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UNITED BEFORE THE BOARD STATES OF GOVERNORS OF AMERICA OF THE FEDERAL WASHINGTON, WYOMING SYSTEM D.C. DEPARTMENT DIVISION RESERVE OF AUDIT OF BANKING _______--__--------------------I In the Matter of Frontier Bank of Laramie Cheyenne, Wyoming DOCKET I , ; County NO. 98-030-B-SM Cease and Desist Order Issued on Consent Pursuant to the Federal Deposit Insurance Act, as Amended and 13-3-104(b)of the Wyoming Statutes I I I _______-___--------------------- WHEREAS, financial in recognition soundness of Laramie County, that and Year Cheyenne, chartered bank the Board of Governors of Governors"), Banking agreed 2000 (the "Division goal of the Frontier of the Federal Reserve Department of Banking"), consent to maintain (the “Bank"), of the Federal into this common readiness Wyoming is a member the Wyoming to enter of their System Cease System, (the "Board Division and the Bank and Desist Bank a State Reserve of Audit, the have of mutually Order (the l'Order") ; and WHEREAS, the board On-e+--- Bank adopted a resolution: of directors lgg81 (1) authorizing and directing of the 2 to enter and consenting this Order to compliance by the Bank defined in section amended (the "FDI Act") issuance forth of a notice evidence (4) waiving Order sections manner, of charges any and all rights THEREFORE, adjudication and without allegation Division of, or finding made IT IS HEREBY (12 U.S.C. Insurance as Act, (2) waiving as the on any matter set of of this to 12 U.S.C. pursuant of the Wyoming to challenge 1818, to Statutes; or contest, terms, or any provision the taking of parties, the issuance of Banking and in any effectiveness, or hereof. of any testimony or on, any issue of fact or law herein, an admission by the Board in connection ORDERED provision in this Order; pursuant constituting or implied of Banking the FDI Act before this Order of the Bank for the purpose to contest validity, of .this Order enforceability 1813(u)); a hearing and 16-3-114 issuance, Deposit set forth of Governors the basis, and every and of hearing (3) waiving any and all rights 13-3-104(d) NOW, (12 U.S.C. 263, and the Division (5) waiving each on behalf its institution-affiliated on any matter by the Board 12 C.F.R. and with 3(u) of the Federal in this Order; taking into this Order, that, with pursuant of any of Governors or the this proceeding: to section 1818(b) (1)) and section 8(b)(l) 13-3-104(b) of of the 3 Wyoming cease Statutes, and desist the prior written Bank"), Bank contain, the Director quality on earnings, cash of Kansas of for approval shall of Banking date to, current flow, Bank of the Division declaration but need not be limited information Reserve without of Governors, Requests dividend as follows: of the Board and the Division to the proposed parties or pay any dividends of the Federal and Regulation of Banking. by the Reserve action not declare approval Supervision the Division prior shall (the "Reserve Banking and its institution-affiliated and take affirmative The Bank 1. City the Bank capital and be received at least 30 days and shall and projected levels and asset of the Bank. (a) 2. Bank shall During employ demonstrated the term of this Order a permanent experience operations of a bank, therewith, shall FDI Act in lending with 1831i) president with the provisions and section the with and the management and in connection comply (12 U.S.C. full-time and thereafter, and any new appointments of section 13-3-104(b) 32 of the of the Wyoming Statutes. (b) such actions cashier Within 15 days of this Order, as are necessary with demonstrated to employ experience the Bank a permanent in investment shall take full-time portfolio and I . 4 interest rate operations risk management, of a bank, Reports of Condition section 13-3-104(b) filling this position. (a) 3. retain including Bank 20 days public than March 1, 1999, statements as of December with shall a review internal control structure. shall acceptable to the Reserve effect, to conduct, of.the accordance with Bank Bank's with auditing 1999, financial the procedures by no later financial shall be conducted 90 days shall letter retain Bank set forth firm's that is of Banking. remains in a public and the Division of year-end, statements and of the Bank's that this Order to the Reserve within to the of the accounting the Bank to standards, and the Division year with shall acceptable in an engagement calendar firm, acceptable of Banking, hereof. For each commencing accounting audit be set forth respect of the Bank's The scope comply the Bank The audit accepted also to conduct, of the effectiveness engagement (b) audit 31, 1998. generally with firm, of Banking, a full scope in accordance Statutes accounting of Consolidated shall of this Order, and the Division include The Bank of the Wyoming Within of the daily the preparation and Income. an independent Reserve and management a full for the year, in paragraph in 3(a) scope (c) statements, Division the Bank of Banking resulting audit Within the Reserve policies Bank procedures aimed controls pertaining investment review securities ledger postings of cashiers and backdated areas, check controls logs and general transactions. corrective transfer of duties internal of in particular and reconcilements, the and of the Bank's in the wire those and regarding and the periodic ledger to written and maintain 21, 1998 Report segregation submit acceptable and include of Examination"), to dual the plan, shall The policies the criticisms in the September (the "Report the Bank to strengthen controls. provide any deficiencies of Banking consider, at addressing set forth Examination general address, shall of the letter. 30 days of this Order, designed letter its written to correct and the Division and the of the receipt the Bank or management and internal shall 45 days of Banking frames Bank and management letter, report of the audited the Reserve report Within time and procedures records comments the audit acceptable 4. actions provide and the Division in the audit .Bank's shall and management Bank including noted 10 days of receipt from the audit. report Reserve Within reconcilements 6 (a) 5. all steps necessary information which Within deficiencies on credits of this Order, maintain with submit plan was past classified (a list of Bank), and cash During necessary on all real estate, flow the term to loans, through collateral approval except examination a written loan that of 90 days in excess as of Bank amortization, assets or listed or visitation whichever may or rescinded of the Reserve shall examiners repayment, means, not be amended or other classified on each by Reserve that the plan loans shall of Banking in excess or other written the Bank that was adversely mention shall to cover position and on each asset This plan of Banking, that are adversely of this Order, as special additional the prior any subsequent documentation or interest of Examination be appropriate. periodically information. the Bank's other or listed liquidation, files financial take all steps take and credit by the Reserve and the Division of this Order, in the Report Division Bank to improve including $30,000, without 60 days due as to principal of the date shall its loan policy. to the Reserve designed management such shall and complete Within (b) loan and current lacking the Bank current consistent in the Bank's accurate the Bank all documentation to the Bank's obtaining statements of this Order, to correct was provided including 60 days Bank and the be amended in excess for special of the Bank of $30,000 mention at or that are ’ 7 past due as to principal the date of each (c) due assets shall subsequent Quarterly in excess include, assets progress at a minimum: elimination of the asset; repayments; (v) specific payment in classified history; internal watch from its books, portions charged charge and past of such and value reduction, of funds of or for loan and timetables (vi) a description of this Order, classified the Bank or collection, "loss" for of the recent most the Bank shall or portions or board Bank or the Division of assets of directors of Banking. shall current eliminate all assets in the Report have not been previously Thereafter, off assets management assets; values for improvement, levels as of 12 hereof, (ii) the nature (iv) the sources by charge-off which off. by paragraph (vii) a copy of the Bank's 10 days of assets Examination, on classified (i) the carrying target 90 days list. Within 6. and required (iii) plans than or visitation. reports of the report; collateral; reductions for more examination of $30,000 as of the date supporting or interest of collected in a timely classified or in full or manner "loss" by the of the Bank or by the Reserve I 8 7. submit (a) .Within 60 days of this Order, to the Reserve business plan, concerning Bank approved the Bank's This plan shall of this Order, by the Bank's proposed contain and, capital, plans supported a written of directors, activities for 1999. the requirements include: financial growth, by detailed, shall of Banking that address at a minimum, for asset board business provisions (i) including and the Division the Bank performance earnings, quarterly objectives, liquidity pro forma and financial statements; (ii.) management, objectives, Report given the condition of Examination, such objectives; of the Bank and the specific and operational as reflected strategies in the for achieving and (iii) the means lending by which identification.of the Bank will seek the major to improve areas in and its operational performance. (b) after A written 1999 shall business be submitted plan for each to the Reserve calendar Bank and the year 9 Division of Banking calendar year. Within 8. the Reserve Bank comprehensive by the end of the first 60 days of this Order, and the Division written procedures shall, (a) vulnerability rates The establishment of net interest in order to ensure compliance in the Bank's asset/liability (b) include public data enhancement concerning deposits, (c) periodic reports the Bank's compliance at a minimum: position ratios targeted (ii) an analysis the reporting period liquidity review the established ’ report to of deposit; of regular, of directors that document and that shall include, of the Bank's then-current liquidity and interest of strategies to address The loan commitments, and submission the policies (i) a complete in meeting and with to in interest the limits unfunded to the board to monitor policy; certificates the preparation written with of the Bank's and large position. to changes management the Bank's submit and consider: of a system earnings shall the Bank's interest liquidity address of that acceptable, for managing an adequate at a minimum, the Bank of Banking procedures rate risk and maintaining month deviations or steps sensitivity taken during from the policies; and 10 (d) reviews controls and monitors and investment to ensure that the board the Bank's liquidity, plans, and approves of directors interest any securities rate risk, purchases or sales. The Bank 9. that its internal shall take the following and external actions mission-critical to ensure systems are Year 2000 compliant: (a) manager, Banking acceptable allocate within financial a substantial appoint a senior and the Division of directors, the Bank's and appoint to support Bank to the board devote matters, (b) of this Order, to the Reserve for supervising and will compliance necessary 10 days and accountable responsible efforts Within Year amount whatever 2000 of who will be readiness of time additional to Year staff 2000 is this effort; 10 days of this Order, and other resources identify necessary and to achieve Year 2000 compliance; (c) Reserve Bank within 30 days of this Order, and the 'Division of Banking submit acceptable to the test plans 11 for all renovated critical systems the Interagency Safety or modified that comply Guidelines and Soundness, October corporate the time-frames Establishing published within borrowers' they are sufficient operations Year 2000 in the Federal periodic Reserve 2000 compliance to avoid significantly missionset forth in Standards for Reqister on within the event systems plan to ensure fails on or after liquidity, 10. of back-up The Bank consistent correct large to determine if of the borrowers' affect the borrowers' time-frames of Banking the prompt to conduct with submit subsequent to the an acceptable resumption information of business 1, 2000 that sources and lines of credit processors immediately sound banking the violation includes for the Bank's shall to provide payments. take all necessary practices, of section in. or environmental January and third-party (a) efforts 30 days of this Order, that any of the Bank's identification evaluate and Bank and the Division contingency disruption and establish evaluations; (e) 30 days of this Order, Year that could creditworthiness, and/or with and external 15, 1998; Cd) actions internal to eliminate 208.3(d) (1) of 12 Regulation H of the Board'of and Title Governors 13 of the Wyoming Statutes (12 C.F.R. set forth 208.3(d)(l)) in the Report of Examination. (b) The Bank shall in any violation of Regulation State law. of Wyoming (c) directors Within shall Committee"), 10 days establish to monitor The Compliance Order. three outside Bank, as defined not engage, H or applicable of this Order, a committee compliance in section shall to the Bank's board hereof The plans, by paragraphs shall Banking periods. the provisions be comprised board of officers of Regulation of directors of this of at least of the 0 of the Board The Compliance 215.2(d)). policies, Committee at least on a and approval. and the Division The Bank shall adopt and engagement lb), 4, 8, and to the Reserve and an engagement Bank procedures, 3(a) and be submitted for review procedures, Reserve the Bank's of basis. 11. required shall 215.2(d) (12 C.F.R. quarterly provisions who are not executive directors, or indirectly, (the "Compliance with Committee of Governors report directly Bank Acceptable letter shall of Banking 9(c) and and all approved (e) the Division plans, to the the required plans, of policies, be submitted within letter policies, time and 13 procedures within 10 days Bank and the Division During them. policies, the term of this Order, and engagement without the prior Bank and the Division Within 12. (December 31, March and the Division this Order on all asset hereof, and Year hereof. Such reports required the Bank shall approval comply with plans, not be amended of the Reserve shall written furnish quarter 30) following to the Reserve progress reports the Bank detailing taken to secure compliance thereof, including updated plans readiness efforts may be discontinued required of Banking reports. by paragraph required when have been accomplished further calendar 30 and September improvement by this Order from making letter the end of each of all actions 2000 Bank and the Division Bank June 31, and the results reports fully the approved written after of Banking the form and manner by the Reserve of Banking. 30 days date of this Order, with of approval and then shall of Banking procedures, or rescinded of receipt 5(b) by paragraph 9 the corrections and the Reserve have, .in writing, released the 14 All 13. communications regarding this Order shall be sent to: (a) Mr. James H. Jonson Vice President Federal Reserve Bank of Kansas 925 Grand Boulevard Kansas City, Missouri 64198 lb) Mr. L. Bruce Hendrickson Wyoming State Banking Commissioner Department of Audit, Division of Banking Herschler Building, 3rd Floor East Wing Cheyenne, Wyoming 82002 (cl Mr. Nick Anest Chairman of the Board Frontier Bank of Laramie County 1501 South Greeley Highway Cheyenne, Wyoming 82003-5720 The provisions 14. of this Order Bank and its institution-affiliated as such, and their 15. enforceable the Board 16. contrary, their Bank successors Each provision until the Reserve sole discretion, with Bank modified, in their shall upon the capacities written effective or suspended and by of Banking. of this Order and the Division any provision remain terminated any provision grant be binding and assigns. and the Division Notwithstanding shall parties, of this Order stayed, of Governors to comply City to the of Banking extensions of this Order. of time may, in to the 15 17. The provisions of this Order shall not bar, estop or otherwise prevent the Board of Governors, the Reserve Bank, the Division of Banking or any federal or state agency or department from taking any other action affecting the Bank or any of its current or former institution-affiliated parties. By order of the Board of Governors of the Federal Reserve System and the Division of Banking effective this /$"day Wyoming Department of Audit State Bk(nking Commissioner Frontier Bank ofsamie Board of Governors of the Federal Reserve System w Secr&tary of the Board County Chairman of the Board The undersigned directors of the Bank each acknowledges having read the foregoing Order and approves of the consent thereto by the Bank. Saul Weingarten of CERTIFICATE EXECUTION OF RESOLUTION AUTHORIZING OF A CEASE AND DESIST ORDER corporation adopted at a special meeti directors called, convened and held o bylaws; that said resolution way the been modified, directors the form set forth Resolved, or rescinded Corporation have but is in full force duly ratified and and effect; affirmed and that said resolution tha/ be and he hereby to execute on behalf of the Order, Docket No.~S-&+,~~e the Federal Reserve System (“Board Institutions of Supervisory and approved a) in at this resolved, that Act Corporation the is, authorized Cease and resolved, that to a hearing Desist “Order”), to be issued on consent by of Governors”) pursuant to the Financial 1966, as amended in the form presented to meeting. the Corporation shall take such steps as are necessary to ensure compliance by the directors, officers, agents and employees Corporation with each and every provision of the Order. Further all below. and directed Further of in accordance with its sR/ t said meeting and has not in any repealed of the copy of a resolution the Corporation duly the Corporation for the purpose hereby of taking waives evidence of the any and all rights: on any matter of Governors; and set forth in the Order; b) to contest the issuance cl to judicial review d) to challenge of the Order; of the Order or contest by the Board the viability of the provisions d and the seal of the Corporation 2Il9PC thi of the Order. I day