Document:

ex102.htm

    Exhibit
10.2

     

    UNITED
STATES OF AMERICA 

    Before
the

    OFFICE
OF THRIFT SUPERVISION

    

    
      	 	 	 
	
               

              In
      the Matter of

               

              ALASKA
      PACIFIC BANK

               

              Juneau,
      Alaska

              OTS
      Docket NO. 04202

            	
              )

              )

              )

              )

              )

              )

              )

              
                )

              

            	
               

              Order
      No. WN-10-031

               

               

              Effective
      Date: September 28, 2010

            

    

     

    STIPULATION AND CONSENT TO
ISSUANCE OF ORDER TO CEASE AND DESIST

     

    WHEREAS, the Office of Thrift
Supervision (OTS), acting by and through its Regional Director for the Western
Region (Regional Director), and based upon information derived from the exercise
of its regulatory and supervisory responsibilities, has informed Alaska Pacific
Bank, Juneau, Alaska, OTS Docket No. 04202 (Association), that the OTS is of the
opinion that grounds exist to initiate an administrative proceeding against the
Association pursuant to 12 U.S.C. § 1818(b);

    WHEREAS, the Regional
Director, pursuant to delegated authority, is authorized to issue Orders to
Cease and Desist where a savings association has consented to the issuance of an
order; and

    WHEREAS, the Association
desires to cooperate with the OTS to avoid the time and expense of such
administrative cease and desist proceeding by entering into this Stipulation and
Consent to the Issuance of Order to Cease and Desist (Stipulation) and, without
admitting or

     

    
      Alaska
Pacific Bank

      Stipulation
and Consent to issuance of Order to Cease and Desist

      Page 1 of
6

       

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    denying
that such grounds exist, but only admitting the statements and conclusions in
Paragraphs 1 and 2 below concerning Jurisdiction, hereby stipulates and agrees
to the following terms:

    Jurisdiction.

    1.  The
Association is a "savings association" within the meaning of 12 U.S.C. § 1813(b)
and 12 U.S.C. § 1462(4). Accordingly, the Association is "an insured depository
institution" as that term is defined in 12 U.S.C. § 1813(c).

    2.  Pursuant
to 12 U.S.C. § 1813(q), the Director of the OTS is the "appropriate Federal
banking agency" with jurisdiction to maintain an administrative enforcement
proceeding against a savings association. Therefore, the Association is subject
to the authority of the OTS to initiate and maintain an administrative cease and
desist proceeding against it pursuant to 12 U.S.C. § 1818(b).

    OTS Findings of
Fact.

    3.  Based on
its March 15, 2010 Comprehensive Report of Examination and its June 7, 2010
Information Technology Report of Examination of the Association, the OTS finds
that the Association has engaged in unsafe or unsound banking practices
resulting in deteriorating asset quality, ineffective risk management practices,
inadequate internal controls, and inadequate oversight and supervision at the
Association.

    Consent.

    4.   The
Association consents to the issuance by the OTS of the accompanying Order to
Cease and Desist (Order). The Association further agrees to comply with the
terms of the Order upon the Effective Date of the Order and stipulates that the
Order complies with all requirements of law.

    

      Alaska
Pacific Bank

      Stipulation
and Consent to issuance of Order to Cease and Desist

      Page 2 of
6

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    Finality.

    5.           The
Order is issued by the OTS under 12 U.S.C. § 1818(b). Upon the Effective Date,
the Order
shall be a final order, effective, and fully enforceable by the OTS under the
provisions of l2 U.S.C. § 1818(i).

    Waivers.

    6.           The
Association waives the following:

    (a)  the right
to be served with a written notice of the OTS's charges against it as provided
by 12 U.S.C. § 1818(b) and 12 C.F.R. Part 509;

    (b)  the right
to an administrative hearing of the OTS's charges as provided by 12 U.S.C. §
1818(b) and 12 C.F.R. Pat/ 509;

    (c)  the right
to seek judicial review of the Order, including, without limitation, any such
right provided by 12 U.S.C. § 1818(h), or otherwise to challenge the validity of
the Order; and

    (d)  any and
all claims against the OTS, including its employees and agents, and any other
governmental entity for the award of fees, costs, or expenses related to this
OTS enforcement matter and/or the Order, whether arising under common law,
federal statutes, or otherwise.

    OTS Authority Not
Affected.

    7.    Nothing in this
Stipulation or accompanying Order shall inhibit, estop, bar, or otherwise
prevent
the OTS from taking any other action affecting the Association if at any time
the OTS deems it appropriate to do so to fulfill the responsibilities placed
upon the OTS by law.

     

    Alaska
Pacific Bank

    
      Stipulation
and Consent to issuance of Order to Cease and Desist

      Page 3 of
6

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    Other Governmental Actions
Not Affected.

    8.  The
Association acknowledges and agrees that its consent to the issuance of the
Order is solely for the purpose of resolving the matters addressed herein,
consistent with Paragraph 7 above, and does not otherwise release, discharge,
compromise, settle, dismiss, resolve, or in any way affect any actions, charges
against, or liability of the Association that arise pursuant to this action or
otherwise, and that may be or have been brought by any governmental entity other
than the OTS.

    Miscellaneous.

    9.  The laws
of the United States of America shall govern the construction and validity of
this Stipulation and of the Order.

    10.  If any
provision of this Stipulation and/or the Order is ruled to be invalid, illegal,
or unenforceable by the decision of any Court of competent jurisdiction, the
validity, legality, and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby, unless the Regional Director in
his or her sole discretion determines otherwise.

    11.  All
references to the OTS in this Stipulation and the Order shall also mean any of
the OTS's predecessors, successors, and assigns.

    12.  The
section and paragraph headings in this Stipulation and the Order are for
convenience only and shall not affect the interpretation of this Stipulation or
the Order.

    13.  The terms
of this Stipulation and of the Order represent the final agreement of the
parties with respect to the subject matters thereof, and constitute the sole
agreement of the parties with respect to such subject matters.

    14.  The
Stipulation and Order shall remain in effect until terminated, modified, or
suspended in writing by the OTS, acting through its Regional Director or other
authorized representative.

     

    
      Alaska
Pacific Bank

      Stipulation
and Consent to issuance of Order to Cease and Desist

      Page 4 of
6

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    Signature of Directors/Board
Resolution.

    15.    Each Director
signing this Stipulation attests that he or she voted in favor of a Board
Resolution
authorizing the consent of the Association to the issuance of the Order and the
execution of the Stipulation. This Stipulation may be executed in counterparts
by the directors after approval of execution of the Stipulation at a duly called
board meeting. A copy of the Board Resolution authorizing execution of this
Stipulation shall be delivered to the OTS, along with the executed original(s)
of this Stipulation.

     

     

     

    [Remainder
of Page Intentionally Left Blank]

    
 

    
      Alaska
Pacific Bank

      Stipulation
and Consent to issuance of Order to Cease and Desist

      Page 5 of
6

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    WHEREFORE, the Association, by
its directors, executes this Stipulation.

    
       

      
        	 	Accepted
      by: 
	 	 
	ALASKA PACIFIC
      BANK	OFFICE OF THRIFT
      SUPERVISION
	Juneau, Alaska	 
	 	 
	
                By:
      /s/William A.
      Corbus                         
      

              	By: /s/ Philip A.
      Gerbick                                  
      
	     
       William A. Corbus	     
       Philip A. Gerbick
	      
       Chairman 	      
       Regional Director, Western Region
	 	 
	 	Date: See Effective
      Date on page 1 
	/s/Doug
      Andrew                                       
      	 
	Doug Andrew,
      Director 	 
	 	 
	/s/BethAnn
      Chapman                             
        	 
	BethAnn Chapman,
      Director 	 
	 	 
	/s/Craig E.
      Dahl                                        
      	 
	Craig E. Dahl,
      Director 	 
	 	 
	/s/Hugh N.
      Grant                                     
        	 
	Hugh N. Grant,
      Director 	 
	 	 
	/s/Scott C.
      Milner                                    
        	 
	Scott C. Milner,
      Director 	 
	 	 
	/s/Maxwell S.
      Rule                                  
        	 
	Maxwell S. Rule,
      Director 	 
	 	 
	/s/William J.
      Schmitz                              
        	 
	William J. Schmitz,
      Director 	 
	 	 
	/s/Linda
      Thomas                                    
        	 
	Linda Thomas,
      Director 	 

      

    

     

     

    Alaska
Pacific Bank

    Stipulation
and Consent to issuance of Order to Cease and Desist

    Page 6 of
6ex103.htm

    Exhibit
10.3

     

    UNITED
STATES OF AMERICA

    Before
the

    OFFICE
OF THRIFT SUPERVISION

     

    
    

     

    
      	 	 	 
	In the Matter
      of  	) 	Order No.:
      WN-10-032 
	 	) 	 
	 	) 	 
	ALASKA PACIFIC BANCSHARES,
      INC.	) 	Effective Date:
      September 28, 2010 
	 	) 	 
	Juneau,
      Alaska 	) 	 
	OTS Docket No.
      H3440 	) 	 
	 	 	 

    

     

     

    ORDER TO CEASE AND
DESIST

     

    WHEREAS, Alaska Pacific
Bancshares, Inc., Juneau, Alaska, OTS Docket No. H3440 (Holding Company), 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 Holding Company,
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 and loan
holding company has consented to the issuance of an order.

     

    NOW,
THEREFORE, IT IS ORDERED that:

     

    Cease and
Desist.

     

    1.    
The Holding Company 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, participating in, counseling or the aiding and abetting of
unsafe or unsound practices that

     

    
      
        
          Alaska Pacific Bancshares,
Inc.

          Order to Cease and
Desist

          Page 1 of 7

        

         

      

      
         

        
          

        

      

      
         

      

    

    resulted
in deteriorating asset quality, ineffective risk management practices,
inadequate internal controls, and inadequate oversight and supervision at its
wholly owned subsidiary, Alaska Pacific Bank, Juneau, Alaska, OTS Docket No.
04202 (Association).

     

    Capital.

     

    2.     By October
29, 2010, the Holding Company shall submit a consolidated capital plan to
preserve
and enhance the capital of the Holding Company and the Association (Capital
Plan) that is acceptable to the Regional Director. At a minimum, the Capital
Plan shall:

     

    (a)    consider
the requirements and restrictions imposed by this Order and the Order
to

     

    Cease and
Desist issued by the OTS against the Association, dated September 28,
2010;
and

     

    (b)    detail
how the Association shall meet and maintain a Tier 1 (Core) Capital ratio equal
to or greater than eight percent (8%) 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 twelve percent (12%), including a specific description of the
method(s) by which additional capital will be raised, if necessary, and an
identification of the sources of such capital.

     

    3.     Upon
receipt of written notification from the Regional Director that the Capital Plan
is acceptable,
the Holding Company shall implement and comply with the Capital Plan. Within
five (5) days of the Board meeting at which it was adopted, the Holding Company
shall provide a copy of the Capital Plan to the Regional Director.

     

    Operations
Plan.

     

    4.     Within
sixty (60) days, the Holding Company shall submit to the Regional Director for
review
and comment an Operations Plan that addresses how Holding Company will meet all
financial obligations from the present through 2013, including, but not limited
to, payments in 

     

    
      
        
          Alaska Pacific Bancshares,
Inc.

          Order to Cease and
Desist

          Page 2 of 7

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    connection
with capital raised through the Troubled Asset Relief Program, without reliance
on dividends from the Association. The Operations Plan shall include, at a
minimum, comprehensive pro forma cash flow projections detailing all anticipated
sources and uses of funds, including, but not limited to, any scheduled payment
obligations of Holding Company related to outstanding debt, operating expenses,
and equity issuances, and a timetable for the repayment or redemption of the
investment in Holding Company made through the Capital Purchase
Program.

    5.  Upon
written notification from the Regional Director that the Operations Plan is
acceptable, the Holding Company shall implement and adhere to the Operations
Plan. Within five (5) days of the Board meeting at which it was adopted, the
Holding Company shall provide a copy of the Operations Plan to the Regional
Director.

    6.  Any
request to modify the Operations Plan shall be submitted to Regional Director
for review and written non-objection at least thirty (30) days prior to the
proposed date to implement any such modification.

    7.  On a
quarterly basis, beginning with the quarter ending December 31, 2010, the Board
shall review a report detailing the adequacy of the Operations Plan given the
projected financial obligations of the Holding Company and actual operating
results, including a detailed description of any deviations from the Operations
Plan and a description of the corrective actions or measures that have been
implemented or are proposed to address each deviation (Variance Analysis
Report).

    8.  Within
forty-five (45) days after the end of each quarter, beginning with the quarter
ending December 31, 2010, the Holding Company shall provide the Regional
Director with a copy of each Variance Analysis Report, and the minutes from the
Board meeting containing the

    
      
        
          Alaska Pacific Bancshares,
Inc.

          Order to Cease and
Desist

          Page 3 of 7

        

         

      

      
         

        
          

        

      

      
         

      

    

    Board’s
discussion of the Variance Analysis Report, including, if applicable, any Board
discussion of possible modifications to the Operations Plan.

    Capital Distributions and
Stock Repurchases.

     

    9.  Effective
immediately, the Holding Company shall not declare, make, or pay any dividends
or other capital distributions, or repurchase or redeem any capital stock
without receiving the prior written non-objection of the Regional Director. The
Holding Company’s written request for such non-objection shall be submitted to
the Regional Director at least thirty (30) days prior to the anticipated date of
the proposed dividend payment, capital distribution or stock
redemption.

    10.  Effective
immediately, the Holding Company shall not take, directly or indirectly,
dividends or any other form of payment representing a reduction in the
Association’s capital from the Association without receiving the prior written
non-objection of the Regional Director. The Holding Company’s written request
for such non-objection shall be submitted to the Regional Director at least
thirty (30) days prior to the anticipated date of the proposed dividend payment
or capital distribution.

    Thrift
Oversight.

    11.  Effective
immediately, the Holding Company shall ensure the Association’s compliance with
applicable laws, rules and regulations and all terms and conditions of the Order
to Cease and Desist issued by the OTS against the Association, dated September
28, 2010.

    Debt
Limitations/Restrictions.

    12.  Effective
immediately, the Holding Company shall not incur, issue, renew, repurchase, or
rollover any debt, increase any current lines of credit, or guarantee the debt
of any entity without receiving the prior written notice of non-objection of the
Regional Director. The Holding

    
      
        
          Alaska Pacific Bancshares,
Inc.

          Order to Cease and
Desist

          Page 4 of 7

        

         

      

      
         

        
          

        

      

      
         

      

    

    Company’s
written request for such non-objection shall be submitted to the Regional
Director at least thirty (30) days prior to the anticipated date of any such
proposed action.

     

    Payment
Limitations/Restrictions.

    13.  Effective
immediately, the Holding Company shall make no payments (including but not
limited to principal, interest, or fees of any kind) on any existing debt
without receiving the prior written non-objection of the Regional Director. The
Holding Company’s written request for such non-objection shall be submitted to
the Regional Director at least thirty (30) days prior to the anticipated date of
any such proposed payment.

    Directorate and Management
Changes.

    14.  Effective
immediately, the Holding Company shall comply with the prior notification
requirements for changes in directors and Senior Executive Officers1 as
set forth in 12 C.F.R. Part 563, Subpart H.

    Employment
Contracts/Compensation Arrangements.

    15.  Effective
immediately, the Holding Company 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 Holding Company, 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 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.

    ______________

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

    
      
        
          Alaska Pacific Bancshares,
Inc.

          Order to Cease and
Desist

          Page 5 of 7

        

         

      

      
         

        
          

        

      

      
         

      

    

    Severance and
Indemnification Payments.

    16.  Effective
immediately, the Holding Company shall not make any golden parachute
payment2 or
prohibited indemnification payment3
unless, with respect to each such payment, the Holding Company has complied with
the requirements of 12 C.F.R. Part 359.

    Effective Date,
Incorporation of Stipulation.

    17.  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.

    18.  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.

    19.  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.

    20.  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
Holding Company that includes reasons in support for any such extension. Any OTS
extension shall be made in writing.

    Submissions and
Notices.

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

    22.  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.

     

    ______________

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

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

    
      
        
          Alaska Pacific Bancshares,
Inc.

          Order to Cease and
Desist

          Page 6 of 7

        

         

      

      
         

        
          

        

      

      
         

      

    

    mail (or
by reputable overnight carrier, electronic facsimile transmission or hand
delivery by messenger) addressed as follows:

     

    
      	
              (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 Holding
      Company:  

              William
      A. Corbus, Chairman 

              Alaska
      Pacific Bancshares, Inc. 

              2094
      Jordan Avenue

              Juneau,
      AK 99801-8046

            

    

     

    No Violations
Authorized.

    23.    
Nothing in this Order or the Stipulation shall be construed as allowing the
Holding Company,
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 Bancshares,
Inc.

      Order to Cease and
Desist

      Page 7 of 7

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