0-20050 | 36-3210283 | |
(Commission File Number) | (IRS Employer Identification No.) | |
606 South Main Street Princeton, Illinois |
61356 |
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(Address of Principal Mr. Ogaard Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement. | ||||||||
Item 9.01 Financial Statements and Exhibits. | ||||||||
SIGNATURES | ||||||||
EXHIBIT INDEX | ||||||||
EX-10.1 |
Item 1.01 | Entry into a Material Definitive Agreement. |
| The board is required to appoint a compliance committee of at least three outside directors who will be required to submit regular progress reports to the full board and the OCC which describe the Banks status of compliance with the Consent Order; | ||
| The board is required to develop and submit to the OCC a detailed written 3 year strategic plan which addresses risk, earnings performance, growth, balance sheet mix, off-balance sheet activities, liability structure, reduction in nonperforming assets, product line development and targeted market segments with strategies to achieve the Banks objectives; | ||
| The board is required to prepare and submit to the OCC at least quarterly a written evaluation of the Banks performance against its strategic plan; | ||
| Within 90 days of the Consent Order and thereafter, the Bank must achieve and maintain a total risk-based capital to risk-weighted assets ratio of at least 12% and a tier 1 capital to adjusted total assets ratio of at least 8%; | ||
| Within 90 days of the Consent Order, the board is required to develop and submit to the OCC a written 3 year capital plan; | ||
| The Bank may declare or pay a dividend or make a capital distribution only with the prior written determination of no supervisory objection by the OCC; | ||
| Within 60 days of the Consent Order, the board is required to develop and ensure the Banks adherence to a written program to improve the Banks loan portfolio management; | ||
| Beginning as of September 30, 2011, on a monthly basis, management is required to provide the board with detailed written reports concerning the Banks delinquent and problem loans and the status thereof and collateral related thereto; | ||
| The Bank is required to take immediate action to protect its interest in criticized assets identified in the Banks most recent Report of Examination dated as of September 30, 2010 and to adopt individual written workout plans with respect to such assets. A copy of the workout plans is required with respect to any criticized asset equal to or exceeding $100,000. The Bank is prohibited from extending any additional credit to any borrower whose loan is criticized, unless a majority of the Banks board (or appropriate committee) has determined that the extension is necessary to promote the best interests of the Bank and such determination is properly recorded; | ||
| Within 30 days of the Consent Order, the board must ensure that the Banks internal ratings of credit relationships are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the OCCs Handbook and related authority; |
| Within 90 days of the Consent Order, the board is required to establish an effective, independent and ongoing loan review system to review, as least semi-annually, the Banks loan and lease portfolio; | ||
| Within 60 days of the Consent Order, the board is required to develop and implement a written program providing for independent review of problem credits for the purpose of monitoring portfolio trends on at least a quarterly basis; | ||
| The board is required to review the adequacy of the Banks allowance for loan and lease losses and to establish a program for the maintenance of an adequate allowance in accordance with the OCCs Handbook and related authority; and | ||
| The board is required to immediately ensure the liquidity of the Bank is maintained to a level that is sufficient to sustain the Banks current operations and to withstand any extraordinary demand against its funding base and to review the Banks liquidity on a monthly basis. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit 10.1 | Stipulation and Consent to the Issuance of a Consent Order by and between Citizens First National Bank and the Comptroller of the Currency |
PRINCETON NATIONAL BANCORP, INC. (Registrant) |
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By: | /s/ Thomas D. Ogaard | |||
Thomas D. Ogaard, President and | ||||
Dated: September 26, 2011 | Chief Executive Officer |
In the Matter of: |
) | AA-EC-10-XX | |||||||
Citizens First National Bank |
) | ||||||||
Princeton, Illinois |
) |
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(a) | a mission statement that forms the framework for the establishment of strategic goals and objectives; | ||
(b) | a description of the Banks targeted market(s) and an assessment of the current and projected risks and competitive factors in its identified target market(s); | ||
(c) | the strategic goals and objectives to be accomplished; | ||
(d) | specific actions designed to improve Bank earnings and accomplish the identified strategic goals and objectives; | ||
(e) | identification of Bank personnel to be responsible and accountable for achieving each goal and objective of the Strategic Plan, including specific time frames for the accomplishment of each goal and objective; | ||
(f) | a financial forecast, to include projections for major balance sheet and income statement accounts, targeted financial ratios, and growth projections over the period covered by the Strategic Plan; | ||
(g) | a description of the assumptions used to determine financial projections and growth targets; | ||
(h) | an identification and risk assessment of the Banks present and planned future product lines (assets and liabilities) that will be utilized to accomplish the strategic goals and objectives established in the Strategic Plan, with the requirement that the risk assessment of new product lines must be completed prior to the offering of such product lines; |
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(i) | a description of control systems to mitigate risks associated with planned new products, growth, or any proposed changes in the Banks markets; | ||
(j) | an evaluation of the Banks internal operations, staffing requirements, board and management information systems, and policies and procedures to ensure that the Banks internal operations, staffing requirements, board and management information systems are adequate and contribute to the accomplishment of the goals and objectives established in the Strategic Plan; | ||
(k) | assigned responsibilities and accountability for the strategic planning process, new products, growth goals, and proposed changes in the Banks operating environment; and | ||
(l) | a description of systems designed to monitor the Banks progress in meeting the Strategic Plans goals and objectives. |
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(a) | an assessment of the adequacy of the Banks management, staffing levels, organizational structure, financial condition, capital adequacy, funding sources, management information systems, internal controls, and written policies and procedures with respect to the proposed significant deviation, and | ||
(b) | the Banks evaluation of its capability to indentify, measure, monitor, and control the risks associated with the proposed significant deviation. |
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(a) | Total risk-based capital at least equal to twelve percent (12%) of risk-weighted assets; and |
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(b) | Tier 1 capital at least equal to eight percent (8%) of adjusted total assets,.1 |
(a) | specific plans for the maintenance of adequate capital that may in no event be less than the requirements of paragraph (1); | ||
(b) | projections for growth and capital requirements based upon a detailed analysis of the Banks assets, liabilities, earnings, fixed assets, and off-balance sheet activities; | ||
(c) | quarterly financial projections of the sources and timing of additional capital to meet the Banks current and future needs; | ||
(d) | identification of the primary source(s) from which the Bank will strengthen and maintain its capital structure to meet the Banks needs; | ||
(e) | contingency plans that identify alternative methods should the primary source(s) under (d) above not be available |
1 | Adjusted total assets is defined in 12 C.F.R. § 3.2(a) as the average total assets figure required to be computed for and stated in a banks most recent quarterly Consolidated Report of Condition and Income minus end-of-quarter intangible assets, deferred tax assets, and credit-enhancing interest-only strips, that are deducted from Tier 1 capital, and minus nonfinancial equity investments for which a Tier 1 capital deduction is required pursuant to section 2(c)(5) of appendix A of 12 C.F.R. § Part 3. |
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a) | when the Bank is in compliance with its approved Capital Plan and would remain in compliance with its approved Capital Plan immediately following the declaration or payment of any dividend; | ||
b) | when the Bank is in compliance with 12 U.S.C. §§ 56 and 60; | ||
c) | when the Bank is in compliance with the minimum capital ratios set forth in paragraph (1) of this article; and | ||
d) | with the prior written determination of no supervisory objection by the Director of Special Supervision. |
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(a) | procedures to ensure satisfactory and perfected collateral documentation; | ||
(b) | procedures to ensure that extensions of credit are granted, by renewal or otherwise, to any borrower only after obtaining and analyzing current and satisfactory credit information; | ||
(c) | procedures to ensure conformance with loan approval requirements; | ||
(d) | a system to track and analyze exceptions; | ||
(e) | procedures to ensure conformance with Call Report instructions; | ||
(f) | procedures to ensure the accuracy of internal management information systems; | ||
(g) | a performance appraisal process, including performance appraisals, job descriptions, and incentive programs for loan officers, which adequately consider their performance relative to policy compliance, documentation standards, accuracy in credit grading, and other loan administration matters; and |
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(h) | procedures to track and analyze concentrations of credit, significant economic factors, and general conditions and their impact on the credit quality of the Banks loan and lease portfolios. |
(a) | early problem loan identification to assure the timely identification and accurate rating of loans and leases based on lending officer submissions; | ||
(b) | statistical records that will serve as a basis for identifying sources of problem loans and leases by industry, size, collateral, division, group, indirect dealer, and individual lending officer; | ||
(c) | previously charged-off assets and their recovery potential; | ||
(d) | compliance with the Banks lending policies and laws, rules, and regulations pertaining to the Banks lending function; | ||
(e) | adequacy of credit and collateral documentation; and | ||
(f) | concentrations of credit. |
(a) | the identification, type, rating, and amount of problem loans and leases; | ||
(b) | the identification and amount of delinquent loans and leases; | ||
(c) | credit and collateral documentation exceptions; | ||
(d) | the identification and status of credit related violations of law, rule or regulation; |
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(e) | the identity of the loan officer who originated each loan reported in accordance with subparagraphs (a) through (d) of this Article and Paragraph; | ||
(f) | an analysis of concentrations of credit, significant economic factors, and general conditions and their impact on the credit quality of the Banks loan and lease portfolios; | ||
(g) | the identification and amount of loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Bank; and | ||
(h) | the identification of loans and leases not in conformance with the Banks lending and leasing policies, and exceptions to the Banks lending and leasing policies. |
(a) | an identification of the expected sources of repayment; |
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(b) | the current value of supporting collateral and the position of the Banks lien on such collateral where applicable; | ||
(c) | an analysis of current and satisfactory credit information, including a global cash flow analysis of the guarantors repayment ability where repayment is dependent in whole or in part on any guarantor; and | ||
(d) | actions designed to eliminate the basis of criticism of or protect the banks interest in the asset, including timeframes for implementing and evaluating the effectiveness of those actions. |
(a) | the status of each criticized asset or criticized portion thereof that equals or exceeds one hundred thousand dollars ($100,000); | ||
(b) | managements adherence to the workout plans adopted pursuant to this Article; | ||
(c) | the status and effectiveness of the plans; and | ||
(d) | the need to revise the plans or take alternative action. |
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(a) | the extension of additional credit is necessary to promote the best interests of the Bank, and | ||
(b) | a comparison to the plans adopted pursuant to this Article shows that the Boards formal plan to collect or strengthen the criticized asset will not be compromised. |
(a) | The primary consideration is the strength of the borrowers primary source of repayment (i.e., the probability of default rather than the risk of loss); | ||
(b) | The strength of the borrowers primary source of repayment is determined through analysis of the borrowers historical and projected financial statements, past performance, and future prospects in light of conditions that have occurred or may occur during the term of the loan; |
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(c) | Collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased; | ||
(d) | Collateral values reflect a current assessment of value based on actual market conditions and project status; | ||
(e) | Credit risk ratings are reviewed and updated whenever relevant new information is received; and | ||
(f) | The credit risk rating analysis is documented and available for review by the Board and the OCC upon request. |
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(a) | the overall quality of the loan and lease portfolios; | ||
(b) | the identification, type, rating, and amount of problem loans and leases; | ||
(c) | the identification and amount of delinquent loans and leases; | ||
(d) | credit and collateral documentation exceptions; | ||
(e) | the identification and status of credit related violations of law, rule or regulation; | ||
(f) | the identity of the loan officer who originated each loan reported in accordance with subparagraphs (b) through (e) of the Article; | ||
(g) | concentrations of credit; | ||
(h) | loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Bank; and | ||
(i) | loans and leases not in conformance with the Banks lending and leasing policies, and exceptions to the Banks lending and leasing policies. |
(a) | monitoring systems for early problem loan identification to assure the timely identification and rating of loans and leases based on lending officer submissions; |
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(b) | statistical records that serve as a basis for identifying sources of problem loans and leases by industry, size, collateral, division, group, indirect dealer, and individual lending officer; | ||
(c) | system for monitoring previously charged-off assets and their recovery potential; | ||
(d) | system for monitoring compliance with the Banks lending policies and laws, rules, and regulations pertaining to the Banks lending function; and | ||
(e) | system for monitoring the adequacy of credit and collateral documentation. |
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(a) | internal risk ratings of loans; | ||
(b) | results of the Banks independent loan review; | ||
(c) | Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 310 Receivables (Pre-codification reference: Statement of Financial Accounting Standards (FAS) Statement No. 114), how impairment will be determined, and procedures to ensure that the analysis of loans complies with ASC 310 requirements; | ||
(d) | criteria for determining loan pools under ASC 310 (Pre-codification reference: FAS Statement No. 5) and an analysis of those loan pools; | ||
(e) | recognition of non-accrual loans in conformance with generally accepted accounting principles (GAAP) and regulatory guidance; | ||
(f) | loan loss experience; | ||
(g) | trends of delinquent and non-accrual loans; | ||
(h) | concentrations of credit in the Bank; and | ||
(i) | present and projected economic and market conditions. |
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(a) | a maturity schedule of certificates of deposit, including large uninsured deposits; | ||
(b) | the volatility of demand deposits including any escrow deposits; | ||
(c) | the amount and type of loan commitments and standby letters of credit; | ||
(d) | an analysis of the continuing availability and volatility of present funding sources; | ||
(e) | an analysis of the impact of decreased cash flow from the Banks loan portfolio resulting from delinquent and non-performing loans; and | ||
(f) | an analysis of the impact of decreased cash flow from the sale of loans or loan participations. |
(a) | selling assets; |
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(b) | obtaining lines of credit from the Federal Reserve Bank; | ||
(c) | obtaining lines of credit from correspondent banks; | ||
(d) | recovering charged-off assets; and | ||
(e) | injecting additional equity capital. |
(a) | Specific plans detailing how the Bank will comply with restrictions or requirements set forth in this Order, including restrictions against brokered deposits in 12 U.S.C. § 337.6; | ||
(b) | The preparations of reports that identify and quantify all sources of funding and funding obligations under best case and worst case scenarios, including asset funding, liability funding and off-balance sheet funding; and | ||
(c) | procedures that ensure the Banks contingency funding practices are consistent with the Boards guidance and risk tolerances. |
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Director for Special Supervision |
with a copy to: | |
Comptroller of the Currency 250 E Street, SW Mail Stop 7-4 Washington, DC 20219 |
Assistant Deputy Comptroller Peoria Field Office 211 Fulton Street, Suite 604 Peoria, IL |
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(a) | ensure that the Bank has sufficient processes, management, personnel, and control systems to effectively implement and adhere to all provisions of this Order, and that Bank management and personnel have sufficient training and authority to execute their duties and responsibilities under this Order; | ||
(b) | authorize and adopt such actions on behalf of the Bank as may be necessary for the Bank to perform its obligations and undertakings under the terms of this Order; | ||
(c) | require the timely reporting by Bank management of such actions directed by the Board to be taken under the terms of this Order; | ||
(d) | follow-up on any non-compliance with such actions in a timely and appropriate manner; and | ||
(e) | require corrective action be taken in a timely manner on any non-compliance with such actions. |
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In the Matter of: |
) | AA-EC-10-XX | |||||||
Citizens First National Bank |
) | ||||||||
Princeton, Illinois |
) |
2
(a) | the issuance of a Notice of Charges pursuant to 12 U.S.C. § 1818(b); | ||
(b) | any and all procedural rights available in connection with the issuance of the Order; | ||
(c) | all rights to a hearing and a final agency decision pursuant to 12 U.S.C. § 1818(i) or 12 C.F.R. Part 19; | ||
(d) | all rights to seek any type of administrative or judicial review of the Order; and | ||
(e) | any and all rights to challenge or contest the validity of the Order. |
/s/ Henry Fleming
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9/20/11 | |
Henry Fleming Director for Special Supervision |
Date |
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/s/Greta E. Bieber
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9/20/2011
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/s/Gary C. Bruce
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9/20/2011
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/s/Sharon L. Covert
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9/20/2011
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/s/John R. Ernat
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9/20/2011
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/s/Todd D. Fanning
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9/20/2011
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/s/Mark Janko
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9/20/2011
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/s/Thomas D. Ogaard
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9/20/2011
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/s/Stephen W. Samet
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9/20/2011
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/s/Craig O. Wesner
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9/20/2011
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