Document:

exv10w1

Exhibit 10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

	 	 	 
	 

	 	 
	
	)	 
	In the Matter of

	)	STIPULATION AND CONSENT
	

	)	TO THE ISSUANCE OF
	ROYAL BANK AMERICA

	)	AN ORDER TO
	NARBERTH, PENNSYLVANIA

	)	CEASE AND DESIST
	
	)	 
	(INSURED STATE NONMEMBER BANK)

	)	FDIC-09-282b
	
	)	 
	 

	 	 

     Subject to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE
AND DESIST (“CONSENT AGREEMENT”) by the Federal Deposit Insurance Corporation (“FDIC”), it is
hereby stipulated and agreed by and between a representative of the Legal Division of the FDIC and
Royal Bank America, Narberth, Pennsylvania (“Bank”), as follows:

          1. The Bank has been advised of its right to receive a NOTICE OF CHARGES AND OF HEARING
(“NOTICE”) detailing the unsafe or unsound banking practices alleged to have been committed by the
Bank and of its right to a hearing on the alleged charges under section 8(b)(1) of the Federal
Deposit Insurance Act (“Act”), 12 U.S.C. § 1818 (b)(1), and has waived those rights.

          2. The Bank, solely for the purpose of this proceeding and without admitting or denying any
of the alleged charges of unsafe or unsound banking practices, hereby consents and agrees to the
issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC. The Bank further stipulates and
agrees that such ORDER shall be deemed to be a final ORDER and that such ORDER shall become
effective immediately upon issuance by the FDIC and fully enforceable by the FDIC pursuant to the
provisions of section 8(i)(1) of the Act, 12 U.S.C.

 

 

§ 1818(i)(1), subject only to the conditions set forth in paragraph 3 of this CONSENT AGREEMENT.

          3. In the event the FDIC accepts this CONSENT AGREEMENT and issues the ORDER, it is agreed
that no action to enforce such ORDER in the United States District Court will be taken by the FDIC
unless the Bank or any director, officer, employee, agent, successor or assignee, or other
institution-affiliated party, has violated or is about to violate any provision of the ORDER.

          4. The Bank hereby waives:

               (a) the receipt of a NOTICE;

               (b) all defenses to the allegations to be set forth in the NOTICE;

               (c) a hearing conducted for the purpose of taking evidence on the allegations to be set forth
in the NOTICE;

               (d) the filing of proposed FINDINGS OF FACT AND CONCLUSIONS OF LAW;

               (e) the issuance of a RECOMMENDED DECISION by an administrative law judge in this matter; and

               (f) the filing of exceptions and briefs with respect to such RECOMMENDED DECISION.

	 	 	 	 	 
	 
	 	 	 	 
	Dated: July 15, 2009
	 	 	 	 
	 
	 	 	 	 
	FDIC 

LEGAL DIVISION 

BY:

	 	ROYAL BANK AMERICA

NARBERTH, PENNSYLVANIA

BY:
	 	 
	 
	 	 	 	 
	/s/ G. Michael Saran
 

G. Michael Saran

Counsel

	 	/s/ Edward F. Bradley
 

Edward F. Bradley

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Joseph P. Campbell
 

Joseph P. Campbell

Director
	 	 

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	 	/s/ Carl M. Cousins
 

Carl M. Cousins, DVM

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Samuel Goldstein
 

Samuel Goldstein

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ James J. McSwiggan
 

James J. McSwiggan

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Anthony J. Micale
 

Anthony J. Micale

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Albert Ominsky
 

Albert Ominsky, Esq.

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Gregory T. Reardon
 

Gregory T. Reardon

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Robert A. Richards, Jr.
 

Robert A. Richards, Jr.

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Murray Stempel, III
 

Murray Stempel, III

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Evelyn R. Tabas
 

Evelyn R. Tabas

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Robert R. Tabas
 

Robert R. Tabas

Director
	 	 

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	 	/s/ Linda Tabas Stempel
 

Linda Tabas Stempel

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Edward B. Tepper
 

Edward B. Tepper

Director
	 	 
	 
	 	 	 	 
	 

	 	/s/ Howard J. Wurzak
 

Howard J. Wurzak

Director
	 	 
	 
	 	 	 	 
	 

	 	Comprising the Board of

Directors of

Royal Bank America

Narberth, Pennsylvania	 	 

4exv10w2

Exhibit 10.2

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

	 	 	 	 	 
	 

	)	 	 	 
	In the Matter of

	)	 	 	ORDER TO CEASE AND DESIST
	 

	)	 	 	 
	ROYAL BANK AMERICA

	)	 	 	FDIC 09-282b
	NARBERTH, PENNSYLVANIA

	)	 	 	 
	 

	)	 	 	 
	(Insured State Nonmember Bank)

	)	 	 	 
	 

	)	 	 	 

          Royal Bank America, Narberth, Pennsylvania (“Bank”), through its board of directors, having
been advised of its right to the issuance and service of a NOTICE OF CHARGES AND OF HEARING
detailing the unsafe or unsound banking practices alleged to have been committed by the Bank and of
its right to a hearing on the alleged charges under section 8(b) of the Federal Deposit Insurance
Act (“Act”), 12 U.S.C. § 1818(b), and having waived those rights, entered into a STIPULATION AND
CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST (“CONSENT AGREEMENT”) with counsel for the
Federal Deposit Insurance Corporation (“FDIC”) dated July 15, 2009, whereby, solely for the purpose
of this proceeding and without admitting or denying the alleged charges of unsafe or unsound
banking practices, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by
the FDIC.

          The FDIC considered the matter and determined that it had reason to believe that the Bank had
engaged in unsafe or unsound banking practices. The FDIC, therefore, accepts the CONSENT AGREEMENT
and issues the following:

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ORDER TO CEASE AND DESIST

     IT IS ORDERED, that the Bank, its institution-affiliated parties, as that term is defined in
section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns, cease and desist from
the following unsafe or unsound banking practices:

	 	1.	 	Operating the Bank with inadequate management, policies and practices that are
detrimental to the Bank.
	 
	 	2.	 	Operating the Bank without adequate supervision and direction by the Bank’s
board of directors over the management of the Bank to prevent unsafe or unsound
banking practices.
	 
	 	3.	 	Operating the Bank with an excessive level of adversely classified loans or
assets.
	 
	 	4.	 	Operating the Bank with an excessive level of delinquent loans.
	 
	 	5.	 	Operating the Bank with an excessive level of nonaccrual loans.
	 
	 	6.	 	Engaging in unsatisfactory lending and collection practices, including, but not
limited to:

	 	a.	 	Insufficient monitoring and controls over receivable-based loans.
	 
	 	b.	 	Excessive out-of-territory lending.
	 
	 	c.	 	Over-reliance on real estate liquidation as a loan repayment source and
over-reliance on guarantors’ real estate net worth.
	 
	 	d.	 	Operating with inadequate underwriting, loan-grading system and loan
administration practices.

	 	7.	 	Operating the Bank with an inadequate level of capital protection for the kind
and quality of assets held by the Bank.

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	 	8.	 	Operating the Bank with inadequate earnings to fund growth and augment capital.
	 
	 	9.	 	Operating the Bank with inadequate net interest margins.
	 
	 	10.	 	Operating the Bank without adequate liquidity and funds management policies
and procedures.
	 
	 	11.	 	Operating with an inadequate investment policy.
	 
	 	12.	 	Operating the Bank with a heavy reliance on non-core funding sources.
	 
	 	13.	 	Operating the Bank with inadequate internal routines and controls.

          IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its successors
and assigns, take affirmative action as follows:

MANAGEMENT 

          1. (a) The Bank shall have and retain qualified management. Each member of management shall
possess qualifications and experience commensurate with his or her duties and responsibilities at
the Bank. The qualifications of management personnel shall be evaluated on their ability to:

          (1) comply with the requirements of this ORDER;

          (2) operate the Bank in a safe and sound manner;

          (3) comply with applicable laws and regulations; and

          (4) restore all aspects of the Bank to a safe and sound condition, including improving
the Bank’s asset quality, capital adequacy, earnings, management effectiveness, and
liquidity.

          (b) While this ORDER is in effect, the Bank shall notify the Regional Director of the FDIC’s
New York Regional Office (“Regional Director”) in writing of any changes of any member of the
Bank’s board of directors (“Board”) or senior management officer within 15 days

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of the event. Any notification required by this subparagraph shall include a description of
the background(s) and experience of any proposed replacement personnel and must be received at
least 30 days prior to the individual(s) assuming the new position(s). The Bank shall also
establish procedures to ensure compliance with section 32 of the Act, 12 U.S.C. § 1831i, and
Subpart F of Part 303 of the FDIC Rules and Regulations, 12 C.F.R. Part 303.

MANAGEMENT — BOARD SUPERVISION

          2. Within 30 days after the effective date of this ORDER, the Board shall increase its
participation in the affairs of the Bank by assuming full responsibility for the approval of the
Bank’s policies and objectives and for the supervision of the Bank’s management, including all the
Bank’s activities. The Board’s participation shall include, at a minimum, monthly meetings in
which the following areas shall be reviewed and approved by the Board: reports of income and
expenses; new, overdue, renewed, insider, charged-off, delinquent, noncurrent, and recovered loans;
investment activities; liquidity and funds management; operating policies; and individual committee
actions. The Board minutes shall document these reviews and approvals, including the names of any
dissenting directors.

CLASSIFIED ASSETS — CHARGE-OFF AND PLAN FOR REDUCTION

          3. (a) Within 30 days after the effective date of this ORDER, the Bank shall, to the extent
that it has not previously done so, eliminate from its books, by charge-off or collection, all
assets or portions of assets classified “Loss” by the FDIC and the Commonwealth of Pennsylvania
Department of Banking in the Joint Report of Examination as of December 31, 2008 (“ROE”).
Elimination or reduction of these assets through proceeds of loans made by the Bank shall not be
considered “collection” for the purpose of this paragraph.

               (b) Within 60 days after the effective date of this ORDER, the Bank shall formulate and submit
a detailed written plan to the Regional Director to reduce the remaining

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assets classified “Doubtful” and “Substandard” in the ROE. The plan shall address each asset
so classified with a balance of $1,000,000 or greater and provide the following:

     (1) the name under which the asset is carried on the Bank’s books;

     (2) type of asset;

     (3) actions to be taken in order to reduce the classified asset; and

     (4) timeframes for accomplishing the proposed actions.

          The plan shall also include, at a minimum:

          (1) a review of the financial position of each such borrower, including the source of
repayment, repayment ability, and alternate repayment sources; and

          (2) an evaluation of the available collateral for each such credit, including possible
actions to improve the Bank’s collateral position.

          In addition, the plan shall contain a schedule detailing the projected reduction of total
classified assets on a quarterly basis. Further, the plan shall contain a provision requiring the
submission of monthly progress reports to the Board and a provision mandating a review by the
Board.

          (c) The Bank shall submit the plan to the Regional Director for review and comment. Within 30
days after the Regional Director has responded to the plan, the Board shall adopt the plan as
amended or modified by the Regional Director, which approval shall be recorded in the minutes of
the Board meeting. The Bank shall then immediately initiate measures detailed in the plan to the
extent such measures have not been initiated.

          (d) For purposes of the plan, the reduction of adversely classified assets shall be detailed
using quarterly targets expressed as a percentage of the Bank’s Tier 1 capital plus the Bank’s
Allowance for Loan and Lease Losses and may be accomplished by charge-off;

5

 

collection; sufficient improvement in the quality of adversely classified assets so as to
warrant removing any adverse classification, as determined by the FDIC; or an increase in the
Bank’s Tier 1 capital.

          (e) While this ORDER is in effect, the Bank shall eliminate from its books, by charge-off or
collection, all assets or portions of assets classified “Loss” as determined at any future
examination.

REDUCTION OF DELINQUENCIES

          4. (a) Within 60 days after the effective date of this ORDER, the Bank shall formulate and
submit to the Regional Director for review and comment a detailed written plan for the reduction
and collection of delinquent loans. Such plan shall include, but not be limited to, provisions
which:

          (1) prohibit the extension of credit for the payment of interest, unless the Board
adopts prior to such extension of credit a detailed written statement giving reasons why
such extension of credit is in the best interests of the Bank and how it improves the
position of the Bank. Copies of the statement approved by the Board shall be made a part of
the Board minutes and placed in the appropriate loan file and submitted to the Regional
Director with the quarterly progress reports required pursuant to paragraph 16 of this
ORDER;

          (2) delineate areas of responsibility for implementing and monitoring the Bank’s
collection policies;

          (3) establish specific collection procedures to be instituted at various stages of a
borrower’s delinquency;

          (4) establish dollar levels to which the Bank shall reduce delinquencies within 6 and
12 months from the effective date of this ORDER; and

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          (5) provide for the submission of monthly written progress reports to the Board for
review and notation in the Board minutes.

          (b) For purposes of the plan, “reduce” means to charge-off or collect.

          (c) Within 30 days after the Regional Director has responded to the plan, the Board shall
adopt the plan as amended or modified by the Regional Director. The plan shall be implemented
immediately to the extent that the provisions of the plan are not already in effect at the Bank.

RESTRICTION ON ADVANCES TO CLASSIFIED BORROWERS

          5. (a) While this ORDER is in effect, the Bank shall not extend, directly or indirectly, any
additional credit to or for the benefit of any borrower whose existing credit has been classified
“Loss” in the ROE, either in whole or in part, and is uncollected, or to any borrower who is
already obligated in any manner to the Bank on any extension of credit, including any portion
thereof, that has been charged off the books of the Bank and remains uncollected. The requirements
of this paragraph shall not prohibit the Bank from renewing (after full collection, in cash, of
interest due from the borrower) any credit already extended to the borrower.

          (b) While this ORDER is in effect, the Bank shall not extend, directly or indirectly, any
additional credit to or for the benefit of any borrower whose extension of credit is classified
“Doubtful” and/or “Substandard” in the ROE, either in whole or in part, and is uncollected, unless
the Board has signed a detailed written statement giving reasons why failure to extend such credit
would be detrimental to the best interests of the Bank. The statement shall be placed in the
appropriate loan file and included in the minutes of the applicable meeting of the Board.

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REDUCTION OF COMMERCIAL REAL ESTATE CONCENTRATIONS 

          6. (a) Within 45 days from the effective date of this ORDER, the Bank shall develop and
submit a written plan, acceptable to the Regional Director, for systematically reducing and
monitoring the Bank’s commercial real estate (“CRE”) loan concentration of credit identified in the
ROE to an amount which is commensurate with the Bank’s business strategy, management expertise,
size, and location. Such plan shall prohibit any advances that would increase the concentration
unless the advance is pursuant to an existing loan agreement and shall include, but not be limited
to:

          (1) dollar levels and percent of capital to which the Bank shall reduce the
concentration;

          (2) timeframes for achieving the reduction in dollar levels in response to (1) above;

          (3) compliance with the Interagency Guidance on Concentrations in Commercial Real
Estate Lending, Sound Risk Management Practices (FIL-104-2006, issued December 12, 2006) and
Managing Commercial Real Estate Concentrations in a Challenging Environment (FIL-22-2008,
issued March 17, 2008);

          (4) provisions for controlling and monitoring of CRE, including plans to address the
rationale for CRE levels as they relate to growth and capital targets, segmentation and
testing of the CRE portfolio to detect and limit concentrations with similar risk
characteristics; and

          (5) provisions for the submission of monthly written progress reports to the Board for
review and notation in minutes of the Board meetings.

          (b) For purposes of the plan, “reduce” means to charge-off or collect, or increase Tier 1
capital.

8

 

          (c) The Bank shall submit the plan to the Regional Director for review and comment. Within 30
days after the Regional Director has responded to the plan, the Board shall adopt the plan as
amended or modified by the Regional Director, which approval shall be recorded in the minutes of
the Board meeting. The plan shall be implemented immediately to the extent that the provisions of
the plan are not already in effect at the Bank.

CAPITAL MAINTENANCE 

          7. (a) Within 30 days after the effective date of this ORDER, and at all times thereafter
while this ORDER is in effect, the Bank, after establishing an adequate Allowance for Loan and
Lease Losses, shall increase and maintain its ratio of Tier 1 capital to total assets (“leverage
ratio”) equal to or greater than 8 percent and its ratio of qualifying total capital to
risk-weighted assets (“total risk-based capital ratio”) equal to or greater than 12 percent.

               (b) If said capital ratios are less than required by this ORDER, as determined as of the date
of any Report of Condition and Income or at any future examination, the Bank shall, within 30 days
after notice of its capital deficiency, submit to the Regional Director a plan to increase its
capital or to take such other measures to bring its leverage ratio and total risk-based capital
ratio to the percentages required by this ORDER. After the Regional Director responds to the plan,
the Board shall adopt the plan, including any modifications or amendments requested by the Regional
Director.

               (c) In addition, the Bank shall comply with the FDIC’s Statement of Policy on Risk-Based
Capital found in Appendix A to Part 325 of the FDIC Rules and Regulations, 12 C.F.R. Part 325, App.
A.

               (d) For purposes of this ORDER, all terms relating to capital shall have the meanings ascribed
to them and shall be calculated according to the methodology set forth in Part 325 of the FDIC
Rules and Regulations, 12 C.F.R. Part 325.

9

 

BUDGET AND PROFIT PLAN

          8. (a) Within 60 days after the effective date of this ORDER, the Bank shall submit to the
Regional Director for review and comment a written profit plan and a realistic, comprehensive
budget for all categories of income and expense for the remainder of the year 2009. The plan
required by this paragraph shall contain formal goals and strategies, be consistent with sound
banking practices, reduce discretionary expenses, improve the Bank’s overall earnings and net
interest income, and shall contain a description of the operating assumptions that form the basis
for major projected income and expense components.

               (b) Within 45 days after the end of each calendar quarter following completion of the profit
plan and budget required by this paragraph, the Board shall evaluate the Bank’s actual performance
in relation to the written profit plan and budget, record the results of the evaluation, and note
any actions taken by the Bank in the Board minutes when such evaluation is undertaken.

               (c) A written profit plan and budget shall be prepared for each calendar year for which this
ORDER is in effect and shall be submitted to the Regional Director for review and comment within 30
days after the end of each year. Within 30 days after receipt of all such comments from the
Regional Director and after adoption of any recommended changes, the Bank shall approve the written
profit plan and budget, which approval shall be recorded in the Board minutes. Thereafter, the
Bank shall implement and follow the plan.

STRATEGIC PLAN 

          9. (a) Within 90 days after the effective date of this ORDER, the Bank shall develop and
submit to the Regional Director for review and comment a comprehensive business/strategic plan
(“Strategic Plan”) covering at least an operating period of three years. The Strategic Plan shall
contain an assessment of the Bank’s current financial condition and

10

 

market area, and a description
of the operating assumptions that form the basis for major projected income and expense components.

          (b) The Strategic Plan shall address, at a minimum:

          (1) strategies for pricing policies and asset/liability management;

          (2) specific plans for the maintenance of capital that may in no event be less than the
requirement of the provisions of paragraph 7 of this ORDER and shall detail the actions to
be taken to maintain the required capital ratio, including but not limited to, the sale of
new securities, the direct contribution of cash by the directors or parent holding company,
or the merger with or acquisition by another federally insured institution or holding
company thereof;

          (3) plans for redeeming or buying back the senior securities from the U.S. Department
of the Treasury issued pursuant to the Troubled Asset Relief Program Capital Purchase
Program;

          (4) plans for sustaining adequate liquidity, including back-up lines of credit to meet
any unanticipated deposit withdrawals;

          (5) goals for reducing problem loans;

          (6) financial goals, including pro forma statements for asset growth, capital adequacy,
and earnings;

          (7) formulation of a mission statement and the development of a strategy to carry out
that mission.

          (c) The Bank shall submit the Strategic Plan to the Regional Director for review and comment.
Within 30 days after the Regional Director has responded to the plan, the Board shall adopt the
plan as amended or modified by the Regional Director, which approval

11

 

shall be recorded in the minutes of the meeting of the Board. Thereafter, the Bank shall implement and follow the Strategic
Plan.

          (d) Within 45 days after the end of each calendar quarter following the effective date of this
ORDER, the Board shall evaluate the Bank’s performance in relation to the Strategic Plan and record
the results of the evaluation, and any actions taken by the Bank, in the minutes of the meeting of
the Board at which such evaluation is undertaken. A copy of the evaluation shall be submitted to
the Regional Director.

          (e) The Strategic Plan required by this ORDER shall be revised and submitted to the Regional
Director for review and comment 45 days after the end of each calendar year for which this ORDER is
in effect. Within 30 days after the Regional Director has responded to the plan, the Board shall
adopt the plan as amended or modified by the Regional Director, which approval shall be recorded in
the minutes of the meeting of the Board. Thereafter, the Bank shall implement the Strategic Plan.

LIQUIDITY AND FUNDS MANAGEMENT

          10. (a) Within 60 days after the effective date of this ORDER, the Bank shall revise its
liquidity and funds management policy and submit it to the Regional Director for review and
comment. Annually thereafter, while this ORDER is in effect, the Bank shall review its policy for
adequacy and, based upon such review, shall make necessary revisions to the policy
to strengthen funds management procedures and maintain adequate provisions to meet the Bank’s
liquidity needs. The initial plan shall include, at a minimum, provisions:

          (1) establishing a reasonable range for its net non-core funding ratio as computed in
the Uniform Bank Performance Report and shall address the means by which the Bank will seek
to reduce its reliance on non-core funding and high cost rate-sensitive deposits;

12

 

          (2) identifying the source and use of borrowed and/or volatile funds;

          (3) establishing sufficient back-up lines of credit that would allow the Bank to borrow
funds to meet depositor demands if the Bank’s other provisions for liquidity proved to be
inadequate;

          (4) requiring the retention of securities and/or other identified categories of
investments that can be liquidated within one day in amounts sufficient (as a percentage of
the Bank’s total assets) to ensure the maintenance of the Bank’s liquidity posture at a
level consistent with short- and long-term liquidity objectives;

          (5) establishing a minimum liquidity ratio and defining how the ratio is to be
calculated;

          (6) establishing contingency plans by identifying alternative courses of action
designed to meet the Bank’s liquidity needs; and

          (7) addressing the use of borrowings (i.e., seasonal credit needs, match funding
mortgage loans, etc.) and providing for reasonable maturities commensurate with the use of
the borrowed funds; addressing concentration of funding sources; and addressing pricing and
collateral requirements with specific allowable funding channels
(i.e., brokered deposits, internet deposits, Fed funds purchased and other
correspondent borrowings).

          (b) Within 30 days after the Regional Director has responded to the plan, the Board shall
adopt the plan as amended or modified by the Regional Director. The plan shall be implemented
immediately to the extent that the provisions of the plan are not already in effect at the Bank.

13

 

BROKERED DEPOSITS

          11. (a) Beginning with the effective date of this ORDER, and so long as this ORDER is in
effect, the Bank shall not solicit, accept, renew, or roll over any brokered deposits unless it has
applied for and been granted a waiver by the Regional Director in accordance with the provisions of
section 337.6 of the FDIC Rules and Regulations.

               (b) Within 60 days from the effective date of this ORDER, the Board shall develop a plan to
reduce the Bank’s reliance on non-core deposits and wholesale funding sources to a level acceptable
to the Regional Director.

DIVIDEND RESTRICTION

          12. As of the effective date of this ORDER, the Bank shall not declare or pay any cash
dividend without the prior written consent of the Regional Director.

HOLDING COMPANY — RESTRICTIONS ON PAYMENTS

          13. (a) As of the effective date of this ORDER, the Bank shall not make any payment, directly
or indirectly, to or for the benefit of the Bank’s holding company or any other Bank affiliate,
without the prior written consent of the Regional Director.

               (b) The Bank shall not enter into any contract with its holding company or any other Bank
affiliate or increase payment under any existing contract without submitting the new
contract or information concerning the increase in any existing contract to the Regional
Director for review and comment.

CORRECTION AND PREVENTION

          14. Beginning on the effective date of this ORDER, the Bank shall take steps necessary,
consistent with other provisions of this ORDER and sound banking practices, to correct and prevent
the unsafe or unsound banking practices that were identified in the ROE.

14

 

COMPLIANCE COMMITTEE

          15. (a) Within 30 days after the effective date of this ORDER, the Board shall establish a
compliance committee of the Board with the responsibility of ensuring that the Bank complies with
the provisions of this ORDER. The compliance committee shall report monthly to the entire Board,
and a copy of the report and any discussion related to the report or this ORDER shall be included
in the minutes of the Board meeting. Nothing contained herein shall diminish the responsibility of
the entire Board to ensure compliance with the provisions of this ORDER.

PROGRESS REPORTS

          16. Within 45 days after the end of each calendar quarter following the effective date of this
ORDER, the Bank shall furnish to the Regional Director written progress reports detailing the form
and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such
reports may be discontinued when the corrections required by this ORDER have been accomplished and
the Regional Director has released, in writing, the Bank from making further reports.

EXECUTIVE COMPENSATION

          17. (a) Within 45 days from the effective date of this ORDER, the Bank shall submit to the
Regional Director for review and approval an executive compensation plan
which incorporates qualitative as well as profitability performance standards for the Bank’s
executive officers. For purposes of this paragraph, “compensation” refers to any and all salaries,
bonus and other benefits of every kind or nature whatsoever, both current and deferred, whether
paid directly or indirectly, and the term “executive officers” shall include the Bank’s chairman of
the Board, vice-chairman of the Board, president, chief executive officer, executive vice
president(s), senior vice president(s), and chief financial officer.

15

 

SHAREHOLDERS

          18. After the effective date of this ORDER, the Bank shall send a copy of this ORDER, or
otherwise furnish a description of this ORDER, to its parent holding company in conjunction with
the Bank’s next shareholder communication. The description shall fully describe the ORDER in all
material respects.

ORDER EFFECTIVE

          19. This ORDER shall be binding upon the Bank, its successors and assigns, and all
institution-affiliated parties of the Bank. The provisions of this ORDER shall remain effective
and enforceable except to the extent that, and until such time as, any provision of this ORDER
shall have been modified, terminated, superseded, or set aside in writing by the FDIC.

               This ORDER will become effective upon its issuance by the FDIC.

               Pursuant to delegated authority.

               Dated this 16th day of July, 2009.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	John M. Lane 	 
	 	Acting Regional Director

New York Region

Division of Supervision and Consumer Protection

Federal Deposit Insurance Corporation 	 
	 

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