be prepared for each calendar year for
which this ORDER is in effect.
(d) Copies of the plans and budgets required by this paragraph shall be submitted to the
Regional Director and Chief Deputy Commissioner.
STRATEGIC PLAN
13. (a) Within 120 days from the effective date of this ORDER, the Bank shall revise and
implement a realistic, comprehensive strategic plan. The plan required by this paragraph shall
contain an assessment of the Banks current financial condition and market area, and a description
of the operating assumptions that form the basis for major projected income and expense components.
The written strategic plan shall address, at a minimum:
(i) | Strategies for pricing policies and asset/liability management; and | ||
(ii) | Financial goals, including pro forma statements for asset growth, capital adequacy, and earnings. |
(b) Within 30 days from the end of each calendar quarter following the effective date of this
ORDER, the Banks board of directors shall evaluate the Banks actual performance in relation to
the strategic plan required by this paragraph and
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record the results of the evaluation, and any actions taken by the Bank, in the minutes of the
board of directors meeting at which such evaluation is undertaken.
(c) The strategic plan required by this ORDER shall be revised 30 days prior to the end of
each calendar year during which this ORDER is in effect. Thereafter the Bank shall approve the
revised plan, which approval shall be recorded in the minutes of a board of directors
meeting, and the Bank shall implement and adhere to the revised plan.
(d) Copies of the plan and revisions thereto required by this paragraph shall be submitted to
the Regional Director and Chief Deputy Commissioner.
CONCENTRATIONS OF CREDIT
14. Within 30 days from the effective date of this ORDER, the Bank shall formulate adopt and
implement a written plan to manage each of the concentrations of credit identified in the ROE in a
safe and sound manner. At a minimum the plan must provide for written procedures for the ongoing
measurement and monitoring of the concentrations of credit, and a limit on concentrations
commensurate with the Banks capital position, safe and sound banking practices, and the overall
risk profile of the Bank. A copy of the plan required by this paragraph shall be submitted to the
Regional Director and Chief Deputy Commissioner.
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CORRECTION OF VIOLATIONS
15. Within 90 days from the effective date of this ORDER, the Bank shall eliminate and/or
correct all violations of law, rule, and regulations listed in the ROE.
INTEREST RATE RISK
16. (a) Within 90 days of the effective date of this Order the Bank shall review and amend
its Policy on sensitivity to interest rate risk. The procedures shall comply with the Joint Agency
Statement of Policy on Interest Rate Risk (June 26, 1996), the Joint Supervisory Statement on
Investment Securities and End-user Derivative Activities (April 23, 1998), and the recommendations
in the ROE.
(b) A copy of the policy revisions and procedures required by this paragraph shall be
submitted to the Regional Director and Chief Deputy Commissioner.
NOTIFICATION TO SHAREHOLDERS
17. Following the effective date of this ORDER, the Bank shall send to its shareholder a copy
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.
PROGRESS REPORTS
18. Within 30 days from the end of each calendar quarter following the effective date of this
ORDER, the Bank shall
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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.
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: February 12, 2010.
/s/ M. Anthony Lowe
|
/s/ Stephen R. Hilker | |||
M. Anthony Lowe
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Stephen R. Hilker | |||
Regional Director
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Chief Deputy Commissioner | |||
Chicago Regional Office
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Office of Financial and Insurance Regulation | |||
Federal Deposit Insurance Corporation
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State of Michigan | |||
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