cdbank.htm


    Exhibit
10.1

    UNITED
STATES OF AMERICA

    Before
the

    OFFICE
OF THRIFT SUPERVISION

     

     

    
      


    

     

    
       

      
         

        
          	 	 	 	 
	 	In the Matter
      of 	) 	Order No.:
      WN-09-023  
	 	 	) 	 
	 	 	) 	 
	 	FIRST HOME SAVINGS
      BANK 	) 	Effective
      Date: August 17, 2009
	 	 	) 	 
	 	
                  Mountain
      Grove, Missouri 

                  OTS Docket No. 05233

                   

                	
                  )

                  )

                  )

                  ) 

                	 


        

      

    

    


    ORDER TO CEASE AND
DESIST

     

    WHEREAS, First Home Savings
Bank, Mountain Grove, Missouri, OTS Docket No. 05233 (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, employees, and agents shall cease and
desist from any
action (alone or with another or others) for or toward causing, bringing
about,

       

      
      

      
      

      
      

       

      
        	
                First
      Home Savings Bank

                Order
      to Cease and Desist

                Page 1
      of 19 

              


      

       

      
      

       

    


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    participating
in, counseling or the aiding and abetting the unsafe or unsound banking
practices that resulted in an increasing level of classified assets, poor
earnings, and inadequate risk management practices at the Association and
violations of the following regulations:

    
    

     

    
      	 	
              (a) 12
      C.F.R. § 560.160 (failure to classify all assets and implement a policy
      for the establishment of allowances in accordance with generally accepted
      accounting principles (GAAP) and the guidelines of the Federal banking
      agencies); 

            
	 	 
	 	(b) 12
      C.F.R. § 560.170(d) (failure to properly administer
      loans); 
	 	 
	 	(c) 12
      C.F.R. §§ 562.1 and 562.2 (failure to file accurate Thrift Financial
      Reports (TFRs));
      and 
	 	 
	 	(d) 12
      C.F.R. § 563.161(a) (failure to adopt updated financial
      policies). 


    

    Business
Plan.

     

    2.   By
September 30, 2009, the Board shall submit to the Regional Director for review
and written notice of non-objection a revised comprehensive budget and business
plan for the third and fourth quarters of 2009, and calendar years 2010 and 2011
for the Association and its Subsidiaries1 (Business Plan). The Business Plan, at a
minimum, shall: (a) set forth an analysis of the profitability of all existing
and projected business lines; (b) set forth an analysis of the profitability of
branches and loan production offices; (c) set forth realistic and well-supported
and realistic strategies to improve earnings and the net interest margin; (d)
incorporate cash flow projections consistent with the Association's revised
Liquidity Policy, dated July 2009; (e) maintain capital levels commensurate with
the Association's risk profile and business strategy; and (f) include the
supporting documentation for all relevant assumptions and
projections.

    3.   The
Business Plan, at a minimum, also shall include the following: (a) the
submission of

     

    


     

    
      	____________________________ 	 
	1 The term
      “Subsidiary” is defined at 12 C.F.R. § 559.2. 	 


    

     

      
      
         

        	
                First
      Home Savings Bank

                Order
      to Cease and Desist

                Page 2
      of 19 

              




       

    


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    pro forma
financial statements, including, but not limited to projected core and
risk-based capital ratios for the third and fourth quarters 2009, and calendar
years 2010 and 2011, that are based on realistic and well-supported assumptions;
and (b) a description of all assumptions that were used to prepare the pro forma
statements, including, but not limited to: (i) the assumed interest rate
scenarios;
(ii) assumptions used for noninterest income and noninterest expenses; (iii)
assumptions used to determine the ALLL; (iv) loan origination rates, using
current rates and taking into consideration current national and regional
economic conditions; and (v) assumptions used to support the cost of funds
projections.

    4.   Within
fifteen (15) days after receiving the Regional Director's written comments or
written notice of non-objection, the Board shall make any revisions to the
Business Plan required by the Regional Director and adopt the Business Plan.
From the date of the adoption of the Business Plan, the Association shall
implement and comply with the Business Plan. Within five (5) days after Board
approval, the Board shall send a copy of the final Business Plan adopted by the
Board to the Regional Director and a copy of the minutes of the Board meeting
reflecting the Board's discussion and action.

    5.   Within
thirty (30) days after the end of each quarter, beginning with the quarter
ending September 30, 2009, the Board shall submit to the Regional Director a
quarterly variance report that: (a) compares actual earnings, capital, and other
operating projections and budgeted projections in the Association's Business
Plan; (b) sets forth a detailed explanation of any material variances from the
Business Plan; (c) sets forth any actions taken to enhance earnings or to
initiate earnings strategies or plans during the preceding calendar quarter; and
(d) discusses any changes required in the Association's business strategy or
earnings enhancement plan due to a change in market conditions or other factors
(Quarterly Variance Report).

     

    
      	
              First
      Home Savings Bank

              Order
      to Cease and Desist

              Page 3
      of 19 

            


    


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    

    6.   For
purposes of Paragraphs 4 and 5 of this Order, a deviation shall be considered
material when the Association engages in any material activity, line of
business, or operation that is inconsistent with the Business Plan. A deviation
also shall be considered material when the Association: (a) exceeds the level of
any activity or growth contemplated in the Business Plan by more than ten
percent (10%); or (b) falls below or fails to meet the target amounts
established in the Business Plan by more than ten percent (10%). Notwithstanding
the foregoing, none of the following deviations shall be deemed to be material:
(a) a change of One Million Dollars ($1.0 million) or less in any balance sheet
category, or (b) a change of ten percent (10%) or less in any income statement
category. For the purposes of this Paragraph, a "balance sheet" category is
defined as cash and investments, mortgage loans, commercial nonmortgage loans,
consumer loans, real estate owned, fixed assets, deposits, borrowings, other
liabilities, and equity capital. For purposes of this Paragraph, an "income
statement" category is defined as interest income, interest expense, provision
for loan losses, noninterest income, noninterest expense, extra ordinary items,
and net income.
7.   Within
thirty (30) days after the end of the quarter, beginning with the quarter ending
September 30, 2009, the Board shall review and address external and internal
risks that may affect the Association's ability to implement the Business Plan.
This review shall include, but not be limited to, adverse scenarios relating to
asset or liability mixes, interest rates, staffing levels and expertise,
operating expenses, marketing costs, and economic conditions in the markets
where the Association is operating. The Board's review of the Business Plan and
Quarterly Variance Reports shall be fully documented in the Board minutes, a
copy of which shall be submitted to the Regional Director, along with the
Quarterly Variance Report submitted pursuant to Paragraph 5 of this
Order.

    
      
         

         

        
           

          
            	
                    First Home Savings
      Bank

                    Order
      to Cease and Desist

                    Page 4
      of 19 

                  


          

           

        

         

      

    


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    

     

    
      8.   If the
Board determines that an amendment or a revision to the Business Plan is
appropriate, within sixty (60) days prior to its proposed implementation, the
Board shall prepare and submit the revised Business Plan to the Regional
Director for review and written notice of non-objection. The Association shall
comply with the Business Plan, including all revisions or amendments thereto as
approved by the Regional Director.
Growth.

    9.   Effective
immediately, the Association is subject to, and shall comply with the
requirements and provisions of OTS Regulatory Bulletin 3b. Without the prior
written notice of non-objection of the Regional Director, the Association shall
not increase its total assets during any quarter, beginning with the quarter
ending June 30, 2009, in excess of an amount equal to net interest credited on
deposit liabilities during the quarter. The growth restriction imposed by this
Paragraph shall remain in effect until the Association receives the Regional
Director's written notice of non-objection of its Business Plan under Paragraph
4 of this Order. Any request for growth in assets, including any growth proposed
in the Business Plan, shall address: (a) the source, volatility, and use of the
funds that support asset growth; (b) any increase in concentration, credit risk,
or interest rate risk due to growth; and (c) the effect of such growth on the
Association's capital.

    Dividends.

    10.  Effective
immediately, the Association shall pay no dividends or make any other capital
distribution, as that term is defined in 12 C.F.R. § 563.141, without receiving
the prior written approval of the Regional Director. The Association's written
request for written approval shall be submitted to the Regional Director at
least thirty (30) days prior to the anticipated date of the proposed dividend
payment or distribution of capital. The written request for such approval shall


     

    
      First Home Savings
Bank

      Order to
Cease and Desist

      Page 5
of 19 

    


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    

     

    also
include: (a) contain current and one-year pro forma projections regarding the
Association's capital, asset quality, and earnings; and (b)
address the Association's compliance with the Business Plan required by
Paragraph 2 of this Order.

    Brokered Deposits
Restriction.

    11.   Effective
immediately, the OTS hereby directs the Association not to increase the dollar
amount of brokered deposits existing as of March 5, 2009, excluding interest
credited, without the prior written notice of non-objection of the Regional
Director. Within thirty (30) days prior to the anticipated date of acceptance of
such brokered deposits, the Association shall submit a request for such
non-objection to the Regional Director.

    Asset
Classification.

    12.   By
September 30, 2009, the Board shall submit a revised Asset Classification Policy
to the Regional Director for review and written notice of non-objection. The
revised Asset Classification Policy shall provide for the evaluation and
classification of the Association's assets:

    
      	 	
              (a) consistent
      with 12 C.F.R. § 560.160; OTS Examination Handbook § 260 (Classification
      of Assets) and § 261 (Adequacy of Valuation Allowances); Section II.G of
      Appendix A to 12 C.F.R. Part 570; OTS CEO Letter No. 250, entitled
      "Interagency Policy Statement on the Allowance for Loan and Lease Losses
      and Questions and Answers on Accounting for Loan and Lease Losses," dated
      December 13, 2006 (2006 ALLL Policy Statement); OTS CEO Letter No. 304
      entitled "ALLL - Observed Thrift Practices Including Sound Practices;" and
      Statement of Financial Accounting Standards No. 5 and No.
    114;

            
	 	(b) setting
      forth the revised methodology for determining general ALLL
      percentages; 


    

     

    First
Home Savings Bank

    Order to
Cease and Desist

    Page 6
of 19


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    

     

    
      	 	(c) requiring
      the classification of all Association's assets, including all repossessed
      assets; 
	 	(d) requiring
      accurate reporting of classified assets on the monthly TFRs and on the
      Association's books and records; and
	 	
              (e) requiring
      a periodic review by the Association's Management2
      regarding the adequacy of ALLL, charge-offs, and specific valuation
      allowances, and requires at least a quarterly review by the Board of the
      adequacy of ALLL for each portfolio category in accordance with 12 C.F.R.
      § 560.160(b), the Association's revised ALLL methodology, the 2006
      Interagency Guidance, and
GAAP. 

            


    

     

    13.   Within
thirty (30) days after receiving the Regional Director's written comments or
written
notice of non-objection, the Board shall make any revisions required by the
Regional Director and adopt the Asset Classification Policy. From the date of
the adoption of the Asset Classification Policy, the Association shall implement
and comply with the Asset Classification Policy.

    Classified
Asset Report.

    14.   By
September 30, 2009 and the end of each quarter thereafter, the Board shall
submit to the
Regional Director a detailed written status report on each nonhomogeneous3
classified asset equal to or greater than Two Hundred Fifty Thousand Dollars
($250,000) (Quarterly Classified Asset Report). The Quarterly Classified Asset
Report shall include for each identified classified asset:

     

    
       

      
        	____________________________ 	 
	2 For purposes of this Order, the term "Management" means
      one or more "Senior Executive Officer" and the term “Senior Executive
      Officer” is defined at 12 C.F.R. § 563.555. 
	
                3
      For
      purposes of this Order, the term "nonhomogeneous loans" is defined to
      include all loans other than permanent single-family
      mortgage and consumer
loans.  

              


      

       

    

     

    First
Home Savings Bank

    Order to
Cease and Desist

    Page 7 of
19


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

     

    
      	 	(a)  significant
      loan underwriting, documentation, or administration deficiencies, if
      any; 
	 	(b)  the
      date(s) of payments due and any last payment
  made; 
	 	(c)  the
      amount of interest reserve remaining and the contractually required debt
      service; 
	 	(d)  the
      estimated value of the collateral, the date of this valuation, and the
      findings from any property inspections; 
	 	(e)  an
      analysis of the borrower's and/or guarantor's current financial
      condition; 
	 	(f)  the
      appropriate asset classification category and the rationale for the asset
      classification category; 
	 	(g)  the
      effective identification of the risks with respect to the
      asset; 
	 	(h)  the
      identification of whether the loan is impaired and an estimate of the loan
      impairment; 
	 	(i)  any
      required specific valuation allowances, charge-offs, or allocation of
      ALLL; and 
	 	(j)  the
      current strategy that the Board approved for resolving the classified
      asset. The Board's review of the Quarterly Classified Asset Report shall
      be fully documented in the Board
minutes. 


    

    15.  By September 30, 2009 and
the end of each quarter thereafter, the Board shall retain a qualified
independent third party to undertake its own review of the nonhomogeneous loans
described in Paragraph 14 of this Order and prepare its own Quarterly Classified
Asset Report as set forth in Paragraph 14 of this Order (Third Party Quarterly
Classified Asset Report) that shall be submitted to the Regional Director, along
with the Quarterly Classified Asset Report required

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 8
of 19

    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    by
Paragraph 14 of this Order. The Board shall address any differences between the
Association's Quarterly Classified Asset Report and the Third Party Quarterly
Asset Report in its submission to the Regional Director.

    Reduction of Classified
Assets.

    16.  By September 30, 2009,
the Board shall submit to the Regional Director for review and written
notice of non-objection a written comprehensive Classified Asset Reduction Plan
that will return asset quality to a level and within a time frame acceptable to
the Regional Director. The Classified Asset Reduction Plan, at a minimum, shall
include:

    
      	 	

              (a)  targets
      for the incremental reduction of classified assets, as a percentage of
      Tier 1 (Core)
      Capital and ALLL, and the timeframe for each such
      target; 

            
	 	(b)  a
      description of the manner of, and methods for, reducing the Association's
      level of classified assets to the targets set forth therein;
      and 
	 	(c)  all
      relevant assumptions and projections and documentation supporting such
      assumptions and projections. 


    

     

    
    

    17.  Within (30) days after
receipt of the Regional Director's written comments or written notice of
non-objection, the Board shall make any revision to the Classified Asset
Reduction Plan required by the Regional Director and adopt the Classified Asset
Reduction Plan. From the date of the adoption of the Classified Asset Reduction
Plan, the Association shall implement and comply with the Classified Asset
Reduction Plan. Within five (5) days of Board approval, the Board shall send a
copy of the final Classified Asset Reduction Plan implemented by the Board to
the Regional Director.

    18.  If the Board determines
that an amendment or revision of the Classified Asset Reduction Plan is
warranted, the Board shall submit the proposed amendment or revision to the
Classified

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 9
of 19

    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    Asset
Reduction Plan to the Regional Director within sixty (60) days prior to the
proposed date of implementation of the amendment or revision to the Classified
Asset Reduction Plan. The Association shall comply with the Classified Asset
Reduction Plan, including all revisions or amendments approved by the Regional
Director.

    19.   Within
thirty (30) days after the end of each quarter, beginning with the quarter
ending September 30, 2009, the Board shall provide to the Regional Director a
written status report regarding the implementation of the Classified Asset
Reduction Plan (Quarterly Classified Asset Reduction Report). Each Quarterly
Classified Asset Reduction Report shall: (a) set forth the Association's efforts
to reduce the Association's level of classified assets during that quarter; and
(b) report and explain in detail the variances of actual operating results from
the targets set forth in the Quarterly Classified Asset Reduction Plan. The
Board's review of the Quarterly Classified Asset Reduction Report shall be fully
documented in the Board minutes and shall include a discussion of the variances
between actual operating results from the targets set forth in the Classified
Asset Reduction Plan and measures that have been implemented or are proposed to
address such variances if the actual operating results have not satisfied such
targets. 

    Concentration
Risk Analysis.

    20.   By
September 30, 2009, the Board shall submit to the Regional Director for review
and written notice of non-objection a Concentration Plan (Concentration Plan)
that addresses: (a) the reduction of the Association's concentration in its
nonhomogeneous loan portfolio to a level and within a time frame satisfactory to
the Regional Director, and supporting documentation for all assumptions and
projections; and (b) the assessment, monitoring, and control of the risks
associated with the Association's commercial real estate portfolio in accordance
with the guidelines in OTS CEO Letter No. 252, entitled "Guidance on Commercial
Real Estate (CRE) 

     

    
      
        First
Home Savings Bank

        Order to
Cease and Desist

        Page 10
of 19

      

    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

    Concentration Risks," and
OTS CEO Letter No. 245, entitled "Updated Director's Responsibility Guide and
Guide to Management Reports." The Concentration Plan, at a minimum, shall
address the following:

     

    
      	 	
              (a)  identification
      and quantification of the nature and level of risk presented by the
      concentrations in the Association's nonhomogeneous loan portfolio,
      including, but not limited to speculative residential construction loans,
      developed building lot loans, and land, acquisition, and development
      loans; 

            
	 	
              (b)  delineation
      of an acceptable level of concentration risk of speculative residential
      construction loans, developed building lot loans, and land, acquisition,
      and development loans in the Association's portfolio, including, but not
      limited to, limits on certain types of borrowers or property types to
      reflect the level of risk acceptable to the Board based on the
      Association's market position, historical experience, trade area, probable
      future loan and funding trends, staff capabilities, and technological
      resources; 

            
	 	
              (c)  specific
      targets for the reduction of the types of nonhomogeneous loans that
      constitute the greater percentage of classified assets and special mention
      assets and that are based on a percentage of Tier 1(Core) Capital and ALLL
      by loan type; 

            
	 	
              (d)  establishment
      of the timeframe for each such target set forth in Paragraph 20(c) of this
      Order; 

            
	 	
              (e)  a
      description of the manner of, and methods for, reducing the Association's
      level of nonhomogeneous loans to the targets set forth
      therein; 

            
	 	
              (f)  establishment
      of internal controls to monitor compliance with the concentration
      limits
      and the Association's loan policy and lending
      strategies; 

            


    

     

     

    
      
        First
Home Savings Bank

        Order to
Cease and Desist

        Page 11
of 19

      

    

    
 

    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

    
    

     

    
      	 	
              (g)  establishment
      of a periodic review and approval process for exposure limits on the types
      of loans in the nonhomogeneous loan portfolio;

            
	 	(h)  establishment
      of a portfolio management process to evaluate the overall exposure to
      economic risk factors and to develop strategic plans to mitigate
      concentration risk in the event of adverse market
      conditions; 
	 	
              (i)  development
      of a management information system that stratifies the nonhomogeneous loan
      portfolio by key factors used in delineating risks;
    and 

            
	 	(j)  undertaking
      of regularly scheduled stress tests or sensitivity analyses of the
      commercial real estate portfolio and portfolio segments of speculative
      residential construction loans, developed building lot loans, and land,
      acquisition, and development loans with common risk characteristics at
      specific time periods to quantify the impact of changing economic
      scenarios on asset quality, earnings, and capital conditions, including,
      but not limited to, those affecting relevant industries or sectors on
      asset quality, earnings, and
capital. 


    

    21.   Within
thirty (30) days after receipt of the Regional Director's written comments or
written
notice of non-objection, the Board shall make any revisions to the Concentration
Plan required by the Regional Director and adopt the Concentration Plan. From
the date of the adoption of the Concentration Plan, the Association shall
implement and comply with the Concentration Plan.

    22.   If the
Board determines that an amendment or revision to the Concentration Plan is
warranted,
the Board shall submit the proposed amendment or revision to the Concentration
Plan to the Regional Director within sixty (60) days prior to the proposed date
of implementation of

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 12
of 19

    


    
      
        
          
            	
                     

                  


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    the
proposed amendment or revision. The Association shall comply with the
Concentration Plan, including all revisions or amendments thereto as approved by
the Regional Director.

    23.   By
September 30, 2009, the Association shall obtain the results of its first
scheduled stress
testing of the Association's commercial real estate portfolio conducted by a
qualified independent outside consultant or a qualified independent employee
pursuant to the Association's requirements of the Concentration Plan and submit
a report setting forth the findings to the Regional Director. Within thirty (30)
days after the completion of each stress testing conducted pursuant to the
requirements of the Concentration Plan, the Board shall review the findings of
the stress testing and determine whether the Association's exposure limits,
concentration risks, limits on certain types of borrowers or property types,
loan policies, or credit review function should be revised. The Board's review
shall be fully documented in the Board minutes. Within five (5) days after the
Board meeting at which the results of each stress test is reviewed, the Board
shall submit a copy of the Board meeting minutes reflecting its review and any
corrective actions directed to the Regional Director.

    24.   Within
thirty (30) days after the end of each quarter, beginning with the quarter
ending September
30, 2009, the Board shall provide to the Regional Director a written report
(Quarterly Concentration Reduction Report) that: (a) summarizes the
Association's efforts to reduce the Association's concentration in the types of
nonhomogeneous loans that constitute the greater proportion of classified and
criticized assets; (b) reports and explains in detail the variances of actual
operating results from the targets set forth in the Concentration Plan for the
reduction of the specific concentrations, as a percentage of Tier 1 (Core)
Capital and ALLL, and the timeframes for the reduction of each such target; and
(c) the measures that have been 

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 13
of 19

    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

    implemented or are proposed to address such variances if the
actual operating results have not satisfied such targets.

    Severance
Payments.

    25.   Effective
immediately, the Association shall not make any golden parachute payment4 unless,
with respect to each such payment, the Association has complied with the
requirements of 12 C.F.R. Part 359.

    Indemnification.

    26.   Effective
immediately, the Association shall not order a prohibited indemnification
payment
unless, with respect to each such payment, the Association has complied with the
requirements of 12 C.F.R. Part 359 and, 12 C.F.R. § 545.121.

    Directorate and Management
Changes.

    27.   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.

    Employment Contracts and
Arrangements.

    28.   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 written 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

     

     

    
      	___________________________ 
	4 The term "golden parachute payment" is defined at 12
      C.F.R. § 359.1(f). 


    

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 14
of 19

    

     


    
      
        
        

         


      

      
         


        
          

        

      

      
         


      

    

     

    
      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.

      29.   Effective
immediately, the Association shall not, directly or indirectly, increase any
salaries, bonuses, or directors' fees, or make any other similar payments to the
Association's directors or Senior Executive Officers without the written notice
of non-objection of the Regional Director.

    

    Third Party
Contracts.

    30.   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 Association5 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; (b) determined that the arrangement or contract complies with the
standards and guidelines set forth in Thrift Bulletin 82a and OTS Examination
Handbook § 310; and (c) received a written notice of non-objection from the
Regional Director.

    Violations of
Law.

    31.   By
October 31, 2009, unless otherwise provided by this Order, the Board shall
ensure that each violation of law, rule, or regulation; noncompliance with
applicable OTS and Interagency Guidelines;, and any other deficiency and
weakness discussed in the Association's

     

     

    
      	___________________________ 
	5
      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. 


    

     

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 15
of 19

    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

    
      March 30,
2009 Report of Examination (ROE) are corrected and shall provide the Regional
Director with a written certification (Certification) adopted by the entire
Board that each violation in the Association's March 30, 2009 ROE has been
corrected. The Certification shall identify and discuss: (a) the manner in which
each violation was corrected; and (b) the implementation of procedures required
or other corrective actions directed by the Board to prevent future
violations.

      32.   Within ninety (90) days,
the Association shall implement specific procedures to prevent future
violations of laws, rules or regulation, and noncompliance or deficiencies with
applicable OTS Guidelines and Interagency Guidelines. These procedures shall
include a requirement that the Board review all policies and procedures of the
Association on at least an annual basis, in accordance with a risk-focused
schedule, for compliance with applicable regulations, OTS Guidelines and
Interagency Guidelines, and the Association's actual
practices.

    

    33.   Within sixty (60) days
after receipt of any subsequent report of examination, internal audit
report, independent external audit report, information technology audit, or
other report prepared by the Association's employees, agents, and/or independent
contractors, which cites or discusses any weakness, deficiency, or noncompliance
with applicable OTS and Interagency Guidelines, or any violation of law, rule,
or regulation, the Board shall require that Management: (a) take actions to
correct each such weakness, deficiency, instance of noncompliance, or violation
by a specific time frame; (b) develop specific procedures to prevent future
weakness, deficiency, instance of noncompliance, or violation; and (c) provide
reports regarding the status of the corrective actions and implementation of
procedures to the Board. The Board shall also ensure that the Association and
Management comply with such actions and procedures.

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 16
of 19

    


    
      
        
        

         


      

      
         


        
          

        

      

      
         


      

    

    
      Compliance with this
Order.

      34.   Within
thirty (30) days after the end of each month, beginning with month ending July
31, 2009,
the Board shall adopt and submit to the Regional Director a board resolution
(Compliance Resolution), formally resolving that, following a diligent inquiry
of relevant information (including a report from the Association's Management
regarding the Association's compliance with each provision of this Order), to
the best of its knowledge and belief, during the immediately preceding month,
the Association complied with each provision of this Order currently in effect,
except as otherwise stated. The Compliance Resolution shall specify in detail
any instance of noncompliance and identify all notices of exemption or
non-objection issued by the Regional Director that were outstanding as of the
date of its adoption. Within five (5) days of the meeting of its Board at which
the Compliance Resolution was adopted, the Association shall provide to the
Regional Director a true copy of each Compliance Resolution, as adopted by its
Board. 

      35.   The
minutes of the meetings of the Board shall set forth the following information
with respect to the adoption of the Compliance Resolution: (a) the identity of
each director voting in favor of its adoption; and (b) the identity of each
director voting in opposition to its adoption or abstaining from voting thereon,
setting forth each such director's reasoning for opposing or abstaining. The
Board, by virtue of the submission of a true copy of such Compliance Resolution
by the Board to the OTS, shall be deemed to have certified to the accuracy of
the statements set forth in each Compliance Resolution, except as noted
therein.

    

     

    Effective Date,
Incorporation of Stipulation.

     

    36.   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.

     

     

    
      
        First
Home Savings Bank

        Order to
Cease and Desist

        Page 17
of 19

      

    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

    
      Duration.

      37.   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.

    

    38.   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.

    39.   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.

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


    41.   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:

     

    
    

     

    
      	
              (a)   
       

            	To the
      OTS: 
	 	 
	 	Regional Director C.K.
      Lee 
	 	Attn: Dennis Havener, Assistant
      Director  
	 	225 E. John Carpenter Freeway,
      Suite 500  
	 	Irving, Texas
      75062-5217 
	 	Facsimile: (972)
      277-9500 
	 	 
	 	 
	 	With a copy
      to: 
	 	 
	 	Don
    Kramer 
	 	Field
      Manager 
	 	Office of Thrift
      Supervision 


    

     

     

     

     

     

     

     

    
      First
Home Savings Bank

      Order to
Cease and Desist

      Page 18
of 19

    

     

     


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

     

    
      
        	 	P.O. Box
      24401 
	 	Overland Park, Kansas
      66283-4401 
	 	 
	
                 (b)      
      

              	To the
      Association: 
	 	 
	 	Attn: Thomas M. Sutherland,
      Chief Executive Officer 
	 	First Home Savings
      Bank  
	 	142 East First
      Street 
	 	Mountain Grove, Missouri
      65711-1742 
	 	Facsimile: (417)
      926-4362 


      

       

    

    No Violations
Authorized.

     

    42.  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/C.K.
      Lee                                                         
       
	 	     
      C.K. Lee 
	 	     
      Regional Director, Western Region 
	 	 
	 	Date: See Effective
      Date on page 1 


    

     

     

     

     

                                                          

     

     

     

     

     

     

    First
Home Savings Bank 

    Order to
Cease and Desist 

    Page 19
of 19