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| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
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Washington, DC 20219

January 3, 2002

**[Fact Sheet: Eagle National Bank Consent Order]{.underline}**

The Office of the Comptroller of the Currency (OCC) has entered into a
consent order with Eagle National Bank, Upper Darby, Pennsylvania, (the
Bank) in which the Bank will develop and implement an "exit strategy" to
cease originating "Cash 'til Payday" (payday) loans, reduce all
outstanding payday loans to zero, and completely discontinue its payday
lending program not later than June 15, 2002. The Bank further agreed to
implement a number of other operational changes and enhancements to
ensure the future operation of the Bank in a safe and sound manner.

This action follows a recent examination of the Bank in which the OCC
determined that:

-   The Bank had risked its financial viability by concentrating in one
    line of business \-- payday lending;

-   The Bank relinquished supervision of the program to a single third
    party originator of payday loans; and

-   The payday lending program was conducted on an unsafe and unsound
    basis, in violation of a multitude of standards of safe and sound
    banking, compliance requirements, and OCC guidance.

**Standards Applicable to Payday Lending by National Banks**

On November 27, 2000, the OCC issued Advisory Letter 2000-10 "Payday
Lending," which detailed the risks inherent in originating payday loans,
including credit risk, transaction risk, concentration risk, reputation
risk, and compliance and legal risks. Advisory Letter 2000-10 emphasized
that these risks are significantly increased when a national bank
engages a third party payday lending company to provide origination and
servicing functions on behalf of the bank. The Advisory Letter provided
detailed guidance on these various risks, as well as on how banks can
effectively address these risks if they offer payday loans.

In Advisory Letter 2000-10, the OCC stated that, because of the
significant safety and soundness and other risks associated with payday
lending, it would "closely review the activities of national banks
engaged or proposing to engage in payday lending, through the direct
examination of the bank \[and the\] examination of any third party
participating in the transaction\...." The OCC further stated that
"\[w\]hen the bank is not following prudent lending practices or when
examiners consider the bank's lending practices to be abusive, the OCC
will initiate corrective measures, including enforcement actions where
appropriate."

**Eagle National Bank's Payday Loan Program**

Eagle National Bank is a \$70 million community bank located in Upper
Darby, Pennsylvania. The Bank's most significant lending product, in
terms of revenues, is its "Cash 'til Payday" loan product. In offering
this product, the Bank relies wholly on the services of Dollar Financial
Group (Dollar) for the origination, servicing, and collection of payday
loans. Dollar provides comprehensive services to the Bank in connection
with the payday loan product in exchange for a fee. Each payday loan
borrower is charged \$15 to \$20 per \$100 borrowed. Even though these
loans are carried on the Bank's books as assets, the Bank retains only
\$4 from each \$100 borrowed. Comparable fees are imposed when the loan
is renewed or rolled over. Eagle National Bank's annual payday loan
volume has increased from \$3 million in 1995, when it entered into this
line of business, to approximately \$400 million in 2001.

In response to supervisory concerns noted by the OCC in its examination
of the Bank in May, 2000, the Bank entered into a Memorandum of
Understanding (MOU) with the OCC that contains ten articles to address
safety and soundness-related concerns cited by examiners.

**OCC Findings and Basis for Consent Order**

In July, 2001, the OCC commenced a comprehensive examination of the
Bank, including its compliance with the March, 2000, MOU, and of the
payday lending operation involving Dollar. The OCC found that the Bank
continued to engage in a myriad of unsafe and unsound practices,
including the following:

-   Bank management engaged in unsafe and unsound banking practices by
    relinquishing control and oversight over the Bank's payday loan
    program to Dollar, resulting in high and unwarranted risk exposures
    to the Bank. The Bank failed to oversee, monitor and control the
    payday lending activities conducted on its behalf by Dollar, or to
    verify that Dollar was operating in accordance with the Bank's
    procedures and applicable law. For example, the OCC found that
    Dollar had begun to offer the Bank's payday loans in additional
    states without the approval of Bank management, despite the fact
    that the Bank bears a significant majority of the associated risk of
    loss from such loans. The OCC also found that Dollar actively
    promoted rollovers of the Bank's payday loans \-- without the Bank's
    knowledge \-- by providing an incentive to Dollar's employees, which
    resulted in a higher volume of rollovers than new loan originations
    and a misuse of the loan product for long-term credit.

-   The Bank failed to verify that Dollar operated in a safe and sound
    manner, or had adequate internal controls and information systems
    relating to the Bank's payday loan program, even though the Bank
    relied totally on Dollar to originate, service, and collect the
    Bank's payday loans. In addition, the OCC found that Bank management
    had failed to develop a contingency plan to provide for the recovery
    of the Bank's outstanding loans in the event of a failure by Dollar
    to fulfill its contractual obligations to the Bank. The OCC
    determined that the lack of such oversight and contingency planning
    is an unsafe and unsound practice.

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-   In offering the Bank's payday loans, Dollar failed to consistently
    follow the Bank's underwriting criteria, and violated federal law
    relating to privacy notices and Truth in Lending disclosures.

-   The Bank's payday loan concentration levels have increased as the
    Bank has relied on the loans as its primary source of income. These
    concentrations increased the risk to the Bank's earnings and capital
    (and potentially the FDIC insurance fund). The OCC determined that
    the Bank violated its own internal guidelines on loan
    concentrations, which is an unsafe and unsound practice that placed
    the Bank at greater risk of loss.

-   The Bank's risk management was inadequate with respect to the high
    levels of credit, transaction, compliance and reputation risks
    associated with the payday loan program. This failure was
    particularly severe in light of the rapid growth in payday loan
    volumes and balances in the five years since the Bank began to offer
    this product, and constitutes an unsafe and unsound practice.

-   Contrary to safe and sound banking practices, the Bank failed to
    maintain capital adequate to support the high levels of
    concentration, credit, transaction, compliance and legal risk of the
    Bank's payday lending program. In the event of a market downturn
    affecting Dollar's financial condition, the Bank could face
    exceptionally high losses, with the likely result of a weakening of
    the Bank's own capital and financial condition. In addition, the OCC
    found that the Bank's failure in this regard could prejudice the
    interests of the FDIC insurance fund and the Bank's depositors.
    Dollar currently originates the Bank's Payday loans in over forty
    States and the funding for the loans comes from FDIC-insured
    deposits gathered in eastern Pennsylvania.

-   The Bank has failed to comply with eight of the ten articles of the
    2000 MOU.

**Consent Order Provisions**

The OCC and the Bank entered into a Consent Order, dated December 18,
2001. The order includes a number of provisions concerning: management
structure; strategic planning, including what products and services will
be offered in the future; budgetary, profit and income planning; credit
risk; increasing and adhering to adequate capital levels; anti-money
laundering procedures; and internal audits to ensure the future safe and
sound operation of the Bank.

With regard to the Bank's payday loan program, the order provides that
the Bank will adopt a written "exit strategy" plan within 30 days of the
date of the order in which the Bank will, among other things:

-   Completely cease all payday loan origination, loan renewal, loan
    rollover and loan refinancing by June 15, 2002;

-   Reduce all outstanding payday loans, and participations in payday
    loans, to zero by June 15, 2002;

-   Maintain adequate capital levels, reduce risk exposure levels, and
    institute appropriate monitoring and controls over the payday
    lending program during the phase-out period;

-   Institute controls over Dollar's activities in connection with the
    payday lending program to ensure that no additional lending
    locations are added during the phase-out period; and

-   Execute a written agreement with Dollar in which Dollar will provide
    funds to reduce the Bank's outstanding payday loans.

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The OCC charters, regulates and examines approximately 2,200 national
banks and 52 federal branches of foreign banks in the United States,
accounting for more than 54% of the nation's banking assets. Its mission
is to ensure a safe and sound and competitive national banking system
that supports the citizens, communities and economy of the United
States.