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UNITED
BEFORE
THE BOARD
STATES
OF GOVERNORS
OF AMERICA
OF THE FEDERAL, RESERVE
WASHINGTON,
SYSTEM
D.C.
)
In the Matter
of
PUTNAM-GREENE
CORPORATION
FINANCIAL
DOCKET
)
97-027-B-BHC
NO.
J
)
Cease and Desist Order
Issued Upon Consent
Pursuant to the Federal
Deposit Insurance Act,
as Amended:
)
)
Eatonton,
Georgia
)
1
)
WHEREAS,
in recognition
of their
maintai n the ;integrity of the records
Putnam-'Greene
Financial
Greene") , a regibtered
all computer-related
subsidiary
Georgia,
Bank
banks,
(collectively,
continue
Governors
bank
holding
operations
The Farmers
The Farmers
of Coastal
Corporation,
Bank,
Georgia,
the "Subsidiary
to be so on and after
of the Federal
Eatonton,
company,
Point,
Banks"),
January
Reserve
System
Bank,
that
and its
Eatonton,
and the First
state
nonmember
are functional
1, 2000,
of
(‘Putnam-
and to ensure
Georgia,
Georgia,
systems
Georgia
for itself
and Merchants
Pembroke,
goaltd
and information
performed
Union
common
and
the Board
(the "Board
of
banks
of
2
Governors")
this
have
and Putnam-Greene
consent
and Desist
Cease
Order
and
of Putnam-Greene
directing
behalf
, 199i,
provision
enter
and consenting
of this Order
to enter
into
and
the board
a resolution
Lu,f?fl~H (7./3&?fi,mo
of Putnam-Greene,
and every
adopted
agreed
(the "Order");
to
WHEREAS,
directors
mutually
of
(1) authorizing
into this Order
to compliance
by Putnam-Greene
with
on
each
and its
:
institution-affiliated
sections
3(u)
as amended
and
parties,
E(b) (3) of the Federal
(the "FDI Act")
(2) waiving
the issuance
any matter
set forth
(3) waiving
was such
a hearing
(12 U.S.C.
of a notice
in this Order
term
Deposit
18131U)
in
Insurance
Act,
and 1818(b) (3));
of charges
relating
for the purpose
is defined
and of hearing
on
to Putnam-Greene;
of taking
evidence
on any
i
matter
set forth
contest
the issuance
Governors
pursuant
(5) waiving
manner
in this Order;
of a cease
to 12 U.S.C.
any and all rights
the basis,
enforceability
issuance,
of this Order
(4) waiving
and desist
any and all rights
order
by the Board
1818 and 12 C.F.R.
to challenge
validity,
Part
or contest
terms,
or any provisions
263;
hereof.
of
and
in any
effectiveness,
to
or
3
NOW,
adjudication
THEREFORE,
before
of or finding
and without
this
Order
on any issue
constituting
allegation
made
or implied
connection
with
this proceeding:
IT IS HEREBY
Act,
that
the taking
Putnam-Greene
of fact
or
an admission
by the Board
ORDERED,
of any
pursuant
testimony
or
law herein,
of any
of Governors
in
to section
8 of the FDI
and its institution-affiliated
parties
:
take
the
following
By December
1.
and put
into
"Electronic
itself
service
\'_
systems,
operating
all data
affirmative
and
Within
submit
to the
Bank")
an acceptable
will
Systems")
services
be taken
Federal
Putnam-Greene
information
and application
the Subsidiary
2.
31, 1997,
electronic
Information
::
processing
actions:
systems
software
that Putnam-Greene
hardware,
to perform
provides
for
Banks.
Reserve
by the board
acquire
(collectively,
that are adequate
30 days of this Order,
plan
shall
Bank of.Atlanta
describing
Putnam-Greene
(the *Reserve
the specific
of directors
shall
actions
and management
that
to ensure
4
that each of Putnam-Greene's Electronic Information Systems are
Year 2000 compliant
("Year 2000 Plan").
At a minimum, the
Year 2000 Plan shall comply with the Interagency Statement on
Year 2000 Project Management Awareness issued by the Federal
Financial
Institutions Examination Council on May 5, 1997 (the
"FFIEC Year 2000 Statement"), and shall address, consider, or
include the following:
.>
(a)
personnel,
The communication by Putnam-Greene to
Its
the Subsidiary Banks, any other customers, any third-
party information systems service providers, any third-party
providers of services that involve embedded microprocessors or
(3
telecommunications links, and any other service providers with
whom Putnam-Greene conducts business by exchange of information
in electronic form, the nature of the Year 2000 problem, as
described
in the FFIEC Year 2000 Statement and the need for
Putnam-Greene,
its Subsidiary Banks, any other customers, and its
service providers to identify and correct any deficiencies in
Putnam-Greene's
capability to process correctly all transactions
involving dates later than December 31, 1999;
5
(b)
a written risk assessment of all Electronic
Information Systems that must be renovated or modified to become
Year 2000 compliant, including the identification of all
interdependencies between Putnam-Greene's Electronic Information
Systems and those of the Subsidiary Banks, any other customers,
its vendors, and its service providers;
Cc)
the establishment of time frames and
identification of resources necessary to complete each phase of
the Year 2000 Plan;
Cd)
the renovation and modification of all
Electronic Information Systems that are used by Putnam-Greene,
including, but not limited to code enhancements, hardware and
;:
software upgrades, to correct all Year 2000 compliance
deficiencies that are identified in the risk assessment phase of
the Year 2000 Plan;
(el the testing of all renovated or modified
Electronic Information Systems, to be completed by no later than
December 31, 1998, to ascertain that all such systems are
Year 2000 compliant; and
6
(f)
no later
Within
plan
by the board
of directors
the prompt
January
consider,
Bank
describing
2000
the implementation,
compliant
Electronic
the specific
or include
of business
Information
At a minimum,
1, 2000.
written
actions
and management
Electronic
Putnam-Greene
of this Order,
an acceptable
resumption
the organization's
after
of Year
90 days
to the Reserve
ensure
testing,
Systems.
3.
recovery
successful
1, 1999,
than July
Information
submit
after
shall
disaster
that will
be
of Putnam-Greene
in the event
Systems
the plan
to
that
fails
shall
taken
any of
on or
address,
the following:
/~
The establishment
(a)
preserve
books
and maintain
and records
'that are maintained
the processing
(b)
Subsidiary
Banks'
correspondent
Putnam-Greene's
of back-up
and the Subsidiary
in electronic
of Putnam-Greene's
payments, by a third-party,
bank;
and
systems
to
Banks'
format;
and
such as a
the
I
7
the establishment
(c)
lines
of credit
to provide
(a)
4.
shall
appoint
implementing
Bank
a senior
the Year
an acceptable
resume,
Within
and on-going
(b)
of any
change
implementing
made
in writ&g
the
replacement
5.
submit
and must
submit
shall
Within
notify
that
the requirements
Examination
Putnam-Greene
data
and each
set forth
Handbook.
the Reserve
manager
Bank
responsible
and qualification
60 days of this Order,
between
a
Such notification‘shall
the name
revised
to the Reserve
be provided.
of lithe senior
2000 Plan.
for
for this position,
and must be provided at least
:i
assuming the new position.
contracts
Systems
that will
include
and
Putnam-Greene
be responsible
and shall
Putnam-Greene
the Year
of this drder,
job description
training
sources
liquidity.
who will
2000 Plan,
to the Reserve.Bank
meet
30 days
in the identity
for
the replacement
necessary
manager
written
of back-up
of
30 days prior
Putnam-Greene
processing
of'the
to
shall
service
Subsidiary
in the FFIEC
be
Banks
Information
I
8
Within
6.
submit
plans
are
60 days of this Order,
to the Reserve
to take
fully
and duly
Systems
a written
description
that an appropriate
to ensure
trained
Information
Bank
Putnam-Greene
that
authorized
are used
of the steps
number
to operate
shall
it
of employees
the Electronic
by the consolidated
organization.
7.
Within
submit
to the Reserve
policy
that,
60 days of this order,
Bank
at a minimum,
Putnam-Greene
an acceptable
information
shall
and
address
shall
systems
consider
4
the
following:
"
member
(a)
The authority
of Putnam-Greene's
Electronic
Information
responsibility
and
processing
information
systems
(b)
Putnam-Greene's
management
Systems
authority
information
with
function,
respect
the
Putnam-Greene's
and the identification
or service
appropriate
providers
of each
to its
including
for defining
needs
Electronic
and responsibility
to meet
operational
of
such needs;
procedures
Informat~ion Systems;
and
for
9
Greene's
(c)
appropriate
operational
Electronic
Information
Systems,
provisions
computer
access
(i) virus
regarding:
and its periodic
to computer-based
of access
to computer-based
of employee
passwords
an electronic
file
and appropriate
of data
and
of employees
computer
whenever
and data
visually
respect
files,
on
protection
encryption
are maintained
and the Subsidiary
.,
duties
(iii) the privileges,
with
controls
in
on a computer screen,
/
to the confidentiality
with respect
Putnam-Greene's
on each
as password
such.passwords
or displayed
protections
regarding
customers;
programs
such
Putnam-
at a minimum,
software
(ii) appropriate
information,
for
including,
protection
update;
controls
:
Banks'
and responsibilities
to the use of the Putnam-Greene's
systems.
(!
Putnam-Greene
8.
ensure
the segregation
personnel
employee
of the duties
of any of the Subsidiary
of Putnam-Greene
conducts-'a
of the
business
Subsidiary
as data
the same
shall take
entry,
proofing,
transaction.
Banks
on behalf
and performs
to
necessary
of its.personnel
and
the
so that no single
or any of the Subsidiary
transaction
Banks
all actions
Banks
both
of Putnam-Greene
data processing
or data reconciliation,
with
or any
tasks,
respect
such
to
10
9.
Within 120 days of this Order, Putnam-Greene shall
submit to the Reserve Bank an acceptable internal audit plan that
includes a review of all intercompany transactions, including,
but not limited to, services provided by Putnam-Greene to the
Subsidiary Banks, and other fees Andyexpenses paid by the
Subsidiary Banks to Putnam-Greene.
Within 60 days of this Order, Putnam-Greene shall
I
submit to the Reserve Bank a plan to increase the number of its
10.
outside directors and shall report quarterly to the Reserve Bank
4
on Putnam-Greene's
11:'
efforts in secur~ing new outside directors.
Within 60 days of this Order, Putnam-Greene
shall
secure a fidelity and indemnity blanket bond that includes all
:>
coverages of its present bond and also coverage for errors and
omissions of Putnam-Greene's data processing service..
12.
quarter
(a)
Within 30 days after the end of each calendar
(December 31, March 31, June 30, and September 30)
following the date of this Order, Putnam-Greene shall furnish to
the Reserve Bank written progress reports detailing the form and
manner of all actions taken to secure compliance with this Order
~.
I
and the results thereof, including updated reports on compliance
with time frames for the Year 2000 Plan required by paragraph 2
hereof.
Such reports may be discontinued when the Reserve Bank
:
has, in writing, released Putnam-Greene from making further
reports.
(b)
The reporting requirements described in
paragraph 12(a) hereof are in addition to the reporting
requirements of the February 1989 Informal Supervisory Action
between Putnam-Greene and the Reserve Bank, which are not
*
superseded by this Order.
:
13.
The plans and policy required by paragraphs 2, 3,
7, and 9, and the job description described in paragraph 4 hereof
I
shall be submitted to the Reserve Bank for review and approval.
Acceptable plans, an acceptable policy, and an acceptable job
description shall be submitted to the Reserve Bank within the
required time periods set forth in this Order.
Putnam-Greene
shall adopt the approved plans, policy, and job description
within 10 days of receipt of approval by the Reserve Bank and
then fully comply with them.
During the term of this Order, the
approved plans, policy, and job description shall not be amended
12
or rescinded without the prior written approval of the Reserve
Bank.
14.
All communications regarding this Order shall be
sent to:
'P
15.
(a)
Marion P. Rivers, III
Assistant Vice President
Federal Reserve Bank of Atlanta
Supervision and Regulation Department
104 Marietta St., N.W.
:
Atlanta, Georgian 30303
(b)
d
Mr. Lurner 0. Benton, III
Chairman of the Board and
President
Putnam-Greene Financial Corporation
P.O. Box 4450
Eatonton, Georgia 31024
The provisions of this Order shall be binding upon
Putnam-Greene and all of its institution-affiliated parties, in
their capacities as such, and their successors and assigns;
16.
Each provision of this Order shall remain
effective and enforceable until stayed, modified, terminated or
suspended by the Board of Governors.
13
17.
Notwithstanding
any provision of this Order to the
contrary, the Reserve Bank may, in its sole discretion, grant
written extensions of time to Putnam-Greene to comply with any
provision. of this Order.
18.
The provisions of this Order shall not bar, estop,
or otherwise prevent any federal or state agency or department
from taking any other action affecting Putnam-Greene or any of
its current or former institution-affiliated parties and their
successors or assigns.
*
By order of the Board of Governors of the Federal
jp
/2*
day of/ljDLf&FI*; 1997.
Reserve System effective this
::
PUTNAM-GREENE FINANCIAL
CORPORATION
Chairman of the Board
and President
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
William W. Wiles
Secretary of the Board