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EXHIBIT 10.2
UNITED STATES OF AMERICA
BEFORE THE
OFFICE OF THRIFT SUPERVISION
-----------------------------
)
In the Matter
of
) Order No.: CN 09-34
)
)
PARK VIEW
FEDERAL
) Effective Date: October
19, 2009
SAVINGS
BANK
)
)
Solon,
Ohio
)
OTS Docket No.
01195 )
)
-----------------------------
ORDER TO CEASE AND DESIST
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WHEREAS, Park View
Federal Savings Bank, Solon, Ohio, OTS Docket No.
01195 (Association), by and through its Board of Directors (Board),
has executed
a Stipulation and Consent to Issuance of an Order to Cease and
Desist
(Stipulation); and
WHEREAS, the
Association, 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. ss.
1818(b); and
WHEREAS, pursuant
to delegated authority, the OTS Regional Director for
the Central Region (Regional Director) is authorized to issue
Orders to Cease
and Desist where a savings association has consented to the
issuance of an
order.
NOW, THEREFORE, IT
IS ORDERED THAT:
CEASE AND DESIST.
1. The Association and its directors,
officers, and employees shall cease
and desist from any action (alone or with others) for or toward,
causing,
bringing about, participating in, counseling, or aiding and
Park View Federal Savings Bank
Order to Cease and Desist
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abetting all unsafe or unsound practices that resulted in the
Association
operating with an excessive level of adversely classified assets;
an inadequate
allowance for loan and lease losses (ALLL) for the volume, type,
and quality of
loans held; and an inadequate level of capital protection for the
volume, type,
and quality of assets held by the Association.
CAPITAL.
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2. (a) By December 31,
2009, the Association shall meet and maintain: (i)
a Tier 1 (Core)
Capital Ratio of at least eight percent (8%) and (ii) a
Total Risk-Based
Capital Ratio of at least twelve percent (12%) after
the funding of an
adequate ALLL.
(b) The
requirement in Subparagraph (a) above to meet and maintain a
specific capital
level means that the Association may not be deemed to
be
"well-capitalized" for purposes of 12 U.S.C. ss. 1831o and 12
C.F.R.
Part 565, pursuant
to 12 C.F.R. ss. 565.4(b) (1) (iv).
3. (a) By October 31,
2009, the Board shall adopt and submit to the
Regional Director
for review and comment a written plan to achieve and
maintain the
Association's capital levels prescribed in Paragraph 2 of
this Order
(Capital Plan). The Capital Plan shall cover the period
beginning with the
quarter ending September 31, 2009 through the
quarter ending
December 31, 2011. At a minimum, the Capital Plan shall:
(i) address the requirements and
restrictions imposed by this
Order;
(ii) detail capital enhancement strategies with
specific
narrative goals, which shall result in new equity and a
capital infusion;
(iii) consider and address the amount of additional
capital that
would be necessary to meet the capital requirements of
Paragraph 2 of this Order under different forward-looking
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Order to Cease and Desist
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scenarios involving progressively stressed economic
environments;
(iv) identify the specific
sources of additional capital;
(v) detail timeframes by which the
additional capital will be
raised and provide specific target month-end capital
levels; and
(vi) provide for alternative methods to
strengthen capital,
should the primary sources identified under Paragraph 3(a)
(iv) of this Order not be available.
(b)
Within thirty (30) days after receiving any written comments
from
the Regional
Director, the Board shall revise and adopt the Capital
Plan based on such
comments. The Board shall ensure that the
Association
implements and adheres to the Capital Plan. A copy of the
Capital Plan shall
be provided to the Regional Director within five (5)
days after the
Board meeting.
(c)
Once the Capital Plan is implemented, the Association shall
operatewithin the
parameters of its Capital Plan. Any proposed material
deviations from or
changes to the Capital Plan must be submitted for
the prior, written
non-objection of the Regional Director. Requests for
any material
deviations or changes must be submitted at least sixty
(60) days before a
proposed change is implemented.
(d)
The Association shall notify the Regional Director regarding
any
material event
affecting or that may affect the capital or capital
projections of the
Association within five (5) days after such event.
4. (a) On a monthly
basis, beginning with the month ending December 31,
2009, the Board
shall review by the last day of each month, a written
report that
compares projected operating results contained within the
Capital Plan to
actual results for the previous month (Capital Plan
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Order to Cease and Desist
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Variance Report).
The Board's review of the Capital Plan Variance
Report and
assessment of the Association's compliance with the Capital
Plan shall be
fully documented in the appropriate Board meeting
minutes.
(b) On
a monthly basis, beginning with December 31, 2009, the
Board shall
provide to the Regional Director, by the 30th day of each
succeeding month,
a copy of the Capital Plan Variance Report.
5. Within fifteen (15) days
after: (a) the Association fails to meet the
capital requirements prescribed in Paragraph 2 beginning December
31, 2009; (b)
the Association fails to comply with the Capital Plan prescribed in
Paragraph 3;
or (c) any written request from the Regional Director, the Board
shall prepare
and submit a written Contingency Plan that is acceptable to the
Regional
Director. The Contingency Plan shall detail the actions to be
taken, with
specific time frames, to achieve one of the following results by
the later of
the date of receipt of all required regulatory approvals or sixty
(60) days
after the implementation of the Contingency Plan: (i) merger with,
or
acquisition by another federally insured depository institution or
holding
company thereof; or (ii) voluntary liquidation by filing an
appropriate
application with OTS in conformity with federal laws and
regulations.
6. Upon receipt of written
notification from the Regional Director, the
Association shall implement the Contingency Plan immediately. The
Board shall
provide the Regional Director with written status reports detailing
the
Association's progress in implementing the Contingency Plan by no
later than the
1st and 15th of each calendar month following implementation of the
Contingency
Plan (Contingency Status Reports).
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Order to Cease and Desist
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LIQUIDITY.
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7. (a) Within
sixty (60) days, the Board shall adopt revisions to the
Association's Liquidity
Policy, which, at a minimum, shall include:
(i) separate ratios and target limits for
on-balance sheet
liquid assets;
(ii) an increase in the Association's minimum
liquidity
ratio;
(iii) management of liquidity in accordance with OTS
Thrift
Bulletin 77 and OTS Examination Handbook ss. 530;
(iv) periodic stress testing of the availability
of all
funding sources under specific scenarios and various
market conditions;
(v) compliance with Paragraph 16 of this
Order regarding the
restrictions on brokered deposits, including, but not
limited to the monitoring of interest rates paid on
deposits for compliance with 12 C.F.R. ss. 337.6; and
(vi) Board oversight of the Association's
liquidity needs and
available sources of liquidity, including a requirement
that
the Regional Director be notified immediately of
any event that would limit the Association's funding
sources or available liquidityamounts.
(b) The Association shall provide a copy of
the Liquidity Policy to
the Regional Director
within five (5) days of Board approval.
ASSET QUALITY.
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8. (a) Within
forty-five (45) days, the Board shall adopt a schedule of
quarterly reduction
targets which: (i) reduces the level of adversely
classified assets at the
Association to no more than 50% of core capital
plus ALLL by December
31, 2010; and (ii) reduces the level of adversely
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Order to Cease and Desist
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classified assets and
assets designated as special mention at the
Association (Criticized
Assets) to no more than sixty-five percent (65%)
of core capital plus
ALLL by December 31, 2010. The Board shall send a
copy of the reduction
targets implemented by the Board to the Regional
Director within seven
(7) days of Board approval.
(b) On a quarterly basis, beginning with
the quarter ending December
31, 2009, the Board
shall review a written report comparing the
projected reduction
targets to actual results (Problem Assets Variance
Report). If the Board
determines that a material deviation exists
between a quarterly
reduction target and actual results, it shall
approve a Board
resolution directing specific remediation steps to
achieve compliance with
the reduction targets by the following quarter.
The Board's review of
the quarterly Problem Assets Variance Report shall
be fully documented in
the Board minutes. (c) Within sixty (60) days of
the close of each
quarter, the Board shall provide the Regional Director
with a copy of the
Problem Assets Variance Report.
9. Withinthirty (30) days, the Board
shall revise the Association's ALLL
methodologies and policies taking into account the methodology
revisions
contained in the Matters Requiring Board Attention section of the
OT
