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UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. In the Matter of DOCKET NO. 98-OOZ-PCA-SM OMNIBANK Prompt Corrective Action Directive Issued Pursuant to Section 38 of the Federal Deposit Insurance Act, as Amended RIVER ROUGE, MICHIGAN The Board of Governors of the Federal Reserve System (the "Board of Governors") has determined (A) a state member The OmniBank, River Rouge, Michigan bank, is critically undercapitalized, in section 208.33(b)(5) (12 C.F.R. Federal U.S.C. (12 U.S.C. Regulation section as defined for purposes of section 38 of the Insurance Act, as amended (the ‘FDI Act") (12 18310), as of January 15, 1998. (B) Act (the "Bank'), of Regulation H of the Board of Governors 208.33(b)(5)), Deposit that: Pursuant to sections 38(f)(2) and (3) of the FDI 18310(f)(2) and (3)), section 208.35(b) H of the Board of Governors of (12 C.F.R. 208.35(b)) and 263.202(a) (2) of the Rules of Practice for Hearings of the 3oard of Governors 263.202(a)(2)), (the "Rules of Practice") the Bank must immediately (12 C.F.R. take certain actions in I L order to carry out the purposes of section 38 Of the FDI Act, due to the Bank's weakened capital position. Accordingly, Regulation pursuant to section 208.35(b) of H of the Board of Governors and section 263.202(a) (2) of the Rules of Practice. the Board issues this Prompt Corrective Action Directive (the "Direc.tive") and immediately directs Bank and its institution-affiliated section 3(u) of the FDI Act parties, as defined the in (12 U.S.C. 1813(u)), to comply fully with the following: 1. The Bank shall immediately, but by no later than March 2, 1998, inconjunction with the Bank's parent company, OmniBanc Corporation, (a) bank holding River Rouge, Michigan: Increase its equity through the sale of shares or contributions to make the Bank adequately to surplus in an amount sufficient capitalized section 208.33(b) (2) of Regulation as defined in H of the Board of Governors; Or (b) acquired enter into and close a contract by another depository institution holding combine with another insured depository under which contract is conditioned to be company or institution, closing only on the receipt of necessary regulatory customary representations customary pre-closing 2. Reserve approvals, paragraphs Without or rollover maturity the prior written approval of the Federal (the "Reserve Bank"), and the (b) hereof, the Bank shall not accept. renew, deposits bearing an interest rate that exceeds the effective yields on insured deposits of comparable in the Bank's normal market area. 3. Reserve Without (a) the prior written approval of the Bank, the ~Bank shall not, directly or indirectly, into, participate, transaction with OmniBanc Corporation (il "transaction" transfer, or any other affiliate. sale or purchase Corporation, of any nature, credit" the terms shall include, but not be limited to the of any asset, including cash, or the or indirect payment of any expense or obligation OmniBanc enter or in any other manner engage in any (b,l For the purposes of this Directive, direct of of either of the requirements set forth in l(a) and prevailing and warranties and the performance covenants. Bank of Chicago fulfillment the continued accuracy of the payment of a management or any extension of credit, of or service fee (ii) "extension of shall be defined as set forth in section 215.3 of Regulation 0 of the Board of Governors (iii) "affiliate" (12 C.F.R. 215.3), and shall be defined as set forth in subparagraph 3 (b; (1) of section 23A of the Federal Reserve Act (12 u.s.C. 371c(b) (1). 4. Immediately but by no later than March 2, (a) 1998, the Bank shall recruit and hire: (i) management A qualified and competent senior team, including but not limited to, a chief executive officer and a chief financial officer/controller; (ii) qualified and competent the Bank's data processing (iii) staff to operate function: and qualified and competent staff to assist the chief lending officer with his or her lending responsibilities. (b) approved All senior management must be by the Reserve Bank, as required by the Written Agreement, dated January Bank, and the Bureau (c) provisions appointments 21, 1997, between the Bank, the Reserve (the "Written Agreement"). The Bank shall comply fully with the of sections 38(f) (4)(A)(i) and (ii] of the FDI Act U.S.C. 1831o(f) (4) (A)(i) and (ii)) restricting the payment of (12 1 . bonuses to senior executive officers and increases in to compensation 5. section such officers. The Bank shall comply fully with the prov .isions of 38th) (2) (A) of the FDI Act (12 U.S.C. 18310(h) (2) restricting subordinated 6. the Written 7. (A) ) the payment of principal or interest on its debt, beginning 60 days after January 15, 1998. The Bank shall fully comply with the provisions Agreement. All communications regarding this Directive shall be sent to: (a). Mr. John J. Wixted, Jr. Senior Vice President Federal Reserve Bank of Chicago 230 South LaSalle Street Chicago, I1 60690 (b) 8. Mr. Thomas Willoughby Acting President and CEO OmniBank 10414 West Jefferson Avenue River Rouge, Michigan 48218-1396 The provisions of this Directive upon the Bank and its institution-affiliated capacities of shall be binding parties, as such, and their successors and assigns. in their 9. effective Each provision of this Directive shall remain and enforceable until stayed, modified, terminated or suspended by the Board of Governors as set forth in paragraph 12 hereof. 10. the contrary, written Notwithstanding the Reserve Bank may, in its sole discretion, grant extensions provision any provision of this Directive to of time to the Bank to comply with any of this Directive. 11. The provisions of this Directive shall not bar, estop or otherwise prevent the Board of Governors, or state department affecting affiliated or any federal or agency from taking any other action the Bank or any of its current or former institutionparties 12. and their successors or assigns. The Bank may, pursuant to section 263.202(a) (2) of the Rules of Practice, submit to the Board of Governors a written appeal of this Directive. Any written appeal of this Directive shall be filed within 14 days of service of this Directive with William W. Wiles, Secretary of the Board, Board of Governors of the Federal Reserve System, 20th & C Streets, N.W., Washington, D.C. 20551. Failure to file a written appeal within 6 the time specified herein opportunity shall constitute a waiver by the Bank of the to file a written appeal of this Directive. BY order of the Board of Governors of the Federal Reserve System effective this 26th day of January, 1998. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM BY William W. Wiles Secretary of the Board The Commissioner of the Financial Institutions of the State of Michigan, being duly apprised of the circumstances imposition of this Directive, surrounding Bureau fully concurs with the issuance thereof. Financial Institutions State omgan By &?sT$A+%& Commissioner 7 Bureau