Random letters in this file have been converted to X in this DEMO conversion.

FEDEXAL DEPOSIX INSURANCX CORPORATXON

WASHXNGTON, D.X.
and
OKLAXOMA STATEXBANKING DXPARTMENT,XOKLAHOMA XITY, OKLAXOMA

)
In tXe Matter Xf ) ORDEX TO CEASEXAND DESISX
)
FIRSX STATE BAXK OF ALTUX )
ALTUX, OKLAHOMX )
) FDIX-08-287b
) OSBX-08-C&D-1X
(InsXred StateXNonmemberXBank) )
)

The Xirst StatX Bank of Xltus, AltXs, OklahoXa (“Bank”X, throughXits boardXof directXrs,

haviXg been adXised of iXs right tX the issuXnce and sXrvice of X NOTICE OX CHARGES XND

OF HXARING detXiling theXunsafe orXunsound bXnking praXtices andXviolationX of law aXd/or

reguXations alXeged to hXve been cXmmitted bX the BankXand of itX right toXa hearingXon the

alleXed chargeX under seXtion 8(b)Xof the FeXeral DepoXit InsuraXce Act (“Xct”), 12 X.S.C.

§ 18X8(b), andXsection 2X4(B) of tXe OklahomX Banking Xode (the XCode”), OXla. Stat.Xtit. 6,

§ 20X(B), and Xhe provisXons of thX OklahomaXAdministrXtive ProcXdures ActX(Okla. StXt. tit. 7X,

§ 25X et seq.)X and haviXg waived Xhose righXs, entereX into a SXIPULATIONXAND CONSEXT

TO TXE ISSUANCX OF AN ORXER TO CEAXE AND DESXST (“CONSXNT

AGREXMENT”) wiXh counselXfor the FXderal DepXsit InsurXnce CorpoXation (“FXIC”) and Xhe

CommXssioner (XCommissioXer”) of tXe OklahomX State BaXking DepaXtment (“SXate”) datXd

JanuXry 7, 200X, wherebyX solely fXr the purXose of thXs proceedXng and wiXhout admiXting or

denyXng the alXeged charXes of unsXfe or unsXund bankiXg practicXs and vioXations ofXlaw and/oX

reguXations, tXe Bank coXsented toXthe issuaXce of an XRDER TO CXASE AND DXSIST

(“ORXER”) by tXe FDIC anX the StatX.

Random letters in this file have been converted to X in this DEMO conversion.

The XDIC and tXe State cXnsidered Xhe matterXand deterXined thatXthey had Xeason to

beliXve that tXe Bank haX engaged Xn unsafe Xr unsoundXbanking pXactices aXd had vioXated lawsX

and/Xr regulatXons. TheXFDIC and Xhe State,XthereforeX acceptedXthe CONSEXT AGREEMEXT

and Xssued theXfollowingX

ORDEX TO CEASEXAND DESISX

IT IX ORDERED, thXt the BanX, Bank-afXiliated pXrties, asXthat termXis defineX in

sectXon 3(u) oX the Act,X12 U.S.C.X§ 1813(u)X of the BXnk, and iXs successXrs and asXigns, ceaXe

and Xesist froX the follXwing unsaXe or unsoXnd bankinX practiceX and violXtions of Xaws and/oX

reguXations:

(a) OperXting the Xank with Xn inadequXte level Xf capitalXprotectioX for the

kindXand qualiXy of asseXs held byXthe Bank.X

(b) OperXting the Xank with XnadequateXearnings Xo fund grXwth, suppXrt

diviXend paymeXts, and aXgment capXtal.

(c) OperXting the Xank with Xn excessiXe level oX adverselX classifiXd loans

or aXsets, delXnquent loXns, and/oX nonaccruXl loans.

(d) OperXting withXan inadeqXate allowXnce for lXan and leXse lossesXfor the

voluXe, kind, Xnd qualitX of loansXand leaseX held andXor failinX to make

provXsion for Xn adequatX reserve Xor possibXe loan loXses.

(e) EngaXing in haXardous leXding, ineXfective aXd/or lax XollectionXpracticesX

inclXding, butXnot limitXd to:

(1) FailXre to obtXin adequaXe and appXopriate sXpporting Xoan

docuXentation Xpon extenXion and/oX renewal.X

(2) FailXre to obtXin adequaXe collateXal.

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(3) FailXre to estXblish andXmonitor cXllateral Xargins ofXsecured

borrXwers.

(4) FailXre to estXblish andXenforce aXequate loXn repaymeXt

progXams.

(5) FailXre to obtXin currenX and compXete finanXial inforXation.

(6) FailXre to estXblish adeXuate credXt adminisXration prXctices.

(f) OperXting the Xank with XnadequateXwritten lXan policiXs and proXedures.

(g) OperXting the Xank in coXtraventioX of writtXn loan poXicies andX

procXdures.

(h) CreaXing conceXtrations Xf credit.X

(i) OperXting withXinadequatX policiesXto monitoX and contXol asset

concXntrationsXand out-oX-territorX lending.X

(j) OperXting the Xank with XanagementXwhose polXcies and Xractices Xre

detrXmental toXthe Bank Xnd jeoparXize the sXfety of iXs depositX.

(k) OperXting the Xank withoXt adequatX supervisXon and diXection byXthe

BankXs board oX directorX over theXmanagemenX of the BXnk to preXent

unsaXe and unsXund bankiXg practicXs and vioXations ofXlaws or

reguXations.

(l) OperXting the Xank in viXlation ofXapplicablX Federal Xaws and rXgulationsX

and/Xr in contXavention Xf Policy XtatementsXregardingXAllowanceXfor

LoanXand LeaseXLosses.

(m) OperXting the Xank with XnadequateXinternal Xeview polXcies or pXocedures

and/Xr internaX routinesXand contrXls and/orXcontrol eXvironmentXover the

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lendXng functiXn.

(n) OperXting withXan inadeqXate auditXprogram.

(o) OperXting the Xank withoXt adequatX liquiditX or propeX regard fXr funds

manaXement in Xight of tXe Bank’s Xsset and Xiability Xix.

(p) OperXting the Xank withoXt an effeXtive loanXapproval Xrocess, aXpraisal

reviXw processX and/or lXan reviewXprocess.

(q) OperXting the Xank withoXt an adeqXate EthicX and/or CXnflicts oX InterestX

PoliXy.

IT IX FURTHER XRDERED, thXt the BanX, its insXitution-aXfiliated Xarties, aXd its

succXssors andXassigns tXke affirmXtive actiXn as follXws:

I. CAPIXAL

A . IncrXase in CaXital and Xapital RaXios

1. (a) WithXn 120 dayX after thX effectivX date of Xhis ORDERX the BankXshall

achiXve and maXntain, afXer establXshing an Xllowance Xor loan aXd lease lXsses as rXquired

hereXn: Tier 1XCapital eXual to orXgreater tXan 8 percXnt of itsXaverage TXtal AssetX (“Tier 1X

CapiXal Ratio”X; Tier 1 Xisk-BasedXCapital eXual to orXgreater tXan 10 perXent of ToXal Risk-

WeigXted AssetX (“Tier 1XRisk-BaseX Capital Xatio”); aXd Total RXsk-Based Xapital eqXal to or

greaXer than 1X percent Xf Total RXsk-WeightXd Assets X“Total RiXk-Based CXpital RatXo”).

(HerXafter somXtimes colXectively Xeferred tX as “CapiXal RatiosX)

(b) By SXptember 3X, 2009, aXd for so Xong thereXfter as tXis ORDER Xs

outsXanding, tXe Bank shXll achievX and mainXain, afteX establisXing an alXowance foX loan andX

leasX losses aX requiredXherein: TXer 1 CapiXal equal Xo or greaXer than 1X percent Xf its aveXage

TotaX Assets (XTier 1 CaXital RatiX”); Tier X Risk-BasXd CapitalXequal to Xr greaterXthan 12

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percXnt of TotXl Risk-WeXghted AssXts (“TierX1 Risk-BaXed CapitaX Ratio”);Xand TotalXRisk-

BaseX Capital Xqual to oX greater Xhan 14 peXcent of TXtal Risk-Xeighted AXsets (“ToXal Risk-

BaseX Capital Xatio”).

(c) If tXe CapitalXRatios arX less thaX the amouXts requirXd herein,Xas

deteXmined at Xn examinaXion by thX FDIC or Xhe State,Xthe Bank Xhall, witXin 30 dayX after

receXpt of a wXitten notXce of theXcapital dXficiency Xrom the RXgional DiXector andXthe

CommXssioner, Xresent toXthe RegioXal DirectXr and theXCommissioXer a planXto increaXe the

CapiXal RatiosXof the BaXk or to tXke other Xeasures tX bring thX Capital Xatios to Xhe requirXd

amouXt. AfterXthe RegioXal DirectXr and theXCommissioXer responX to the pXan, the BXnk’s

boarX of direcXors shallXadopt theXplan, incXuding anyXmodificatXons or amXndments rXquested bX

the Xegional DXrector anX the CommXssioner.

(d) TherXafter, toXthe extenX such meaXures haveXnot previXusly beenXinitiatedX

the Xank shallXimmediateXy initiatX measuresXdetailed Xn the plaX to increXse its CaXital RatiXs by

an aXount suffXcient to Xring the Xatios to Xhe amountX requiredXby this OXDER withiX 30 days

afteX the RegiXnal DirecXor and thX CommissiXner respoXd to the Xlan. SucX increaseXin CapitaX,

and Xny increaXe in CapiXal necessXry to meeX the ratiXs requireX by this XRDER, mayXbe

accoXplished bX:

(i) The Xale of seXurities iX the formXof commonXstock; orX

(ii) The Xirect conXribution Xf cash suXsequent tX July 7, X008, by tXe

direXtors and/Xr sharehoXders of tXe Bank orXby the BaXk’s holdiXg

compXny; or

(iiiX ReceXpt of an Xncome taxXrefund orXthe capitXlization XubsequentXto

JulyX7, 2008, Xf a bona Xide tax rXfund certXfied as bXing accurXte

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Random letters in this file have been converted to X in this DEMO conversion.

by aXcertifiedXpublic acXounting fXrm; or

(iv) Any Xther methXd approveX by the RXgional DiXector andXthe

CommXssioner.

(e) If aXl or partXof the inXrease in Xapital reXuired by Xhis ORDERXis to be

accoXplished bX the saleXof new seXurities, Xhe Bank’sXboard of Xirectors Xhall adopX and

implXment a plXn for theXsale of sXch additiXnal securXties, incXuding solXciting prXxies and Xhe

votiXg of any Xhares or Xroxies owXed or conXrolled byXthem in fXvor of thX plan. SXould the

implXmentationXof the plXn involveXa public XistributiXn of the Xank’s secXrities (iXcluding aX

distXibution lXmited onlX to the BXnk’s exisXing shareXolders), Xhe Bank sXall prepaXe offerinX

mateXials fullX describiXg the secXrities beXng offereX, includiXg an accuXate descrXption of Xhe

finaXcial condXtion of tXe Bank anX the circXmstances Xiving risX to the oXfering, aXd any othXr

mateXial disclXsures necXssary to Xomply witX Federal XecuritiesXlaws. PrXor to theX

implXmentationXof the plXn, and inXany eventX not lessXthan 20 dXys prior Xo the disXeminationXof

suchXmaterialsX the planXand any mXterials uXed in theXsale of tXe securitXes shall Xe submittXd to

the XDIC, AccoXnting andXSecuritieX DisclosuXe SectionX WashingtXn, D.C. 2X429, and Xo the

StatX for reviXw. Any cXanges reqXested to Xe made inXthe plan Xr the matXrials by Xhe FDIC oX

the Xtate shalX be made Xrior to tXeir disseXination. XIf the inXrease in Xapital isXto be proXided

by tXe sale ofXnon-cumulXtive perpXtual prefXrred stocX, then alX terms anX conditioXs of the

issuX shall beXpresentedXto the ReXional DirXctor and Xhe CommisXioner forXprior appXoval.

(f) In cXmplying wXth the prXvisions oX this ORDXR and untXl such tiXe as

any Xuch publiX offeringXis terminXted, the Xank shallXprovide tX any subsXriber andXor purchaXer

of tXe Bank’s XecuritiesXwritten nXtice of aXy plannedXor existiXg developXent or otXer changeX

whicX is materXally diffXrent fromXthe inforXation refXected in Xny offeriXg materiaXs used inX

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Random letters in this file have been converted to X in this DEMO conversion.

connXction witX the saleXof the BaXk’s securXties. ThX written Xotice reqXired by tXis paragrXph

shalX be furniXhed withiX 10 days Xfter the Xate such Xaterial dXvelopmentXor changeXwas

planXed or occXrred, whiXhever is Xarlier, aXd shall bX furnisheX to everyXpurchaserXand/or

subsXriber whoXreceived Xr was tenXered the XnformatioX containeX in the BXnk’s origXnal

offeXing materXals.

(g) In aXdition toXthe requiXements ofXsubparagrXphs (a) aXd (b), thX Bank

shalX comply wXth the FDXC’s StateXent of PoXicy on RiXk-Based CXpital fouXd in AppeXdix A

to PXrt 325 ofXthe FDIC’X Rules anX RegulatiXns, 12 C.X.R. Part X25, App. X.

(h) For Xhe purposXs of thisXORDER, thX terms “AXlowance fXr Loan anX

LeasX Losses”,X“Risk-WeiXhted AsseXs”, “TierX1 CapitalX, “Tier 1XRisk-BaseX Capital Xatio”,

“TotXl Assets”X and “TotXl Risk-BaXed CapitaX Ratio” sXall be asXdefined iX Part 325Xof the

FDICXs Rules aXd RegulatXons, respXctively SXctions 32X.2(a), (vX, and (x)X 12 C.F.RX §§

325.X(a), (s),X(v), (w),X(x), and Xy). “AveXage TotalXAssets” sXall be caXculated aXcording tX the

methXdology seX forth inXthe ReporX of ExamiXation.

B . DiviXend RestrXction

2. As oX the effeXtive dateXof this OXDER, the Xank shallXnot declaXe or pay Xny

cashXdividend Xithout thX prior wrXtten consXnt of theXRegional Xirector aXd the ComXissioner.X

II. XSSET QUALXTY

A . CharXe-Off andXPlanned RXduction oX ClassifiXd Assets

3. (a) WithXn 30 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall, to

the Xxtent thaX it has nXt previouXly done sX, eliminaXe from itX books, bX charge-oXf or

collXction, alX assets oX portionsXof assetsXclassifieX Loss by Xhe FDIC oX the StatX as a resXlt of

theiX examinatXon of theXBank as oX July 7, X008. EliXination oX reductioX of theseXassets

7
Random letters in this file have been converted to X in this DEMO conversion.

throXgh proceeXs of loanX made by Xhe Bank sXall not bX considerXd “collecXion” for Xhe purposX

of tXis paragrXph.

(b) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

submXt a writtXn plan toXthe RegioXal DirectXr and theXCommissioXer to redXce the reXaining

asseXs classifXed DoubtfXl and SubXtandard aX of July X, 2008. Xhe plan sXall addreXs each asXet

so cXassified Xith a balXnce of $5X0,000 or Xreater anX provide Xhe followXng:

(i) The Xame underXwhich theXasset is Xarried onXthe booksXof the

BankX

(ii) TypeXof asset;X

(iiiX ActiXns to be Xaken in oXder to reXuce the cXassified Xsset; andX

(iv) TimeXrames forXaccomplisXing the pXoposed acXions.

The Xlan shallXalso inclXde, at a Xinimum,

(i) ReviXw of the Xinancial Xosition oX each sucX borrowerX includinX

the Xource of Xepayment,XrepaymentXability, Xnd alternXte

repaXment sourXes; and

(ii) EvalXation of Xhe availaXle collatXral for eXch such cXedit,

inclXding possXble actioXs to imprXve the BaXk’s collaXeral

posiXion.

In aXdition, tXe Bank’s Xlan shallXcontain aXschedule Xetailing Xhe projecXed reductXon of

totaX classifiXd assets Xn a quartXrly basisX FurtherX the planXshall conXain a proXision reqXiring

the XubmissionXof monthlX progressXreports tX the BankXs board oX directorX and a prXvision

mandXting a reXiew by thX Bank’s bXard of diXectors.

(c) The Xank shallXpresent tXe plan toXthe RegioXal DirectXr and theX

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Random letters in this file have been converted to X in this DEMO conversion.

CommXssioner fXr review.X Within 3X days aftXr receiptXof the ReXional DirXctor and Xhe

CommXssioner’sXresponse,Xthe plan,XincludingXany requeXted modifXcations oX amendmenXs, shall

be aXopted by Xhe Bank’sXboard of Xirectors.X The BankXshall theX immediatXly initiaXe measureX

detaXled in thX plan to Xhe extentXsuch measXres have Xot been iXitiated.

(d) For Xurposes oX the planX the reduXtion of tXe level oX adverselX classifiXd

asseXs as of JXly 7, 200X, to quarXerly targXts expresXed as a pXrcentage Xf Tier 1 Xapital plXs the

AlloXance for Xoan and LXase LosseX may be aXcomplisheX by:

(i) CharXe-off;

(ii) CollXction;

(iiiX SuffXcient impXovement iX the qualXty of advXrsely claXsified asXets

so aX to warraXt removinX any adveXse classiXication, Xs

deteXmined by Xhe FDIC oX the StatX; or

(iv) IncrXase of TiXr 1 CapitXl.

(e) WhilX this ORDXR is in eXfect, theXBank shalX eliminatX from itsXbooks, byX

charXe-off or XollectionX all asseXs or portXons of asXets classXfied LossXas determXned at anX

futuXe examinaXion conduXted by thX FDIC or Xhe State.X

B.X ReduXtion of ConcXntrationsX

4. (a) WithXn 30 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

formXlate and Xubmit to Xhe RegionXl DirectoX and the XommissionXr for revXew and coXment a

writXen plan tX reduce eXch of theXconcentraXions idenXified on Xages 62 aXd 63 of tXe Report Xf

ExamXnation daXed July 7X 2008. WXth regardXto indiviXual loan XoncentratXons, the Xlan shallX

provXde that tXe Bank shXll reduceXits exposXre to notXmore thanX25 percenX of the BXnk’s totaX

TierX1 CapitalX With reXard to thX industryX product Xine, or tXpe of colXateral coXcentratioXs, the

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Random letters in this file have been converted to X in this DEMO conversion.

planXshall proXide that Xhe Bank sXall reducX its expoXure to noX more thaX 100 percXnt of theX

BankXs total TXer 1 CapiXal. SuchXplan shalX prohibitXany additXonal advaXces that Xould incrXase

the XoncentratXons or crXate new cXncentratiXns and shXll includX, but notXbe limiteX to:

(i) DollXr levels Xo which tXe Bank shXll reduceXeach concXntration;X

and

(ii) ProvXsions forXthe submiXsion of mXnthly wriXten progrXss reportX

to tXe Bank’s Xoard of dXrectors fXr review Xnd notatiXn in minuXes

of tXe meetingX of the BXnk’s boarX of direcXors.

(b) For Xurposes oX the planX “reduce”Xmeans to:X

(i) CharXe-off;

(ii) CollXct; or

(iiiX IncrXase Tier X Capital.X

(c) AfteX the RegiXnal DirecXor and thX CommissiXner have Xesponded Xo the

planX the BankXs board oX directorX shall adXpt the plXn as amenXed or modXfied by tXe RegionaX

DireXtor and tXe CommissXoner. ThX plan shaXl be implXmented imXediately Xo the extXnt that

the XrovisionsXof the plXn are notXalready iX effect aX the BankX

C.X ReduXtion of DeliXquencies

5. (a) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

formXlate and Xubmit to Xhe RegionXl DirectoX and the XommissionXr for revXew and coXment a

writXen plan fXr the redXction andXcollectioX of delinXuent loanX. Such pXan shall Xnclude, bXt not

be lXmited to,XprovisionX which:

(i) ProhXbit the eXtension oX credit fXr the payXent of inXerest;

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Random letters in this file have been converted to X in this DEMO conversion.

(ii) DeliXeate areaX of respoXsibility Xor implemXnting andXmonitorinX

the Xank’s colXection poXicies;

(iiiX EstaXlish specXfic colleXtion procXdures to Xe instituXed at varXous

stagXs of a boXrower’s dXlinquencyX

(iv) EstaXlish dollXr levels Xo which tXe Bank shXll reduceX

deliXquencies Xithin 30 Xays; and

(v) ProvXde for thX submissiXn of montXly writteX progressXreports tX

the Xank’s boaXd of direXtors for Xeview andXnotation Xn the

minuXes of theXmeetings Xf the BanX’s board Xf directoXs.

(b) For Xurposes oX the planX “reduce”Xmeans to:X

(i) CharXe-off; orX

(ii) CollXct.

(c) AfteX the RegiXnal DirecXor and thX CommissiXner have Xesponded Xo the

planX the BankXs board oX directorX shall adXpt the plXn as amenXed or modXfied by tXe RegionaX

DireXtor and tXe CommissXoner. ThX plan wilX be impleXented immXdiately tX the exteXt that

the XrovisionsXof the plXn are notXalready iX effect aX the BankX

D. AlloXance For Xoan And LXase LosseX AmendmenX Of Call Xeports

6. (a) FromXthe effecXive date Xf this ORXER, the BXnk’s AlloXance for Xoan

and Xease LossXs (“ALLL”X should bX funded bX charges Xo currentXoperatingXincome, aXd

shouXd be calcXlated in XccordanceXwith geneXally acceXted accouXting stanXards and XLLL

supeXvisory guXdance. HXreafter, Xhe Bank sXall maintXin a reasXnable ALLX. Prior Xo the endX

of eXch calendXr quarterX the BankXs board oX directorX shall reXiew the aXequacy ofXthe Bank’X

ALLLX Such reXiews shalX include,Xat a miniXum, the BXnk’s loanXloss expeXience, anXestimate

11
Random letters in this file have been converted to X in this DEMO conversion.

of pXtential lXss exposuXe in the Xortfolio,Xtrends ofXdelinquenX and non-Xccrual loXns and

prevXiling andXprospectiXe economiX conditioXs. The mXnutes of Xhe Bank’sXboard of Xirectors’X

meetXngs at whXch such rXviews areXundertakeX shall inXlude compXete detaiXs of the Xeviews anX

the Xesulting XecommendeX increaseX in the AXLL.

(b) WithXn 30 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xust use

FinaXcial AccoXnting StaXdards BoaXd StatemeXts NumberX 5 and 11X for deteXmining thX

BankXs allowanXe for loaX and leasX losses rXserve adeXuacy. PrXvisions fXr loan loXses must Xe

baseX on the iXherent riXk in the Xank’s loaX portfoliX. The diXectorate Xust documXnt with

writXen reasonX any deciXion not tX require XrovisionsXfor loan Xosses in Xhe Bank’sXboard of

direXtors’ minXtes.

E. RestXiction ofXAdvances Xo ClassifXed BorrowXrs

7. (a) WhilX this ORDXR is in eXfect, theXBank shalX not exteXd, directXy or

indiXectly, anX additionXl credit Xo or for Xhe benefiX of any bXrrower whXse existiXg credit Xas

beenXclassifieX Loss, eiXher in whXle or in Xart, by tXe FDIC orXthe StateXas the reXult of itX

examXnation ofXthe Bank,Xand is unXollected,Xor to anyXborrower Xho is alrXady obligXted in anX

mannXr to the Xank on anX extensioX of crediX, includiXg any porXion thereXf, that hXs been

charXed-off thX books ofXthe Bank Xnd remainX uncollecXed. The XequiremenXs of thisXparagraphX

shalX not prohXbit the BXnk from rXnewing crXdit alreaXy extendeX to a borXower afteX full

collXction, inXcash, of Xnterest dXe from thX borrowerX

(b) WhilX this ORDXR is in eXfect, theXBank shalX not exteXd, directXy or

indiXectly, anX additionXl credit Xo or for Xhe benefiX of any bXrrower whXse extensXon of creXit is

clasXified DouXtful and/Xr SubstanXard, eithXr in wholX or in paXt, by theXFDIC or tXe State aX the

resuXt of its XxaminatioX of the BXnk, and iX uncollecXed, unlesX the BankXs board oX directorX has

12
Random letters in this file have been converted to X in this DEMO conversion.

signXd a detaiXed writteX statemenX giving rXasons whyXfailure tX extend sXch creditXwould be

detrXmental toXthe best Xnterests Xf the BanX. The stXtement shXll be plaXed in theXappropriaXe

loanXfile and Xncluded iX the minuXes of theXapplicablX Bank’s bXard of diXectors’ mXeting.

F.X TechXical ExceXtions

8. (a) WithXn 90 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

corrXct the teXhnical exXeptions lXsted in tXe July 7,X2008, RepXrt of ExaXination.

(b) WithXn 90 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

implXment a syXtem of moXitoring lXan documeXtation exXeptions oX an ongoiXg basis aXd

implXment procXdures desXgned to rXduce the XccurrenceXof such eXceptions Xn the futXre.

G. LoanXReview ReXuirementsX

9. (a) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xthe boardXof

direXtors shalX develop X program Xf indepenXent loan Xeview thaX will proXide for aXperiodic

reviXw of the Xank's loaX portfoliX and the XdentificaXion and cXtegorizatXon of proXlem crediXs.

At aXminimum, Xhe systemXshall proXide for:

(i) PromXt identifXcation ofXloans witX credit wXaknesses Xhat warraXt

the Xpecial atXention ofXmanagemenX, includiXg the namX of the

borrXwer, amouXt of the Xoan, reasXn why theXloan warrXnts speciXl

atteXtion; andXassessmenX of the dXgree of rXsk that tXe loan wiXl

not Xe fully rXpaid accoXding to iXs terms;

(ii)X ActiXn plans tX reduce tXe Bank’s Xisk exposXre from eXch

idenXified relXtionship;X

(iiiX PromXt identifXcation ofXall outstXnding balXnces and XommitmentX

attrXbutable tX each oblXgor identXfied undeX the requXrements oX

13
Random letters in this file have been converted to X in this DEMO conversion.

subpXragraph (X), includXng outstaXding balaXces and cXmmitmentsX

attrXbutable tX related Xnterests Xf such obXigors, inXluding thX

obliXor of recXrd, relatXonship toXthe primaXy obligorXidentifieX

undeX subparagXaph (i), Xnd an assXssment ofXthe risk Xxposure

fromXthe aggreXate relatXonship;

(iv)X IdenXificationXof trendsXaffectingXthe qualiXy of the Xoan portfXlio,

poteXtial probXem areas,Xand actioX plans toXreduce thX Bank’s rXsk

expoXure;

(v) AsseXsment of Xhe overalX quality Xf the loaX portfoliX;

(vi)X IdenXificationXof creditXand collaXeral docuXentation XxceptionsX

and Xn action Xlan to adXress the XdentifiedXdeficiencXes;

(viiX IdenXificationXand statuX of violaXions of lXws, rulesX or regulXtions

withXrespect tX the lendXng functiXn and an Xction plaX to addreXs

the XdentifiedXviolationX;

(viiX) IdenXificationXof loans Xhat are nXt in confXrmance wiXh the BanX's

lendXng policyXand an acXion plan Xo addressXthe identXfied

defiXiencies;

(ix)X IdenXificationXof loans Xo directoXs, officeXs, princiXal sharehXlders,

and Xheir relaXed intereXts;

(x) An aXsessment Xf the abiXity of inXividual mXmbers of Xhe lendinX

stafX to operaXe within Xhe framewXrk of theXBank’s loXn policy Xnd

applXcable lawX, rules, Xnd regulaXions; andXan actionXplan to

addrXss the idXntified dXficiencieX; and

14
Random letters in this file have been converted to X in this DEMO conversion.

(xi)X A meXhanism foX reportinX periodicXlly, but Xn no evenX less thaX

quarXerly, theXinformatiXn developXd in (i) Xhrough (vXii) aboveXto

the Xoard of dXrectors. XThe reporX should aXso descriXe the

actiXn(s) takeX by managXment withXrespect tX problem Xredits.

(b) The Xank shallXsubmit thX program Xo the RegXonal DireXtor and tXe

CommXssioner fXr review Xnd commenX. WithinX30 days fXom receipX of any cXmment froX the

RegiXnal DirecXor and thX CommissiXner, and Xfter due XonsideratXon of anyXrecommendXd

chanXes, the BXnk shall Xpprove thX program,Xwhich appXoval shalX be recorXed in theXminutes oX

the Xank’s boaXd of direXtors’ meeXing. TheXeafter, tXe Bank shXll implemXnt and fuXly complyX

withXthe progrXm.

(c) UponXimplementXtion, a cXpy of eacX report sXall be suXmitted toXthe

BankXs board oX directorX, as wellXas documeXtation ofXthe actioXs taken bX the BankXor

recoXmendationX to the BXnk’s boarX of direcXors that Xddress idXntified dXficiencieX in speciXic

loanXrelationsXips or thX Bank’s pXlicies, pXocedures,XstrategieX, or otheX elementsXof the BaXk’s

lendXng activiXies. SucX reports Xnd recommXndations,Xas well aX any resuXting deteXminationsX

shalX be recorXed and reXained in Xhe minuteX of the mXeting of Xhe Bank’sXboard of Xirectors.X

H Xoan PolicX.

10. (a) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xand annuaXly

therXafter, thX board ofXdirectorsXof the BaXk shall rXview the Xank’s loaX policy aXd proceduXes

for XffectivenXss and, bXsed upon Xhis revieX, shall mXke all neXessary reXisions toXthe policX in

ordeX to strenXthen the Xank’s lenXing proceXures and Xbate addiXional loaX deteriorXtion. ThX

reviXed writteX loan polXcy shall Xe submittXd to the Xegional DXrector anX the CommXssioner fXr

reviXw and comXent upon Xts compleXion.

15
Random letters in this file have been converted to X in this DEMO conversion.

(b) The Xnitial reXisions toXthe Bank’X loan polXcy requirXd by thisXparagraphX

at aXminimum, Xhall inclXde provisXons:

(i) DesiXnating thX Bank’s nXrmal tradX area;

(ii) EstaXlishing rXview and XonitoringXprocedureX to ensurX that allX

lendXng personXel are adXering to XstablisheX lending XroceduresX

and Xhat the dXrectorateXis receivXng timelyXand fullyXdocumenteX

repoXts on loaX activityX includinX any deviXtions froX establisXed

poliXy;

(iiiX RequXring writXen procedXres for tXe approvaX of loansXwith

suppXrting docXmentationXto ensureXthat loanXauthoritiXs have beXn

exerXised in aXcordance Xith existXng Bank pXlicies;

(iv) CompXehensive Xuidance oX the methXdology foX determinXng an

apprXpriate alXowance foX loan andXlease losXes;

(v) LoanXpricing gXidelines;X

(vi) RequXring thatXall extenXions of cXedit origXnated or Xenewed byXthe

BankXbe supporXed by curXent crediX informatXon and coXlateral

docuXentation,XincludingXlien searXhes and tXe perfectXon of

secuXity interXsts; haveXa definedXand stateX purpose;Xand have X

predXtermined Xnd realisXic repaymXnt sourceXand schedXle. CredXt

infoXmation anX collaterXl documenXation shaXl includeXcurrent

finaXcial infoXmation, pXofit and Xoss stateXents or cXpies of tXx

retuXns, and cXsh flow pXojectionsX and shalX be maintXined

throXghout theXterm of tXe loan;

16
Random letters in this file have been converted to X in this DEMO conversion.

(viiX RequXring loanXcommitteeXreview anX monitoriXg of the Xtatus of

repaXment and XollectionXof overduX and matuXing loansX as well Xs

all Xoans clasXified “SuXstandard”X “DoubtfuX”, and “SXecial

MentXon” in thX July 7, X008, RepoXt of ExamXnation;

(viiX) RequXring the XstablishmXnt and maXntenance Xf a loan Xrading

systXm and intXrnal loanXwatch lisX;

(ix) RequXring a wrXtten planXto lessenXthe risk Xosition iX each linX of

credXt identifXed as a pXoblem creXit on theXBank’s inXernal loaX

watcX list;

(x) ProhXbiting thX capitaliXation of Xnterest oX loan-relXted expenXes

unleXs the boaXd of direXtors formXlly approXes such eXtensions Xf

credXt as beinX in the bXst intereXt of the Xank and pXovides

detaXled writtXn supportXof its poXition in Xhe minuteX of the BXnk’s

boarX of direcXors’ meetXngs;

(xi) RequXring thatXextensionX of crediX to any oX the BankXs executiXe

offiXers, direXtors, or Xrincipal XhareholdeXs, or to Xny relateX

inteXest of suXh person,Xbe thorouXhly revieXed for coXpliance

withXall proviXions of RXgulation X, 12 C.F.X. § 337.3Xand 12

C.F.X. Part 21X;

(xiiX RequXring prioX written Xpproval bX the BankXs board oX directorX

for Xny extensXon of creXit, renewXl, or disXursement Xn an amouXt

whicX, when agXregated wXth all otXer extensXons of crXdit to thXt

persXn and relXted interXsts of thXt person,Xexceeds $X50,000. Xor

17
Random letters in this file have been converted to X in this DEMO conversion.

the Xurpose ofXthis paraXraph “relXted interXst” is deXined as iX

SectXon 215.2(X) of ReguXation O, X2 C.F.R. X 215.2(n)X

(xiiX) RequXring a noX-accrual Xolicy in XccordanceXwith the Xederal

FinaXcial BankX ExaminatXon CounciX’s InstruXtions forXthe

ConsXlidated RXports of Xondition Xnd IncomeX

(xivX RequXring accuXate reporXing of paXt due loaXs to the Xank’s boaXd

of dXrectors oX at leastXa monthlyXbasis;

(xv) AddrXssing conXentrationX of crediX and diveXsificatioX of risk,X

inclXding goalX for portXolio mix,XestablishXent of liXits withiX

loanXand otherXasset catXgories, aXd developXent of a Xracking aXd

moniXoring sysXem for thX economicXand finanXial condiXion of

specXfic geogrXphic locaXions, indXstries, aXd groups Xf borroweXs;

(xviX RequXring guidXlines andXreview ofXout-of-teXritory loXns which,Xat

a miXimum, shaXl includeXcomplete Xredit docXmentationX approvalX

by aXmajority Xf the BanX’s board Xf directoXs prior tX the

disbXrsement oX funds, aXd a detaiXed writteX explanatXon of whyX

suchXa loan isXin the beXt interesX of the BXnk;

(xviX) EstaXlishing sXandards fXr extendiXg unsecurXd credit;X

(xviXi) IncorpXrating coXlateral vXluation rXquirementX, includiXg: (a)

maxiXum loan-tX-collaterXl-value lXmitationsX (b) a reXuirement

thatXthe valuaXion be coXpleted prXor to a cXmmitment Xo lend

fundX; (c) a rXquirementXfor perioXic updatiXg of valuXtions; anX

18
Random letters in this file have been converted to X in this DEMO conversion.

(d) X requiremXnt that tXe source Xf valuatiXns be docXmented inX

the Xank’s recXrds;

(xixX EstaXlishing sXandards fXr initiatXng collecXion efforXs;

(xx) EstaXlishing gXidelines Xor timelyXrecognitiXn of lossXthrough

charXe-off;

(xxiX ProhXbiting thX extensioX of a matXrity dateX advancemXnt of

addiXional creXit or renXwal of a Xoan to a Xorrower wXose

obliXations toXthe Bank Xere classXfied “SubXtandard,”X“DoubtfulX”

or “Xoss,” wheXher in whXle or in Xart, by tXe FDIC orXState

authXrity in aXsubsequenX Report oX ExaminatXon, withoXt the fulX

collXction in Xash of acXrued and Xnpaid intXrest, unlXss the loXns

are Xell securXd and/or Xre supporXed by curXent and cXmplete

finaXcial infoXmation, aXd the renXwal or exXension haX first beXn

apprXved in wrXting by aXmajority Xf the BanX’s board Xf directoXs;

(xxiX) EstaXlishing oXficer lenXing limitX and limiXations onXthe aggreXate

leveX of crediX to any oXe borroweX which caX be grantXd withoutX

the Xrior apprXval of thX Bank’s lXan commitXee;

(xxiXi) RequirXng that cXllateral XppraisalsXbe compleXed prior Xo the

makiXg of secuXed extensXons of crXdit, and Xhat perioXic collatXral

valuXtions be Xerformed Xor all seXured loanX listed oX the BankXs

inteXnal watchXlist, criXicized inXany interXal or outXide auditXreport

of tXe Bank, oX criticizXd in any XegulatoryXreport ofXexaminatiXn

of tXe Bank;

19
Random letters in this file have been converted to X in this DEMO conversion.

(xxiX) ProhibiXing the iXsuance ofXstandby lXtters of Xredit unlXss the

lettXrs of creXit are weXl securedXand/or arX supporteX by curreXt

and Xomplete fXnancial iXformationX

(xxvX ProhXbiting thX payment Xf any oveXdraft in Xxcess of X25,000

withXut the prXor writteX approvalXof the BaXk’s boardXof directXrs,

and Xmposing lXmitationsXon the usX of the CXsh Items Xccount;

(xxvX) EstabliXhing limiXations onXthe maximXm volume Xf loans iX

relaXion to toXal assetsX

(xxvXi) EstablXshing revXew and moXitoring pXocedures Xo ensure

compXiance witX FDIC’s rXgulation Xn appraisXls, 12 C.X.R. Part

323;X

(xxvXii)DeveloXing writtXn commercXal real eXtate (“CRX”) lendinX

guidXnce incluXing, (a) XegmentatiXn of the XRE portfoXio for riXk

analXsis; (b) Xrudent CRX risk limXts; (c) aXcompliancX monitoriXg

procXss; (d) pXriodic maXket analyXis; (e) eXpanded crXdit

undeXwriting sXandards; Xnd (f) poXtfolio stXess testiXg to asseXs the

poteXtial impaXt to earnXngs and cXpital.

(c) The Xank shallXsubmit thX foregoinX policiesXto the ReXional DirXctor and

the XommissionXr for comXent. AftXr the RegXonal DireXtor and tXe CommissXoner haveX

respXnded to tXe policieX, the BanX’s board Xf directoXs shall aXopt the pXlicies asXamended oX

modiXied by thX RegionalXDirector Xnd the CoXmissionerX The poliXies will Xe implemeXted

immeXiately toXthe extenX that theX are not Xlready inXeffect atXthe Bank.X

I. SeniXr Life SeXtlement LXans

20
Random letters in this file have been converted to X in this DEMO conversion.

11. (a) FromXthe effecXive date Xf this ORXER, the BXnk shall Xot advancX loan

procXeds for tXe paymentXof intereXt or feesXregardingXits five Xenior LifX SettlemeXt loans. XIn

addiXion, the Xank shallXreserve 1X0 percentXof any adXances of Xoan proceXds for thX payment Xf

lifeXinsuranceXpremiums Xf the BanX is requiXed to makX such payXents.

(b) By AXril 30, 2X09, the BXnk shall Xdopt a plXn (“Plan”X to assesX the riskX

assoXiated witX the fiveXSenior LiXe SettlemXnt loans Xade by thX Bank, thXir suitabXlity as aX

asseX of the BXnk, and aXmethod toXmitigate Xhe Bank’sXrisk in tXese loansX The PlaX shall

inclXde, at a Xinimum: (X) obtainiXg legal oXinions reXated to tXe structuXe of the Xenior LifX

SettXement AgrXements; (Xi) perfecXing the BXnk’s secuXity interXst in theXSenior LiXe SettlemXnt

AgreXments; anX (iii) obXaining leXal opinioXs regardiXg the benXficiariesX right toXreceive tXe

procXeds of thX policiesXupon the Xeaths of Xhe insureXs.

(c) WithXregard toXthe underXriting anX structurXng of theXe loans, Xhe Plan

shalX include XrovisionsXfor: (i) Xandatory Xeduction Xf loan baXances upoX receipt Xf proceedX

deriXed from tXe deaths Xf the insXreds; (iiX defined Xepayment Xlans in tXe absenceXof proceeXs

deriXed from tXe deaths Xf the insXreds; (iiX) paymentXof intereXt by the Xorrowers Xther thanX

throXgh the BaXk’s advanXement of XdditionalXloan procXeds; (iv)Xpayment oX insurancX

premXums on thX underlyiXg insuranXe policieX other thXn throughXthe Bank’X advancemXnt of

addiXional loaX proceedsX (v) paymXnt of ongXing fees Xetween thX borrowerX and BankXaffiliateX

AltuX VenturesXother thaX through Xhe Bank’sXadvancemeXt of addiXional loaX proceedsX and (vi)X

a loXg-term coXtingency Xlan to enXure that Xhe Bank cXn manage Xnd hold tXese assetX on an

ongoXng basis,Xcoupled wXth an anaXysis of tXe potentiXl impact Xn the BanX’s liquidXty, capitXl,

and Xarnings iX the evenX the BankXcontinuesXto hold tXese assetX.

(d) WithXregard toXthe collaXeral secuXing theseXloans, thX Plan shaXl includeX(i)

21
Random letters in this file have been converted to X in this DEMO conversion.

an eXit strateXy, includXng the saXe of thesX policiesXin the seXondary maXket; (ii)Xan analysXs of

the Xecondary Xarket forXthese polXcies; (iiX) a documXnted and Xell-suppoXted evaluXtion of tXe

fairXmarket vaXue of theXcollateraX; (iv) anXanalysis Xf Senior Xife SettlXment tranXaction riXks and

compXexity; (vX a designXted Bank Xfficer whX will be XpecificalXy trainedXin the arXa of SeniXr

LifeXSettlemenX policiesXand transXctions asXociated wXth these Xolicies iX order toXdevelop aX

thorXugh underXtanding oX the dynaXics of thX insurancX policiesXand the vXriables tXat dictatX

the Xolicies’ XerformancX; (vi) anXanalysis Xf the potXntial risXs of litiXation assXciated wiXh

thesX policiesX includinX, but notXlimited tX, the traXsfer of tXe policieX to trustX and the

subsXquent salX or assigXment of tXe trusts Xo third pXrties unrXlated to Xhe insureXs or theiX

origXnal benefXciaries; Xvii) an aXalysis ofXthe risk XssociatedXwith the XontestabiXity proviXions of

eachXof the liXe insuranXe policieX; (viii) X legal opXnion thatXall the dXcuments cXnform to Xtate

and/Xr federalXstatutes,Xlaws, andXregulatioXs relatinX to consuXer protecXion; (ix)Xa method Xor

obtaXning all Xissing doXuments reXuired to XompletelyXtrace theXSenior LiXe SettlemXnt

tranXactions fXom their Xnception;Xand (x) aX analysisXof the poXential crXdit risksXrelated tX the

insuXance compXnies thatXissued thX insurancX policiesX

(e) For Xo long asXthe Bank Xas outstaXding loanX to the fXve SeniorXLife

SettXement borXowers, thX Bank shaXl, on a mXnthly basXs, reviewXthe futurX performaXce of theX

loanX, taking Xnto consiXeration: Xi) any siXnificant Xr anticipXted changXs to the Xife insurXnce

poliXies; (ii)Xdeclines Xn the finXncial conXitions ofXthe insurXnce carriXrs; (iii)XanticipatXd policy

surrXnders; anX (iv) chaXges in taX laws or Xegal inteXpretationX that couXd have anXimpact onXthe

perfXrmance ofXthese polXcies.

J XeappraisaX. of ColorXdo and AlXbama RealXEstate CoXlateral

12. (a) By AXril 30, 2X09, the BXnk shall Xbtain curXent appraXsals on aXl real

22
Random letters in this file have been converted to X in this DEMO conversion.

estaXe collateXal for itX Alabama Xnd ColoraXo real esXate loansX and an iXdependentXvaluationXof

realXestate paXtnership Xnterests Xn AlabamaXreal estaXe. The BXnk shall Xngage difXerent

apprXisers to Xonduct thX appraisaXs of all Xf the colXateral, aXd such apXraisers sXall not bX the

sameXappraiserXwho perfoXmed the aXpraisals Xhen the lXans were XriginallyXmade.

III.XMANAGEMENX

A. QualXfied ManaXement

13. (a) The Xank shallXhave and Xetain quaXified manXgement. Xach membeX of

manaXement shaXl possessXqualificaXions and XxperienceXcommensurXte with hXs or her Xuties andX

respXnsibilitiXs at the Xank. TheXqualificaXions of mXnagement Xersonnel Xhall be eXaluated oX

theiX ability Xo:

(i) CompXy with thX requiremXnts of thXs ORDER;

(ii) OperXte the BaXk in a saXe and souXd manner;X

(iiiX CompXy with apXlicable lXws and reXulations;Xand

(iv) RestXre all asXects of tXe Bank toXa safe anX sound coXdition,

inclXding asseX quality,Xcapital aXequacy, eXrnings, mXnagement

effeXtiveness,Xand liquiXity.

(b) WhilX this ORDXR is in eXfect, theXBank shalX notify tXe RegionaX

DireXtor and tXe CommissXoner in wXiting of Xny changeX in any oX the BankXs directoXs or

SeniXr ExecutiXe OfficerX. For puXposes of Xhis ORDERX “Senior Xxecutive Xfficer” iX defined

as iX Section X03.101(b)Xof the FDXC Rules aXd RegulatXons, 12 CXF.R. § 30X.101(b). XPrior to

the Xddition oX any indiXidual to Xhe Bank’sXboard of Xirectors Xr the empXoyment ofXany

indiXidual as X Senior EXecutive OXficer, thX Bank shaXl comply Xith the rXquirementX of SectiXn

32 oX the Act,X12 U.S.C.X§ 1831i, Xnd SubparX F of ParX 303 of tXe FDIC RuXes and ReXulations,X

23
Random letters in this file have been converted to X in this DEMO conversion.

12 CXF.R. §§ 3X3.100 - 3X3.103.

B. CompXiance ComXittee

14. (a) WithXn 30 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank’X board

of dXrectors sXall estabXish a comXittee of Xhe board Xf directoXs of the Xank chargXd with thX

respXnsibilityXof ensuriXg that thX Bank comXlies withXthe proviXions of tXis ORDER.X A

majoXity of thX members Xf such coXmittee shXll be dirXctors notXemployed Xn any capXcity by

the Xank otherXthan as aXdirector.X The commXttee shalX report mXnthly to Xhe full bXard of

direXtors of tXe Bank, aXd a copy Xf the repXrt and anX discussiXn relatinX to the rXport or tXe

ORDEX shall beXnoted in Xhe minuteX of the BXnk’s boarX of direcXors’ meetXngs. TheX

estaXlishment Xf this suXcommitteeXshall notXdiminish Xhe responXibility oX liabilitX of the eXtire

boarX of direcXors of thX Bank to Xnsure comXliance wiXh the proXisions ofXthis ORDEX.

C.X EthiXs PoliXy

15. (a) WithXn 90 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

deveXop, adoptXand impleXent a wriXten ethicX policy (XEthics PoXicy”) andXprogram (XEthics

ProgXam") desiXned to brXng to theXattentionXof each mXmber of tXe Bank’s Xoard of dXrectors

confXicts of iXterest whXch may exXst in appXoving loaXs or otheX transactXons in whXch officeXs,

direXtors or pXincipal sXockholderX of the BXnk (“InsiXers”) areXinvolved.X The EthiXs Policy Xill

statX the ethiXal conducX and otheX standardX expectedXof directXrs, officXrs, emploXees, agenXs

and Xther persXns particXpating inXthe conduXt of the Xffairs ofXthe Bank X“Covered XndividualX”),

in tXe performXnce of thXir dutiesXand respoXsibilitieX, and estXblish theXdefinitioXs, instruXtions

and Xormat to Xe followeX by CoverXd IndividXals in thX preparatXon of comXrehensiveXconflict

discXosure staXements (“XtatementsX) to be fXled for rXview by aX Ethics CXunselor aXd/or EthiXs

CommXttee. AtXa minimumX the EthiXs ProgramXwill prohXbit self-Xealing byXinsiders Xr their

24
Random letters in this file have been converted to X in this DEMO conversion.

advaXcing persXnal, busiXess, or oXher interXsts, or tXose of otXers, at tXe expenseXof the BaXk;

and Xequire:

(i) InitXal statemXnts from Xll existiXg CoveredXIndividuaXs;

(ii)X InitXal statemXnts from Xny personXwho becomXs a new CXvered

IndiXidual;

(iiiX PeriXdic stateXents fromXall CoverXd IndividXals;

(iv)X The XisclosureXof all poXential coXflicts ofXinterest Xrising frXm a

busiXess or otXer intereXt or affiXiation; aXd

(v) ImmeXiate repoXting of nXw conflicXs or discXvery of pXeviously

unreXorted conXlicts.

(b) The Xthics ProXram will,Xat a miniXum, ensurX that eacX member oX the

BankXs board oX directorX has beenXapprised Xf any potXntial conXlict prioX to makinX a decisiXn,

and Xas acted XpecificalXy on any Xoan or otXer transaXtion in wXich InsidXrs and/orXtheir busXness

assoXiates areX directlyXor indireXtly, invoXved. TheXresults oX any deliXerations Xy the BanX’s

boarX of direcXors regarXing potenXial conflXcts shallXbe reflecXed in theXminutes oX its meetXngs.

The Xthics ProXram will Xlso addreXs the ethXcal and oXher conduXt and resXonsibilitXes with

respXct to CovXred IndivXduals, anX specificXlly the pXrmissibilXty and diXclosure oX:

(i) AcceXtance of Xifts, entXrtainmentX favors aXd loans;

(ii)X Use Xf officiaX informatXon;

(iiiX EmplXyment of Xelatives;X

(iv)X Use Xf Bank prXperty;

(v) ReimXursement Xr paymentXof travelXexpenses;X

(vi)X IndeXtedness tX the BankXor any otXer financXal institXtion;

25
Random letters in this file have been converted to X in this DEMO conversion.

(viiX FinaXcial inteXests and XbligationX that appXar to conXlict withXthe

indiXidual's dXties and XesponsibiXities, inXluding, bXt not limXted

to, XarticipatXon of anyXsort in aXy transacXion or loXn in whicX the

indiXidual, hiX spouse, Xhild, parXner, or aXy organizXtion in wXich

the XndividualXhas a finXncial intXrest, or Xerves as Xn officerX

direXtor, trusXee, or paXtner, is Xnvolved;

(viiX) PurcXasing of Xank propeXty;

(ix)X ProvXding goodX or serviXes to theXBank;

(x) OutsXde employXent and oXher activXties; andX

(xi)X A peXiodic wriXten methoX of reporXing each Xovered InXividual'sX

compXiance witX the EthiXs ProgramXto an EthXcs CounseXor and/orX

commXttee who Xhall reviXw compliaXce with tXe Ethics Xrogram

and Xeport itsXfindings Xo the BanX’s board Xf directoXs.

(c) The Xank shallXsubmit thX policy aXd programXto the ReXional DirXctor

and Xhe CommisXioner forXreview anX comment.X Within 3X days froX the receXpt of anyXsuch

commXnts from Xhe RegionXl DirectoX and the XommissionXr and aftXr due conXiderationXof any

recoXmended chXnges, theXBank shalX approve Xhe policyXand progrXm, which Xpproval sXall be

recoXded in thX minutes Xf the meeXing of thX Bank’s bXard of diXectors. Xhe Bank sXall

therXafter impXement andXenforce tXe policy Xnd prograX

.

D.X CorrXction of ViolXtions

16. (a) By AXril 30, 2X09, the BXnk shall Xliminate Xnd/or corXect all vXolations Xf

law Xnd regulaXions noteX in the RXport of EXaminationX The BanX shall doXument eacX

violXtion thatXcannot beXeliminateX or correXted, and Xhy, for rXview by tXe Board oX DirectorX.

26
Random letters in this file have been converted to X in this DEMO conversion.

The Xoard’s reXiew, discXssion, anX any actiXn taken wXth respecX to the uXcorrectedXviolationX

shalX be recorXed in theXminutes oX the BoarX. By MayX31, 2009,Xthe Bank Xhall deveXop and

submXt a plan XcceptableXto the ReXional DirXctor and Xhe CommisXioner to Xorrect alX remaininX

uncoXrected viXlations. X

(b) WithXregard toXthe violaXions of RXgulation X and SectXon 23A ofXthe

FedeXal ReservX Act noteX in the RXport of EXaminationX the BankXshall devXlop and sXbmit a

planX("Plan") XcceptableXto the ReXional DirXctor and Xhe CommisXioner to Xorrect alX violatioXs

of RXgulation X and SectXon 23A wiXhin 60 daXs after tXe effectiXe date ofXthis ORDEX. The

PlanXshall incXude, at aXminimum:

(i) RepaXment of aXl loans tX insidersXand affilXates detaXled in thX

“VioXations ofXLaws and XegulationX” and “ItXms SubjecX to

AdveXse ClassiXication” Xages in tXe July 7,X2008, RepXrt of

ExamXnation; aXd

(ii)X RepaXments reqXired pursXant to thXs paragraXh shall nXt be

fundXd, directXy or indiXectly, inXwhole or Xn part, bX any exteXsion

of cXedit or aXy other pXyment, guXrantee, oX indemnifXcation maXe

by oX on behalX of the BXnk.

(c) The Xank shallXsubmit evXdence of Xhe actionX taken toXcomply wiXh the

PlanXsubmittedXpursuant Xo this paXagraph toXthe RegioXal DirectXr and theXCommissioXer withinX

10 dXys of takXng each aXtion.

(d) WithXn 30 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

implXment procXdures to Xnsure futXre compliXnce with Xll applicXble laws Xnd regulaXions.

(e) WithXn 30 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

27
Random letters in this file have been converted to X in this DEMO conversion.

addrXss any coXtraventioXs of poliXy noted iX the JulyX7, 2008, Xeport of XxaminatioX.

(f) The Xank shallXnot engagX or partiXipate, diXectly or XndirectlyX in any

furtXer violatXons of laXs or reguXations, iXcluding bXt not limXted to, RXgulation X and SectXons

23A Xnd 23B ofXthe FederXl ReserveXAct.

E. InteXnal AuditXControl PXogram

17. (a) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank’X board

of dXrectors sXall impleXent an efXective prXgram for Xnternal aXdit and cXntrol. TXe audit

progXam shall Xrovide prXcedures tX test theXvalidity Xnd reliabXlity of oXerating sXstems,

procXdural conXrols, andXresultingXrecords, Xnd shall Xomply witX the InteXagency PoXicy

StatXment on tXe InternaX Audit FuXction andXits OutsoXrcing. TXe internaX auditor Xhall repoXt

quarXerly to tXe Bank’s Xoard of dXrectors. XThe reporX and any Xomments mXde by theXdirectorsX

regaXding the Xnternal aXditor’s rXport shalX be notedXin the miXutes of tXe Bank’s Xoard of

direXtors’ meeXings.

IV. XARNINGS

A. BudgXt and ProXit Plan

18. (a) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

formXlate and Xubmit to Xhe RegionXl DirectoX and the XommissionXr for revXew and coXment a

writXen profitXplan and X realistiX, comprehXnsive budXet for alX categoriXs of incoXe and

expeXse for caXendar yeaXs 2009 anX 2010. TXe plans rXquired byXthis paraXraph shalX contain

formXl goals aXd strategXes, be coXsistent wXth sound Xanking prXctices, rXduce discXetionary

expeXses, imprXve the BaXk’s overaXl earningX, and shaXl containXa descripXion of thX operatinX

assuXptions thXt form thX basis foX major prXjected inXome and eXpense comXonents.

(b) The Xritten prXfit plan Xhall addrXss, at a Xinimum:

28
Random letters in this file have been converted to X in this DEMO conversion.

(i) IdenXificationXof the maXor areas Xn and meaXs by whicX the BankXs

boarX of direcXors will Xeek to imXrove the Xank’s earXings;

(ii)X SpecXfic goalsXto improvX the net Xnterest mXrgin, incXease inteXest

incoXe, reduceXdiscretioXary expenXes, and iXprove andXsustain

earnXngs, as wXll as maiXtain adeqXate proviXions to tXe allowanXe

for Xoan and lXase losseX;

(iiiX RealXstic and XomprehensXve budgetX for all XategoriesXof incomeX

and Xxpense itXms;

(iv)X A deXcription Xf the opeXating assXmptions tXat form tXe basis fXr,

and XdequatelyXsupport, Xaterial pXojected rXvenue andXexpense

compXnents;

(v) CoorXination oX the BankXs loan, iXvestment,Xfunds manXgement,

and Xperating Xolicies; Xtrategic Xlan; and Xllowance Xor loan aXd

leasX loss metXodology wXth the prXfit and bXdget planXing;

(vi)X A buXget revieX process Xo monitorXthe revenXe and expXnses of

the Xank whereXy actual XerformancX is compaXed againsX

budgXtary projXctions noX less thaX quarterlX; recordiXg the resXlts

of tXe evaluatXon and anX actions Xaken by tXe Bank inXthe minutXs

of tXe Bank’s Xoard of dXrectors’ Xeeting atXwhich sucX evaluatiXn

is uXdertaken;Xand

(viiX IndiXidual(s) XesponsiblX for implXmenting eXch of theXgoals andX

straXegies of Xhe ProfitXPlan.

(c) WithXn 30 daysXfrom the Xnd of eacX calendarXquarter fXllowing

29
Random letters in this file have been converted to X in this DEMO conversion.

compXetion of Xhe profitXplans andXbudgets rXquired byXthis paraXraph, theXBank’s boXrd of

direXtors shalX evaluateXthe Bank’X actual pXrformanceXin relatiXn to the Xlan and bXdget, recXrd

the Xesults ofXthe evaluXtion, andXnote any Xctions taXen by theXBank in tXe minutesXof the BaXk’s

boarX of direcXors’ meetXng at whiXh such evXluation iX undertakXn.

(d) A wrXtten profXt plan anX budget sXall be prXpared forXeach caleXdar year

for Xhich thisXORDER is Xn effect Xnd shall Xe submittXd to the Xegional DXrector anX the

CommXssioner fXr review Xnd commenX within 3X days of Xhe end ofXeach yearX Within X0 days

of rXceipt of Xll such cXmments frXm the RegXonal DireXtor and tXe CommissXoner and Xfter

adopXion of anX recommenXed changeX, the BanX shall apXrove the Xlan, whicX approvalXshall be

recoXded in thX minutes Xf a Bank’X board ofXdirectorsX meeting.X ThereaftXr, the BaXk shall

implXment and Xollow theXplan.

B.X GrowXhPlanX

19. (a) WhilX this ORDXR is in eXfect, theXBank shalX not incrXase its TXtal AssetX

by mXre than 5Xpercent dXring any XonsecutivX six-montX period wXthout proXiding, atXleast 30

daysXprior to Xts implemXntation, X growth pXan to theXRegional Xirector aXd the ComXissioner.X

SuchXgrowth plXn, at a mXnimum, shXll includX the fundXng sourceXto supporX the projXcted

growXh, as welX as the aXticipatedXuse of fuXds. ThisXgrowth plXn shall nXt be implXmented

withXut the prXor writteX consent Xf the RegXonal DireXtor and tXe CommissXoner. InXno event

shalX the BankXincrease Xts Total Xssets by Xore than X0 percentXannually.X

C. HoldXng CompanX – RestriXtions on Xayments

20. (a) As oX the effeXtive dateXof this OXDER, the Xank shallXnot make Xny

paymXnt, direcXly or indXrectly, tX or for tXe benefitXof the BaXk’s holdiXg companyXor any otXer

BankXaffiliateX without Xhe prior Xritten coXsent of tXe RegionaX DirectorXand the CXmmissioneX.

30
Random letters in this file have been converted to X in this DEMO conversion.

(b) The Xank shallXnot enterXinto any Xontract wXth its hoXding compXny or

any Xther BankXaffiliateXwithout sXbmitting Xhe new coXtract to Xhe RegionXl DirectoX and the

CommXssioner fXr review Xnd opportXnity for Xomment.

V. LIQUXDITY AND XENSITIVITX TO MARKEX RISKS

A.X LIQUXDITY/ASSEX/LIABILITX MANAGEMEXT

21. (a) WithXn 60 daysXafter theXeffectiveXdate of tXis ORDER,Xthe Bank Xhall

deveXop and suXmit to thX RegionalXDirector Xnd the CoXmissionerXfor revieX and commXnt a

writXen plan aXdressing Xiquidity.X AnnuallyXthereafteX, while tXis ORDER Xs in effeXt, the BaXk

shalX review tXis plan fXr adequacX and, basXd upon suXh review,Xshall makX necessarX revisionX

to tXe plan toXmaintain Xdequate pXovisions Xo meet thX Bank’s lXquidity nXeds. TheXinitial pXan

shalX include,Xat a miniXum, proviXions:

(i) LimiXing the BXnk’s ratiX of totalXloans to Xotal asseXs to not Xore

thanX80 percenX;

(ii) EstaXlishing aXreasonablX range foX its net Xon-core fXnding ratXo

as cXmputed inXthe UnifoXm Bank PeXformance Xeport;

(iiiX IdenXifying thX source aXd use of Xorrowed aXd/or volaXile fundsX

(iv) EstaXlishing lXnes of crXdit at coXrespondenX banks, iXcluding tXe

FedeXal Home LXan Bank oX Topeka, Xhat wouldXallow theXBank to

borrXw funds tX meet depXsitor demXnds if thX Bank’s oXher

provXsions forXliquidityXproved toXbe inadeqXate;

(v) RequXring the Xetention Xf securitXes and/orXother ideXtified

cateXories of XnvestmentX that canXbe liquidXted withiX one day Xn

amouXts sufficXent (as aXpercentagX of the BXnk’s totaX assets) Xo

31
Random letters in this file have been converted to X in this DEMO conversion.

ensuXe the maiXtenance oX the BankXs liquidiXy postureXat a leveX

consXstent witX short- aXd long-teXm liquidiXy objectiXes;

(vi) EstaXlishing aXminimum lXquidity rXtio and dXfining hoX the ratiX

is tX be calcuXated;

(viiX EstaXlishing cXntingencyXplans by XdentifyinX alternatXve courseX

of aXtion desiXned to meXt the BanX’s liquidXty needs;Xand

(viiX) AddrXssing theXuse of boXrowings (X.e., seasXnal crediX needs,

matcX funding Xortgage lXans, etc.X and provXding for XeasonableX

matuXities comXensurate Xith the uXe of the Xorrowed fXnds;

addrXssing conXentrationXof fundinX sources;Xand addreXsing

pricXng and coXlateral rXquirementX with speXific alloXable fundXng

chanXels (i.e.X brokeredXdeposits,Xinternet Xeposits, Xed funds

purcXased and Xther corrXspondent XorrowingsX.

(b) WithXn 30 daysXfrom the Xeceipt ofXall such Xomments fXom the ReXional

DireXtor and tXe CommissXoner, andXafter revXsing the Xlan as neXessary, tXe Bank shXll adopt Xhe

planX which adXption shaXl be recoXded in thX minutes Xf the BanX’s board Xf directoXs’ meetinX.

TheXeafter, tXe Bank shXll implemXnt the plXn.

VI. XISCELLANEXUS

A.X ProgXessRepoXts

22. WithXn 30 daysXfrom the Xnd of eacX calendarXquarter fXllowing tXe effectiXe date

of tXis ORDER,Xthe Bank Xhall furnXsh to theXRegional Xirector aXd the ComXissioner Xritten

progXess reporXs signed Xy each meXber of thX Bank’s bXard of diXectors, dXtailing tXe actionsX

takeX to securX complianXe with thX ORDER anX the resuXts thereoX. Such rXports mayXbe

32
Random letters in this file have been converted to X in this DEMO conversion.

discXntinued wXen the coXrections Xequired bX this ORDXR have beXn accomplXshed and Xhe

RegiXnal DirecXor and thX CommissiXner have Xeleased, Xn writingX the BankXfrom makiXg

furtXer reportX.

B.X NotiXe to SharXholders

23. AfteX the effeXtive dateXof this OXDER, the Xank shallXsend a coXy of thisX

ORDEX, or otheXwise furnXsh a descXiption ofXthis ORDEX, to its XhareholdeXs (1) in XonjunctioX

withXthe Bank’X next shaXeholder cXmmunicatiXn, and alXo (2) in XonjunctioX with itsXnotice orX

proxX statemenX precedinX the BankXs next shXreholder Xeeting. Xhe descriXtion shalX fully

descXibe the OXDER in alX materialXrespects.X The descXiption anX any accoXpanying

commXnication,XstatementX or noticX shall beXsent to tXe State aXd to the XDIC AccouXting and

SecuXities DisXlosure SeXtion, WasXington, DXC. 20429,Xfor revieX at leastX20 days pXior to

dissXmination Xo sharehoXders. AnX changes Xequested Xy the FDIX or the SXate shallXbe made

prioX to disseXination oX the descXiption, cXmmunicatiXn, noticeX or stateXent.

C.X ConcXudingParaXraph

ThisXORDER shaXl be bindXng upon tXe Bank, iXs successXrs and asXigns, andXall

instXtution-afXiliated pXrties of Xhe Bank. XThe proviXions of tXis ORDER Xhall remaXn effectiXe

and XnforceablX except tX the exteXt that, aXd until sXch time aX, any proXision of Xhis ORDERX

shalX have beeX modifiedX terminatXd, supersXded, or sXt aside bX the FDICXand the

CommXssioner.

ThisXORDER wilX become eXfective uXon its isXuance by Xhe FDIC aXd the StaXe.

PursXant to deXegated auXhority.

DateX this 16tX day of JXnuary, 20X9.

33
Random letters in this file have been converted to X in this DEMO conversion.

___X_________X_________X_____
ThomXs J. DujeXski
RegXonal DireXtor

___X_________X_________X__
MicX ThomXson
ComXissioner
OklaXoma StateXBanking DXpartment

34