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; FEDERAL RESERVE press release
For immediate release
January 13, 1997/
The Federal Reserve Board today announced the execution
of a Written Agreement by and among The Pan American Bank, Miami,
Florida, the Federal Reserve Bank of Atlanta, and the Department
of Banking and Finance, Division of Banking, State of Florida.
A copy of the Written Agreement is attached.
Attachment
DNITED
BEFORE
THE BOARD
OF
STATES
GOVERNORS
OF
AMERICA
OF TEE
FEDERAG
RESERVE SYSTEM
WASHINGTON, D.C.
STATE OF FLORIDA
DEPARTMENT
OF
BANKING AND FINANCE
DIVISION
OF
BANKING
TALLARASSER, FLORIDA
Written Agreement by and among;
Docket No. 96-018-WA/RB-SM
)
Administrative Proceeding No.:
3517-b-5/96
THE PANAMERICANBANE
Miami, Florida
FEDERAL RESERVE BANE
OF ATLANTA
Atlanta, Georgia
DEPARTMENT OF BANKING AND
FINANCE, DIVISION OF
BANKING, STATE OF FLORIDA
Tallahassee, Florida
WHEREAS, in recognition of their common goal to
maintain the f,inancialsoundness of the Pan American Bank, Miami,
Florida (the "Bank"), a state member bank, the Federal Reserve
Bank
of
Atlanta (the "Reserve Bank"), the Department of Banking
and Finance, Division
of
Banking of the State of Florida (the
"Department") and the Bank have mutually agreed to enter into
this Agreement;
-2WHEREAS, this Agreement is being executed in accordance
with the Rules Regarding Delegation of Authority of the Board of
Governors of the Federal Reserve System (the "Board of
Governors"), specifically 12 C.F.R. 265.11(a) (151, and the
Reserve Bank has received the prior approval of the Director of
the Division of Banking Supervision and Regulation (the
"Director") and the General Counsel of the Board of Governors to
enter info this Agreement with the Bank; and
WHEREAS, on
/Th?
,
1996, the board of directors
of the Bank adopted a resolution authorizing and directing
Hans C. Mueller, Chief Executive Officer of the Bank, to enter
into this Agreement on behalf of the Bank and consenting to
compliance with each and every provision of the Agreement by the
Bank and its institution-affiliated parties, as defined in
section 3(u) of the Federal Deposit Insurance Act, as amended
(the "FDI Act") (12 U.S.C. 1813(u)).
NOW, THEREFORE, before the taking of any testimony or
adjudication of, or finding on, any issue of law or fact herein,
and without this Agreement constituting an admission of any
allegation made or implied by the Board of Governors, the Reserve
Bank or the Department, the Bank, the Reserve Bank and the
Department agree as follows:
p
-3Dividend and Share Revurchase Restrictions
1.
The Bank shall not, directly or indirectly,
declare or pay any dividends, make any capital distributions or
repurchase any of its shares without the prior written approval
of the Director, the Reserve Bank and the Department.
BSA Comoliance
2.
Within 60 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department an acceptable
/,
written internal compliance program designed to ensure that the
!
Bank has proper policies and procedures in place to comply with
the provisions of the Currency and Foreign Transaction Reporting
/
Act (31 U.S.C. 5311 &
m.1
and the accompanying regulations
issued thereunder by the United States Department of the Treasury
(31 C.F.R. 103.11 &
w.1
(collectively referred to as the Bank
Secrecy Act (the "BSA")) and the provisions of section 655.50,
!
Florida Statutes and Rule 3C-1.022, Florida Administrative Code.
/
At a minimum, the internal compliance program shall:
/
I
1
(a) Address the violations of Regulation H of the
L
Board of Governors (12 C.F.R. Part 208) cited in the Report of
I
I
!
Examination of the Bank as of May 24, 1996 (the "Report of
Examination");
(b) provide the means by which to detect and
monitor all transactions occurring at the Bank (including but not
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!
/
/
-4limited to, through wire transfers, cash deposits or the Bank's
overseas pouch);
(c) provide the means to monitor frequent or
recurring cash or wire transactions in large balance accounts;
(d) require the maintainance of accurate and
complete wire transfer logs of all incoming and outgoing domestic
and international wire transfers of funds, which shall be
available for review by the Reserve Bank and the Department;
(e) provide and document training to any
personnel representing the Bank in the United States and
overseas, including but not limited to, tellers, customer service
representatives, lending officers, private and personal banking
officers and all other personnel engaged in customer contact or
BSA monitoring, in all aspects of regulatory and internal
policies and procedures related to the BSA and update the
training on a regular basis to ensure that all personnel are
provided with the most current and up-to-date information;
(f) implement a "know your customer" policy as
part of the BSA compliance measures required by this Agreement,
and consistent with the Bank's operations, that will enable the
Bank to:
-5-
(i) Review the adequacy of the Bank's
documentation with respect to existing customers, identify and
confirm the identity of new customers of the Bank, and prohibit
transactions with customers whose identities cannot be confirmed,
(ii) monitor the transactions of each of the
customers of the Bank to determine if each transaction is
consistent with the customer's regular, ordinary and expected
practices,
(iii) monitor the flow of funds to and from
the Bank to persons and entities within and outside of the United
States. and
(iv) investigate further, and where
necessary, prohibit transactions involving customers whose
identities or business activities cannot be sufficiently
confirmed or whose transactions are inconsistent with the
customer's normal practices and no satisfactory explanation
exists;
(g) ensure the identification and timely,
accurate and complete reporting to law enforcement and
supervisory authorities of all instances of suspicious activity
or known or suspected criminal activity perpetrated against or
involving the Bank, consistent with all applicable federal and
-6-
state laws and regulations, including but not limited to,
ensuring that Bank personnel with reporting responsibilities are
instructed to consult with counsel for the Bank or the Reserve
Bank with respect to any circumstances in which the Bank's
reporting obligations are not clear;
(h) provide for an internal review process within
the Bank to ensure that the Bank is complying with the BSA and
"know your customer" policies and procedures, that appropriate
personnel possess the requisite knowledge necessary to comply
with the BSA and "know your customer" policies and procedures,
that all policies and procedures are ih writing and that such
policies and procedures are complete and accurate and that the
results of the internal review are reported to senior management
of the Bank: and
(i) provide for independent testing of compliance
with the BSA and "know your customer" policies and procedures to
be conducted by qualified, trained and experienced independent
third parties, who specialize in this subject matter, who are not
in any manner affiliated with the Bank or any of the Bank's
subsidiaries or affiliates or any of the Bank's institutionaffiliated parties or their related interests or family members,
and provide that the results of the internal testing program are
to be reported to senior management of the Bank.
I
- 7 Risk Manaaement and wernal
3.
Controls
Within 60 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department acceptable written
policies and procedures designed to strengthen and maintain the
Bank's risk management and internal audit and control functions
responsive to the criticisms of current policies and procedures
set forth in the Report of Examination, including but not limited
to:
(a) Acceptable revised, comprehensive policies
and procedures to detect and prevent check kiting at or through
the Bank by, among other things, identifying the personnel
responsible for the detection and prevention of check kiting,
describing the methods to be used to detect and prevent check
kiting, and setting appropriate parameters for transactions to be
reviewed, taking into consideration all of the monetary
instruments through which kiting of any nature may be perpetrated
at the Bank, such as checks, wire transfers and the Bank's
overseas pouch; and
(b) acceptable written policies and procedures
governing the Bank's wire transfer activities.
Violations
4.
Within 60 days of this Agreement, the Bank shall
correct all violations of federal and state laws and regulations
-
8
-
cited in the Report of Examination and initiate an affirmative
compliance program in order to ensure compliance with the
provisions of all applicable federal and state laws and
regulations and this Agreement.
Affiliate Transactionq
5.
(a) Without the prior review of the Reserve Bank
and the Department, the Bank shall not, directly or indirectly,
engage,
undertake or, in any manner, participate in any financial
transaction with: (i) any person or entity that currently is, or
was since December 24, 1991, an affiliate of the Bank or
Interbank Holding Company, Miami, Florida ("Interbank"), a
registered bank holding company (each, a "PAE Affiliate");
(ii) any person or entity that currently is, or was since
December 24, 1991, a related party of Xnterbank or the Bank
(each, a "PAB Related Party"); (iii) a subsidiary of Interbank or
the Bank; or (iv) any person that currently is, or was since
December 24, 1991, an institution-affiliatedparty of Interbank
or the Bank, or a family member or related interest of such a
current or former institution-affiliated party, provided,
however, that the family members of an outside director of the
Bank shall not be subject to this paragraph. Any transaction
submitted for review by the Reserve Bank and the Department shall
be described in writing and accompanied by a resolution of the
board of directors of the Bank approving such transaction,
subject to regulatory review.
-
9 -
(b) For purposes of this Agreement, the
(i)
as
(A)
terms:
"Financial transaction" shall be defined
the extension of credit
or
the renewal or modification of
any extension of credit, as defined in section 215.3 of
Regulation 0 of the Board of Governors, 12 C.F.R. 215.3,
including any overdrafts on either a daylight or overnight basis,
(B) the direct or indirect payment, guarantee or confirmation of
any obligation, (Cl the payment of any service or management fee,
(D) the transfer, contribution,purchase or sale of any asset,
and 03) the transfer of cash or cash-like instruments; it being
understood that
such term shall not include the acceptance or
payment of deposits and the provision of deposit custody
services, nor shall it include transactionswith a value of
$25,000 or less per transaction,provided that all transactions
for that person or entity in the calendar month
do
not
exceed
$50,000.
(ii) "related party' shall be defined as
(A)
any person holding an ownership interest in excess of
25 percent of Interbank or the Bank,
or
any
of Interbank'sor the
Bank's subsidiariesor affiliates, (B) any person, or group of
persons acting in
concert,
thaL controla, is controlled by, or io
under connnoncontrol with Interbank and the Bank, (Cl any family
member of any person or group of persons holding an ownership
interest
in Interbank or the Rank, or any of Interbank‘sor the
-
10
-
Bank's subsidiaries or affiliates; and (D) any company,
partnership, trust or other entity controlled by any person
described in paragraphs 5(b)(ii)(A)-(D)
hereof.
(iii) "control" shall be defined as the
power, directly or indirectly, to
(A)
vote
25 percent or more of
the voting shares of a company, excluding situations in which the
stock is controlled in a fiduciary capacity, (B) elect a majority
of the directoro of a company, or (C) as determined by the Board
of Governors or the Department, otherwise exercise a controlling
influence over the management and policies of a company.
[iv) "person" ehall mean a corporation,
unincorporated association, partnership, trust, or any other
entity or individual.
(4
"related interest* shall be defined as
set forth in section 215.2(n) of Regulation 0 of the Board of
Governore (12 C.F.R. 215.2(n)) and section 69.48(4), Florida
Statutes.
(vi) *affiliate'shall be defined as set
forth in 12 U.S.C. 371c(b)(1).
(vii) "institution-affiliated
party' shall be
defined as set forth in sections.3(u) and B(b)(3) of the FDI Act
-
11 -
(12 U.S.C. 1813(u) and 1818(b)(3)) and section 655.005(l)(iI,
Florida Statutea, provided Qg&,
the term "institution-affiliated
party" shall not include any employee or former employee below
the level
of
vice president.
(viii) 'outside director" shall be defined as
a director who does not serve, and has not at any time since
December 24, 1991 served, aa an officer or employee
provided u,
of
the Bank,
for purposes,of thie Agreement, Luie A. Ortega
shall not be considered an outside director of the Bank.
(ix) "family member" shall include an
individual's spouse, parents, siblings, children, niecee and
nephews, and the spouses thereof.
(c) Notwithstandingthe provisions of this
parairaph, the Bank shall not, directly or indirectly, engage,
undertake or, in any manner, participate in any financial'
transaction with Interbank without the prior written approval of
the Reserve Bank and the Department.
(d) The Bank ahall submit to the Reserve Bank and
the Department, within five days of the end
of
each month
following the date of thie Agreement, an accurate and complete
- 12 list of all affiliates of the Bank, current as of the end of the
preceeding month.
ReDresentative or Other Overseas Offices
6.
(a) Within 30 days of this Agreement, the Bank
shall submit to the Reserve Bank and the Department a written
description of the activities conducted by the Bank through its
representative or other overseas offices.
(b) The Bank shall conduct its overseas
activities, whether through representative offices or otherwise,
in compliance with all applicable domestic and foreign laws and
regulations, including but not limited to, conducting only
permissible activities through such offices.
(c) The Bank shall not establish any new
representative or other overseas office without the prior
approval of the Reserve Bank and the Department.
(d) Within 30 days of this Agreement, the Bank
shall enter into written agreements in the English language with
any representative or other overseas office from which it
currently receives any services or to which it currently provides
any services. No new or expanded services shall be received from
or provided to any representative or other overseas office of the
Bank prior to the execution of a written agreement reflecting
- 13 such services. All such agreements shall be on terms and
conditions, including but not limited to, the pricing of
services, that are no less favorable to the Bank than those
available to the Bank by third parties.
bendina Activities
7.
Within 60 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department acceptable enhanced
written loan policies and procedures. The policies and
procedures shall include, but not be limited to, the following:
(a) Comprehensive policies, procedures and
guidelines for international lending, including but not limited
to:
(i) specific guidance for loans to companies or individuals
resident in countries in which the Bank has a concentration of
loans (defined as loans in excess of 25 percent of the Bank's
Tier 1 capital plus the Bank's allowance for loan and lease
losses); (ii) specific guidance for pre-export financing; (iii) a
review of specific country limits in light of the Bank's capital
and expected future capital needs; and (iv) guidelines to limit,
reduce and monitor concentrations of credit, to any one borrower
or category of borrowers or to borrowers in any one country;
(b) procedures and guidelines to ensure the
identification of the Bank's ultimate borrowing customer and the
ultimate uses of borrowed funds, including but not limited to,
- 14 receipt of certifications that funds lent to a named borrower
have not been received for the benefit of an unnamed borrower and
will be utilized only for the purpose stated in the loan
application;
(c)
internal loan review procedures designed to
promptly identify and categorize problem credits, to reduce the
number and severity of classified loans at the Bank and to assess
and monitor the overall quality of the Bank's loan portfolio;
and
(d)
procedures for monitoring compliance with the
Bank's loan policies and procedures adopted pursuant to this
paragraph 7.
Allowance for Loan Losses
9.
Within 60 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department an acceptable
written description of the Bank's methodologies for establishing
an adequate allowance for loan and lease losses in accordance
with the Interagency Policy Statement on the Allowance for Loan
and Lease Losses, SR 93-70, dated December 22, 1993.
"
II
Charue-Off of Assets Classrfied
Los 8"
9.
The Bank shall immediately charge-off 100 percent
of all assets or portions of assets classified nLossn in the
Report of Examination which have not been previously charged-off
-
15
-
"Collected" as used in this paragraph shall not
or collected.
include reductions through use of loan proceeds advanced by the
Bank.
Unless otherwise approved in writing by the Reserve Bank
and the Department, the Bank shall, within 30 days from the
receipt of any state or federal report of examination, charge-off
100 percent of all assets classified "Loss".
Corresnondent Banks
10.
Within 30 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department a list of all of
the banks with which it has correspondent banking relationships.
Within 30 days of this Agreement, and at least annually
thereafter, the board of directors shall review the Bank's
correspondent banks for credit risk and submit to the Reserve
Bank and the Department a list of correspondent banks for the
following year.
The Bank shall conduct all correspondent banking
relationships in compliance with Regulation J of the Board of
Governors (12 C.F.R. Part 210).
.
**
Asset/Liabilitv Cow
11.
Within 45 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department acceptable,
comprehensive asset/liability management policies and procedures,
including but not limited to, policies and procedures for
monitoring the Bank's assets and liabilities and establishing an
appropriate interest rate and maturity gap range for the Bank.
F
,,
.
-
16
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i
Brokered
12.
(a) The Bank shall not accept brokered deposits
except in compliance with the provisions of section 29 of the FDI
Act (12 U.S.C. 1831f). The Bank shall notify the Reserve Bank
and the Department if the Bank requests any waiver of the
restrictions imposed by section 29 from the Federal Deposit
Insurance Corporation (the "FDIC") and shall notify the Reserve
Bank and the Department of the FDIC's disposition of any request
for such a waiver.
(b) Notwithstanding the provisions of
paragraph 12 (a) hereof, the Bank shall-notify the Reserve Bank
and the Department in writing at least 5 days prior to its intent
to take any action to accept, solicit or place any brokered
deposits and, shall, along with the notification, provide the
Reserve Bank and the Department with a written statement
regarding its proposed sources and uses of brokered funds. The
Reserve Bank or the Department may respond to the Bank regarding
objections to use any such brokered funds and may require
appropriate corrective action.
13.
Within 30 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department an acceptable
written plan to maintain an adequate capital position. The plan
shall, at a minimum, address and consider:
- 17 (a) The Bank's current and future capital
requirements, including compliance with the Capital Adequacy
Guidelines of the Board of Governors for State Member Banks:
Risk Based Measures and Tier 1 Leverage Measures (12 C.F.R. Part
208, Apps. A and B);
(b) the volume and trends of the Bank's adversely
classified assets;
(cl
the Bank's anticipated levels of retained
earnings; and
(d) the source and timing of additional funds to
fulfill the future capital and loan loss reseme
requirements set
forth in this Agreement.
Strateuic
Plannjgq
14.
Within 90 days of this Agreement, the Bank shall
submit to the Reserve Bank and the Department a written business
plan and budgets, approved by the Bank's board of directors,
concerning the Bank's proposed business activities for the 1997
and 1998 fiscal years.
This plan shall contain provisions that
address the requirements of this Agreement and, at a minimum,
include:
-
.
(a)
18
-
Financial performance objectives, including
plans for earnings, improvement of the Bank's earning asset base
and net interest margin, liquidity (taking into consideration the
level of the Bank's involvement in the provision of custodial
services to third parties) and capital, supported by detailed,
quarterly pro forma financial statements;
(b) a complete analysis of the Bank's overhead
expenses, including receipt and review of budgets for each of the
Bank's representative offices, with a complete description of the
steps to be taken to reduce overhead expenses to peer levels or
below;
(c) the anticipated business of the Bank in both
the domestic and international loan and deposit markets; and
(d) quarterly review of and necessary revision to
the strategic plan.
Manaaement Review
15.
Within 60 days of this Agreement, the board of
directors of the Bank shall conduct and complete a review of the
management and personnel responsible for international activities
directly reporting to the chief executive officer and shall
forward to the Reserve Bank and the Department written findings
and conclusions of the management review along with any changes
-
19
-
that may be proposed as a result of the review.
The review shall
focus on an assessment of the duties performed by each of the
officers or employees and the ability of that person to perform
competently his or her assigned duties.
Officer/Director Notification
16.
During the term of this Agreement, or as otherwise
required by law, the Bank shall comply with the provisions of
section 32 of the FDI Act (12 U.S.C. 1631i) and Subpart H of
Regulation Y of the Board of Governors (12 C.F.R. Part 225,
Subpart H), and section 655.0365, Florida Statutes, with respect
to the appointment of any new directors or the hiring or
promotion of any senior executive officers.
.
17.
.
The plans, policies, procedures and programs
required by paragraphs 2, 3, 7, 8, 11, 13 and 14 hereof shall be
submitted to the Reserve Bank and the Department for review and
approval. Acceptable plans, policies, procedures and programs
shall be submitted to the Reserve Bank and the Department within
the required time periods.
The Bank shall adopt the approved
plans, policies, procedures and programs within 10 days of
approval by the Reserve Bank and the Department and then shall
fully comply with them.
During the term of this Agreement, the
approved plans, policies, procedures and programs shall not be
-
20 -
amended or rescinded without the prior written approval of the
Reserve Bank and the Department.
proaress Reoortg
18.
Within 30 days after the end of each calendar
quarter (December 31, March 31, June 30 and September 30)
following the date
of
this Agreement, the Bank shall furnish to
the Reserve Bank and the Department written progress reports
detailing the form and manner of all actions taken to secure
compliance with this Agreement and the results thereof. Such
reports may be discontinued when the corrections required by this
Agreement have been accomplished and the Reserve Bank and the
Department have, in writing, released the Bank from making
further reports.
CommunicatiQna
19.
All communications regarding this Agreement shall
be sent to:
(a) Mr. Marion P. Rivers, III
Assistant Vice President
Federal Reserve Bank of Atlanta
104 Marietta Street, N.W.
Atlanta, Georgia 30303
(b)
Ms.
Linda R. Townsend
Chief, Bureau of Financial Institutions
Division of Banking
Office of the Comptroller
State of Florida
101 East Gaines Street, Suite 636
Tallahassee, Florida 32399
- 21 (c)
Mr. Hans C. Mueller
Chief Executive Officer
The Pan American Bank
888 Brickell Avenue
Miami, Florida 33131
Miscellaneous Provisions
20.
This Agreement shall be binding on the Bank and
each of its institution-affiliated parties in their capacities as
such, and their successors and assigns.
21.
This Agreement shall remain in full force and
effect, except to the extent that, and until such time as, any
provision of this Agreement shall have been stayed, modified,
terminated or suspended by the Board of Governors and the
Department.
22.
Notwithstanding any provision of this Agreement to
the contrary, the Reserve Bank and the Department may, in their
sole discretion, grant written extensions of time to the Bank to
comply with any provision of this Agreement.
23.
The provisions of this Agreement shall not bar,
estop or otherwise prevent the Board of Governors, the Reserve
Bank, the Department or any federal or state agency or
department, from taking any other action affecting the Bank, or
its successors or assigns, or any of its current or former
institution-affiliated parties, except with respect to the
matters addressed in the Board of Governors's and the
- 22 Department's outstanding administrative proceedings against the
Bank.
24.
This Agreement is a "written agreement" for the
purposes of section 8 of the FDI Act (12 U.S.C. 1818).
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed this 13Lh day of Jznunry 1997.
The Pan American Bank, Miami, Florida
Federal Reserve Bank of Atlanta
By
flhV.~d
Marion P. Riv rs. III
Assistant Vice President
.
of the State of Florida and head
of the Department of Banking and
Finance