ex101.htm


    Exhibit
10.1

    
 

    UNITED
STATES OF AMERICA

    Before
the

    OFFICE
OF THRIFT SUPERVISION

     

     

    
      	 	 	 
	
               

              In the
      Matter of 

               

              ALASKA
      PACIFIC BANK

               

              Juneau, Alaska

              OTS Docket No. 04202

               

            	
              )

              )

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              )

              )

              )

            	
              Order
      No.: WN-10-031 

               

              Effective Date: September 28,
  2010

            


    

     

    ORDER TO CEASE AND
DESIST

     

    WHEREAS, Alaska Pacific Bank,
Juneau, Alaska, OTS Docket No. 04202 (Association), by and through its Board of
Directors (Board), has executed a Stipulation and Consent to the Issuance of an
Order to Cease and Desist (Stipulation); and

    WHEREAS, the Association, by
executing the Stipulation, has consented and agreed to the issuance of this
Order to Cease and Desist (Order) by the Office of Thrift Supervision (OTS)
pursuant to 12 U.S.C. § 1818(b); and

    WHEREAS, pursuant to delegated
authority, the OTS Regional Director for the Western Region (Regional Director)
is authorized to issue Orders to Cease and Desist where a savings association
has consented to the issuance of an order.

    NOW,
THEREFORE, IT IS ORDERED that:

    Cease and
Desist.

    1.    The
Association and its directors, officers, and employees shall cease and desist
from any action
(alone or with others) for or toward, causing, bringing about, participating in
or


    
      
        
          
            	
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    counseling,
or aiding and abetting the unsafe or unsound practices that resulted in
deteriorating asset quality, ineffective risk management practices, inadequate
internal controls, and inadequate oversight and supervision at the
Association.

    Capital.

     

    2.    By September 30,
2010, the Association shall have and maintain a Tier 1 (Core) Capital
Ratio
equal to or greater than 8 percent (8.0%) after the funding of an adequate
Allowance for Loan and Lease Losses (ALLL) and a Total Risk-Based Capital Ratio
equal to or greater than 12 percent (12.0%).1

    3.    By October
29, 2010, the Association shall submit a written plan to maintain the
Association’s
capital at the levels prescribed in Paragraph 2 (Capital Plan) that is
acceptable to the Regional Director. At a minimum, the Capital Plan
shall:

    (a)    detail
the Association’s capital preservation and enhancement strategies with specific
narrative goals;

    (b)    address
the requirements and restrictions imposed by this Order relating to capital
under different forward-looking scenarios involving progressively stressed
economic environments; and

    (c)    include
detailed quarterly financial projections, including Tier 1 (Core) and Total
Risk-Based Capital Ratios, for the remainder of 2010 through September 30,
2013.

    4.           Upon
receipt of written notification from the Regional Director that the Capital Plan
is acceptable,
the Association shall implement and adhere to the Capital Plan. A copy of the
Capital Plan and the Board meeting minutes reflecting the Board’s adoption
thereof shall be provided to the Regional Director within ten (10) days after
the Board meeting.

     

    ____________________________

    1 The requirement in Paragraph 2 to have
and maintain a specific capital level means that the Association may not be
deemed to be
“well-capitalized” for purposes of 12 U.S.C. §1831o and 12 C.F.R. Part 565,
pursuant to 12 C.F.R. §565.4(b)(1)(iv).


    
      
        
          
            	
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    5.    On a quarterly basis,
beginning with the quarter ending December 31, 2010, the Board shall
review the Association’s compliance with the Capital Plan. At a minimum, the
Board’s review shall include:

    (a)    a
comparison of actual operating results to projected results;

    (b)    detailed
explanations of any material deviations; and

    (c)    a
discussion of specific corrective actions or measures that have been or will be
implemented to address each material deviation.

    6.    Within fifteen (15)
days after: (a) the Association fails to meet the capital requirements
prescribed
in Paragraph 2; (b) the Association fails to comply with the Capital Plan
prescribed in Paragraph 3; or (c) any written request from the Regional
Director, the Association shall submit a written Contingency Plan that is
acceptable to the Regional Director.

    7.    The Contingency Plan
shall detail the actions to be taken, with specific time frames, to achieve
one of the following results by the later of the date of receipt of all required
regulatory approvals or sixty (60) days after the implementation of the
Contingency Plan: (a) merger with, or acquisition by, another federally insured
depository institution or holding company thereof; or (b) voluntary dissolution
by filing an appropriate application with the OTS in conformity with applicable
laws, regulations and regulatory guidance.

    8.    Upon receipt of
written notification from the Regional Director, the Association shall
implement
and adhere to the Contingency Plan immediately. The Association shall provide
the Regional Director with written status reports detailing the Association’s
progress in implementing the Contingency Plan by no later than the first (1st) and
fifteenth (15th) of
each month following implementation of the Contingency Plan.


    
      
        
          
            	
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    Business
Plan.

     

    9.    Within thirty
(30) days, the Association shall submit an updated comprehensive business
plan for
the period from October 31, 2010 to October 31, 2013 (Business Plan) that is
acceptable to the Regional Director. At a minimum, the Business Plan shall
include:

    (a)    plans to
improve the Association’s core earnings, and achieve profitability on a
consistent basis throughout the term of the Business Plan;

    (b)    strategies
for ensuring that the Association has the financial and personnel resources
necessary to implement and adhere to the Business Plan, adequately support the
Association’s risk profile, maintain compliance with applicable regulatory
capital requirements, and comply with this Order;

    (c)    quarterly
pro forma financial projections (balance sheet, regulatory capital ratios, and
income statement) for each quarter covered by the Business Plan;
and

    (d)    identification
of all relevant assumptions made in formulating the Business Plan and a
requirement that documentation supporting such assumptions be retained by the
Association.

    10.    Upon receipt
of written notification from the Regional Director of non-objection to the
Business
Plan, the Association shall implement and adhere to the Business Plan. A copy of
the Business Plan and the Board meeting minutes reflecting the Board’s adoption
thereof shall be provided to the Regional Director within ten (10) days after
the Board meeting.

     

    

      
        
          
            
              	
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    11.           Any
material modifications to the Business Plan2 must
receive the prior written non-objection
of the Regional Director. The Association shall submit proposed material
modifications to the Regional Director at least forty-five (45) days prior to
implementation.


     12.    On a
quarterly basis, beginning with the quarter ending December 31, 2010, the Board
shall
review quarterly variance reports on the Association’s compliance with the
Business Plan (Business Plan Variance Reports). The Business Plan Variance
Reports shall:

    (a)   identify
variances in the Association’s actual performance during the preceding quarter
as compared to the projections set forth in the Business Plan;

    (b)         
contain
an analysis and explanation of identified variances; and

    (c)          
discuss the specific measures taken or to be taken to address identified
variances.

    13.    A copy of the
Business Plan Variance Reports and Board meeting minutes shall be provided
to the Regional Director within ten (10) days after the Board
meeting.

    Classified Asset Reduction
Plan.

    14.    Within thirty (30)
days, the Association shall submit an updated written comprehensive Classified
Asset Reduction Plan that is acceptable to the Regional Director. The Classified
Asset Reduction Plan, at a minimum, shall include:

    (a)   the
additional assets classified adversely in the March 15, 2010 Comprehensive
Report of Examination (2010 ROE);

    (b)   targets
for the level of classified assets as a percentage of Tier 1 (Core) Capital and
ALLL and timeframes for each such target;

     

    
      ____________________________

    

    
      2 A modification shall be considered
material under this Section of the Order if the Association plans to: (a) engage
in any activity not contemplated by the Business Plan or that is inconsistent
with the Business Plan; or (b) exceed the level of any activity contemplated in
the Business Plan or fail to meet target amounts established in the Business
Plan by more than ten percent (10%).

      
 

    

    
      
        
          
            	
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    (c)   a
description of the manner of, and methods for, reducing the Association’s level
of classified assets to the target set therein; and

    (d)   a
description of all underlying assumptions and projections and document
supporting such assumptions and projections. 


    15.    Upon receipt of
written notification from the Regional Director that the Classified Asset
Reduction
Plan is acceptable, the Association shall implement the Classified Asset
Reduction Plan.

    16.    Any modifications to
the Classified Asset Reduction Plan must receive the prior written non-objection
of the Regional Director. The Association shall submit proposed modifications to
the Regional Director at least forty-five (45) days prior to
implementation.

    17.    Within thirty (30)
days after the close of each calendar quarter, beginning with the calendar
quarter ending December 31, 2010, the Board shall review quarterly variance
reports on the Association’s compliance with the Classified Asset Reduction Plan
(Classified Asset Reduction Variance Reports). The Classified Asset Reduction
Variance Reports shall:

    (a)    identify
variances in the Association’s actual performance during the preceding quarter
as compared to the projections set forth in the Classified Asset Reduction
Plan;

    (b)    contain
an analysis and explanation of identified variances; and

    (c)       
discuss the specific measures taken or to be taken to address identified
variances.

    18.    A copy of the
Classified Asset Reduction Variance Reports shall be provided to the
Regional
Director within ten (10) days after the Board meeting.

    Liquidity
Management.

    19.    Within seven (7)
days, the Association shall submit a liquidity and funds management policy
(Liquidity Management Policy) that is acceptable to the Regional Director and
addresses 

    
 

    
      
        
          
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    all
corrective actions set forth in the 2010 ROE relating to liquidity and funds
management. The Liquidity Management Policy shall comply with all applicable
laws, regulations and regulatory guidance.


    20.    The Liquidity
Management Policy shall include a Contingency Funding Plan, which shall, at
a minimum, include:

    (a)    a cash
flow analysis that includes reasonable assumptions, identifies anticipated
funding needs and the sources of liquidity to meet those needs, and addresses
potential contingent liabilities;

    (b)    alternative
funding sources for meeting extraordinary demands or to provide liquidity in the
event the main sources identified in the Liquidity Management Policy are
insufficient. Such alternative funding sources must consider, at a minimum, the
selling of assets, obtaining secured lines of credit, recovering charged-off
assets, injecting additional equity capital, and the priority of their
implementation; and

    (c)    provisions
that set forth the assumptions used in the formulation of the Contingency
Funding Plan, including, but not limited to, assumptions regarding the
Association’s deposits, identification of the Association’s unpledged assets,
the collateral requirements for Federal Home Loan Bank advances, and borrowing
capability from Federal Reserve Banks.

    21.    Upon receipt of
written notification from the Regional Director that the Liquidity Management
Policy is acceptable, the Association shall implement and adhere to the
Liquidity Management Policy. The Board’s review of the Liquidity Management
Policy shall be documented in the Board meeting minutes. A copy of the Liquidity
Management Policy shall be provided to the Regional Director within ten (10)
days of adoption by the Board.


    
      
        
          
            	
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    Internal
Audit.

     

    22.    Within
forty-five (45) days, the Association shall submit a revised internal audit
program (Internal
Audit Program) that is acceptable to the Regional Director. At a minimum, the
Internal Audit Program shall:

    (a)    be
sufficient for the size of the Association and the nature, scope and risk of its
activities;

    (b)       detect
irregularities and weak practices in the Association’s operations;

    (c)    determine
the Association’s level of compliance with all applicable laws, rules and
regulations;

    (d)    verify
the accuracy and enhance the effectiveness of self-assessments through the use
of transaction testing;

    (e)    assess
the effectiveness of Association policies and procedures and other internal
controls of the Association;

    (f)           
establish an annual audit plan using a risk based approach that appropriately
identifies
the levels of risk of Association activities;

    (g)    ensure
that the audit program is independent and that the persons responsible for
implementing the Internal Audit Program shall report directly to the Board or
its Audit Committee, which shall have the sole power to direct their
activities;

    (h)    ensure
that the audit function is supported by an adequately staffed department or
outside firm, with respect to the experience level and number of the individuals
employed;


    
      
        
          
            	
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    (i)                  
ensure
that immediate actions are undertaken to remedy deficiencies cited in audit
reports and that the Association maintains a written record describing each
deficiency, the projected corrective action, and the status of the corrective
action; and

    (j)    provide
that audit staff shall evaluate in writing the effectiveness of each corrective
action taken in connection with identified audit deficiencies and recommend
additional corrective actions, as necessary.

    23.    Upon
receipt of written notification from the Regional Director that the Internal
Audit Program is acceptable, the Association shall implement and adhere to the
Internal Audit Program. The Board’s review of the Internal Audit Program shall
be documented in the Board meeting minutes. A copy of the Internal Audit Program
shall be provided to the Regional Director within ten (10) days of adoption by
the Board.

    Compliance
Plan.

    24.    Within
forty-five (45) days, the Association shall revise its written consumer
compliance program (Compliance Program) to ensure that it is acceptable to the
Regional Director and addresses all corrective actions set forth in the 2010 ROE
relating to consumer compliance. At a minimum, the Compliance Program
shall:

    (a)    comply
with all applicable consumer and other compliance laws, regulations and
regulatory guidance (Compliance Laws and Regulations);3

    (b)    require
that the Association allocate resources to the compliance area that are
commensurate with the Association’s size, complexity, product lines, and
business operations to ensure the implementation of an adequate Compliance
Program, including appropriate staffing levels with qualified and experienced
personnel;

     

    ____________________________

    3 The term “consumer and other
compliance laws, regulations and regulatory guidance” includes all laws and
regulations referenced in
Section 1100 (Compliance Oversight Examination Program) of the OTS Examination
Handbook.


    
      
        
          
            	
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    (c)    develop
and implement a risk assessment process that measures the Association’s levels
of compliance risk, adequacy of controls, and provides for periodic
reassessments;

    (d)    require a
formal training program that provides for ongoing training in Compliance Laws
and Regulations for all appropriate Association employees, Board members, and
other affiliated individuals performing compliance related activities for the
Association; and

    (e)    require
written record retention requirements, reporting requirements and internal
control systems to facilitate the oversight of the effectiveness of the
Compliance Program by the Board and Senior Executive Officers.4

    25.    Upon
written notification from the Regional Director that the Compliance Program is
acceptable, the Association shall implement and adhere to the Compliance
Program. The Board’s review of the Compliance Program shall be documented in the
Board meeting minutes. A copy of the Compliance Program shall be provided to the
Regional Director within ten (10) days of adoption by the Board.

    Information
Technology.

    26.    By
December 31, 2010, the Association shall submit a written plan addressing
information technology management (IT Management Plan) that is acceptable to the
Regional Director and addresses all corrective actions set forth in the June 7,
2010 Information Technology Report of Examination of the Association (2010 IT
ROE). At a minimum, the IT Management Plan shall include: (a) a succession plan
for key personnel responsible for IT areas, including the positions of Chief
Operating Officer and IT Manager; (b) a comprehensive list of the duties and
responsibilities of such key personnel; and (c) a plan for training and
development of such personnel commensurate with their duties and
responsibilities at the Association. Upon

     

    ___________________________

    4 The term “Senior Executive Officer” is
defined at 12 C.F.R. § 563.555.


    
      
        
          
            	
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    receipt
of written notification from the Regional Director that the IT Management Plan
is acceptable, the Association shall implement and adhere to the IT Management
Plan.

    27.  By
December 31, 2010, the Association shall develop and implement a risk-based IT
audit program (IT Audit Program) that conforms to all applicable law,
regulations, and regulatory guidance (including the FFIEC IT Audit Examination
Handbook dated August 2003 and OTS Examination Handbook Section 341 (Information
Technology)).

    28.  By
Ocotber 29, 2010, the Association shall submit a plan that is acceptable to the
Regional Director (Server Contingency Plan) to address contingency planning
risk(s) associated with its backup information technology server(s). Upon
receipt of written notification from the Regional Director that the Server
Contingency Plan is acceptable, the Association shall implement and adhere to
the Server Contingency Plan.

    29.  By
December 31, 2010, the Association shall implement revised information
technology vendor management procedures to address Thrift Bulletin 82a (TB 82a)
requirements and guidelines. The revised procedures shall include due diligence
in selecting third party information technology vendors, contract issues,
ongoing oversight of third parties, and assessment of the quality of service and
support by vendors.

    30.     Effective
immediately, the Association shall, on a quarterly basis or more frequently if
requested by the Regional Director, submit a report acceptable to the Regional
Director that details the Association’s progress in complying with the
requirements in Paragraphs 26 through 29, until such time as the Regional
Director releases the Association from this requirement.


    
      
        
          
            	
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    Matters Requiring Board
Attention/Corrective Actions.

    31.  The
Association shall complete all matters requiring board attention in the 2010 ROE
by the dates set forth in the 2010 ROE and all corrective actions in the 2010
ROE by December 31, 2010.

    32.  The
Association shall complete all matters requiring board attention in the 2010 IT
ROE by the dates set forth in the 2010 IT ROE and all corrective actions in the
2010 IT ROE by December 31, 2010.

    Brokered
Deposits.

    33.  Effective
immediately, the Association shall comply with the requirements of 12 C.F.R. §
337.6(b).

    Directorate and Management
Changes.

    34.  Effective
immediately, the Association shall comply with the prior notification
requirements for changes in directors and Senior Executive Officers set forth in
12 C.F.R. Part 563, Subpart H.

    Dividends and Other Capital
Distributions.

    35.  Effective
immediately, the Association shall not declare or pay dividends or make any
other capital distributions, as that term is defined in 12 C.F.R. § 563.141,
without receiving the prior written approval of the Regional Director in
accordance with applicable regulations and regulatory guidance. The
Association’s written request for approval shall be submitted to the Regional
Director at least thirty (30) days prior to the anticipated date of the proposed
declaration, dividend payment or distribution of capital.


    
      
        
          
            	
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    Employment Contracts and
Compensation Arrangements.

    36.  Effective
immediately, the Association shall not enter into, renew, extend or revise any
contractual arrangement relating to compensation or benefits for any Senior
Executive Officer or director of the Association, unless it first provides the
Regional Director with not less than thirty (30) days prior written notice of
the proposed transaction. The notice to the Regional Director shall include a
copy of the proposed employment contract or compensation arrangement or a
detailed, written description of the compensation arrangement to be offered to
such officer or director, including all benefits and perquisites. The Board
shall ensure that any contract, agreement or arrangement submitted to the
Regional Director fully complies with the requirements of 12 C.F.R. Part 359, 12
C.F.R. §§ 563.39 and 563.161(b), and 12 C.F.R. Part 570 - Appendix
A.

    Golden Parachute and
Indemnification Payments.

    37.  Effective
immediately, the Association shall not make any golden parachute payment5 or
prohibited indemnification payment6
unless, with respect to each such payment, the Association has complied with the
requirements of 12 C.F.R. Part 359 and, as to indemnification payments, 12
C.F.R. § 545.121.

    Growth.

    38.  Effective
immediately, the Association shall not increase its total average assets during
any quarter in excess of an amount equal to net interest credited on deposit
liabilities during the prior quarter without the prior written notice of
non-objection of the Regional Director. The growth restriction imposed by this
Paragraph shall remain in effect until the Association receives

     

    ___________________________

    5 The term “golden parachute payment” is
defined at 12 C.F.R. § 359.1(f).

    6 The term “prohibited indemnification
payment” is defined at 12 C.F.R. § 359.1(l).


    
      
        
          
            	
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    the
Regional Director’s notice of non-objection to the Business Plan, including the
growth projections contained therein, pursuant to Paragraph 10 of this
Order.

    Third-Party
Contracts.

    39.  Effective
immediately, the Association shall not enter into any arrangement or contract
with a third party service provider that is significant to the overall operation
or financial condition of the Association7 or
outside the Association’s normal course of business unless, with respect to each
such contract, the Association has: (a) provided the Regional Director with a
minimum of thirty (30) days prior written notice of such arrangement or contract
and a written determination that the arrangement or contract complies with the
standards and guidelines set forth in Thrift Bulletin 82a (TB 82a); and (b)
received written notice of non-objection from the Regional
Director.

    Transactions with
Affiliates.

    40.  Effective
immediately, the Association shall not engage in any new transaction with an
affiliate unless, with respect to each such transaction, the Association has
complied with the notice requirements set forth in 12 C.F.R. § 563.41(c)(4),
which shall include the information set forth in 12 C.F.R. § 563.41(c)(3). The
Board shall ensure that any transaction with an affiliate for which notice is
submitted pursuant to this Paragraph complies with the requirements of 12 C.F.R.
§ 563.41 and Regulation W, 12 C.F.R. Part 223.

    Board Oversight of
Compliance with Order.

    41.  Within
thirty (30) days, the Board shall designate a committee to monitor and
coordinate the Association’s compliance with the provisions of this Order and
the completion of all

     

    _____________________________

    7 A contract will be considered
significant to the overall operation or financial condition of the Association
where the annual contract
amount equals or exceeds two percent (2%) of the Association’s total capital,
where there is a foreign
service provider, or where it involves information technology that is critical
to the Association’s daily operations without regard to the
contract amount. 

     

     

    
      
        
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    corrective
actions required in the 2010 ROE and the 2010 IT ROE (Oversight Committee). The
Oversight Committee shall be comprised of three (3) or more directors, the
majority of whom shall be independent8
directors.

    42.    Within thirty
(30) days after the end of each quarter, beginning with the quarter ending
December
31, 2010, the Oversight Committee shall submit a written compliance progress
report to the Board (Compliance Tracking Report). The Compliance Tracking Report
shall, at a minimum:

    (a)    separately
list each corrective action required by this Order and the 2010 ROE and the 2010
IT ROE;

    (b)    identify
the required or anticipated completion date for each corrective action;
and

    (c)    discuss
the current status of each corrective action, including the action(s) taken or
to be taken to comply with each corrective action.

    43.    Within thirty (30)
days after the end of each quarter, beginning with the quarter ending
December
31, 2010, the Board shall review the Compliance Tracking Report and all reports
required to be prepared by this Order. Following its review, the Board shall
adopt a resolution: (a) certifying that each director has reviewed the
Compliance Tracking Report and all required reports; and (b) documenting any
corrective actions adopted by the Board. A copy of the

     

    ____________________________

    8 For purposes of this Order, an
individual who is “independent” with respect to the Association shall be any
individual
who:

    
      	 (a)   
      	is not employed in
      any capacity by the Association, its subsidiaries, or its affiliates,
      other than as a director; 
	 (b)   
      	does not own or
      control more than ten percent (10%) of the outstanding shares of the
      Association or any of its affiliates; 
	 (c)   
      	is not related by
      blood or marriage to any officer or director of the Association or any of
      its affiliates, or to any shareholder owning more than ten percent (10%)
      of the outstanding shares of the Association or any of its affiliates, and
      who does not otherwise share a common financial interest with any such
      officer, director or shareholder; 
	 (d)   
      	is not indebted,
      directly or indirectly, to the Association or any of its affiliates,
      including the indebtedness of any entity in which the individual has a
      substantial financial interest; and 
	 (e)   
      	has not served as a
      consultant, advisor, underwriter, or legal counsel to the Association or
      any of its affiliates. 


    

     

        


    
      
        
          
            	
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    Compliance
Tracking Report and the Board resolution shall be provided to the Regional
Director within ten (10) days after the Board meeting.

    Effective Date,
Incorporation of Stipulation.

    44.  This
Order is effective on the Effective Date as shown on the first page. The
Stipulation is made a part hereof and is incorporated herein by this
reference.

    Duration.

    45.  This
Order shall remain in effect until terminated, modified, or suspended by written
notice of such action by the OTS, acting by and through its authorized
representatives.

    Time
Calculations.

    46.  Calculation
of time limitations for compliance with the terms of this Order run from the
Effective Date and shall be based on calendar days, unless otherwise
noted.

    47.  The
Regional Director, or an OTS authorized representative, may extend any of the
deadlines set forth in the provisions of this Order upon written request by the
Association that includes reasons in support for any such extension. Any OTS
extension shall be made in writing.

    Submissions
and Notices.

    48.  All
submissions, including any reports, to the OTS that are required by or
contemplated by this Order shall be submitted within the specified
timeframes.

    49.  Except as
otherwise provided herein, all submissions, requests, communications, consents
or other documents relating to this Order shall be in writing and sent by
first-class U.S. mail (or by reputable overnight carrier, electronic facsimile
transmission or hand delivery by messenger) addressed as follows:

     

    
    

     

    
      
        
          Alaska
Pacific Bank

          Order to
Cease and Desist

          Page 16 of
17

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 (a)	
              To the
      OTS:

              Philip
      A. Gerbick, Regional Director

              Attn:
      Dale R. Blackburn, Assistant Director 

              Office
      of Thrift Supervision, Western Region 

              101
      Stewart Street, Suite 1010

              Seattle,
      WA 98101-2419

              Facsimile:
      (206) 829-2620

            
	 	 
	(b)	
              To the
      Association:

              William
      A. Corbus, Chairman 

              Alaska
      Pacific Bank

              2094
      Jordan Avenue

              Juneau,
      AK 99801-8046

            


    

     

    No Violations
Authorized.

     

    50.    Nothing in
this Order or the Stipulation shall be construed as allowing the Association,
its Board,
officers, or employees to violate any law, rule, or regulation.

     

    IT
IS SO ORDERED.

     

    
      	 	OFFICE OF THRIFT
      SUPERVISION
	 	 
	 	 
	 	By: /s/Philip A.
      Gerbick                                       
      
	 	           
      Philip A. Gerbick 
	 	          
       Regional Director, Western Region
	 	 
	 	Date: See Effective
      Date on page 1 


    

     

     


    
      
        
          
            	
                    Alaska
      Pacific Bank

                    Order
      to Cease and Desist

                    Page 17
      of 17