FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
and
OKLAHOMA STATE BANKING DEPARTMENT
OKLAHOMA CITY, OKLAHOMA

In the Matter of
SPIRITBANK
TULSA, OKLAHOMA
(Insured State Nonmember Bank)

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CONSENT ORDER
FDIC-12-103b
OSBD-12-C&D-2

The Federal Deposit Insurance Corporation ("FDIC") is the appropriate Federal banking
agency for SpiritBank, Tulsa, Oklahoma ("Bank"), under 12 U.S.C. ? 1813(q).
The Oklahoma State Banking Department ("State") is the appropriate state banking
agency for the Bank, under the Oklahoma Banking Code, OKLA. STAT. tit. 6 ? 101 et seq.
The Bank, by and through its duly elected and acting board of directors ("Board"), has
executed a "STIPULATION TO THE ISSUANCE OF A CONSENT ORDER"
("STIPULATION"), dated April 18, 2012, that is accepted by the FDIC and the State. With the
STIPULATION, the Bank has consented, without admitting or denying any charges of unsafe or
unsound banking practices relating to asset quality, earnings, liquidity, management, capital and
sensitivity to market risk to the issuance of this CONSENT ORDER ("ORDER") by the FDIC
and the State.
Having determined that the requirements for issuance of an order under 12 U.S.C.
? 1818(b) and Section 204(B) of the Oklahoma Banking Code, OKLA. STAT. tit. 6 ? 204(B), and
the provisions of the Oklahoma Administrative Procedures Act, OKLA. STAT. tit. 75 ? 250, et
seq. have been satisfied, the FDIC and the State hereby order that:

1

 ALLOWANCE FOR LOAN AND LEASE LOSSES
AND
AMENDED CALL REPORTS
1.

(a)

Within 30 days after the effective date of this ORDER, the Bank shall

make provisions to its Allowance for Loan and Lease Losses ("ALLL") in an amount equal to
those loans required to be charged off by this ORDER in the amount of at least $3,900,000. The
allowance should be funded by charges to current operating income, and should be calculated in
accordance with generally accepted accounting standards and ALLL supervisory guidance.
After the initial provision is made, the Bank shall thereafter maintain a reasonable ALLL. Prior
to the end of each calendar quarter, the Bank's Board shall review the adequacy of the Bank's
ALLL. Such reviews shall include, at a minimum, the Bank's loan loss experience, an estimate
of potential loss exposure in the portfolio, trends of delinquent and non-accrual loans and
prevailing and prospective economic conditions. The minutes of the Bank's Board meetings at
which such reviews are undertaken shall include complete details of the reviews and the resulting
recommended increases in the ALLL.
(b)

Within 30 days after the effective date of this ORDER, the Bank shall

review Consolidated Reports of Condition and Income filed with the FDIC on or after September
30, 2011, and amend said reports if necessary to accurately reflect the financial condition of the
Bank as of the date of each such report. In particular, such reports shall contain a reasonable
ALLL. Reports filed after the effective date of this ORDER shall also accurately reflect the
financial condition of the Bank as of the reporting date.
(c)

Within 30 days after the effective date of this ORDER, the Bank must use

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")

2

 Numbers 450 and 310 (formerly Statements Numbers 5 and 114 respectively) ("Number 450"
and "Number 310" respectively) for determining the Bank's ALLL reserve adequacy.
Provisions for loan losses must be based on the inherent risk in the Bank's loan portfolio. The
directorate must document with written reasons any decision not to require provisions for loan
losses in the Board minutes.
CAPITAL INCREASE AND MAINTENANCE
2.

(a)

Within 180 days after the effective date of this ORDER, the Bank, after

establishing an adequate ALLL, shall maintain its Tier 1 Leverage Capital ratio equal to or
greater than 8.5 percent of the Bank's Average Total Assets; shall maintain its Tier 1 Risk-Based
Capital ratio equal to or greater than 11 percent of the Bank's Total Risk-Weighted Assets; and
shall maintain its Total Risk-Based Capital ratio equal to or greater than 12 percent of the Bank's
Total Risk Weighted Assets. Any increase in the Bank's Tier 1 Capital necessary to meet the
capital ratios required by this ORDER may be accomplished by:
(1)

The sale of securities in the form of common stock; or

(2)

The direct contribution of cash subsequent to September 12, 2011,
by the directors and shareholders of the Bank or by the Bank's
holding company; or

(3)

Receipt of an income tax refund or the capitalization subsequent to
September 12, 2011, of a bona fide tax refund certified as being
accurate by a certified public accounting firm; or

(4)

Any other method approved by the Regional Director of the
FDIC's Dallas Regional Office ("Regional Director") and the

3

 Commissioner of the Oklahoma State Banking Department
("Commissioner").
(b)

If any such capital ratios are less than the percentages required by this

ORDER, as determined as of the date of any Report of Condition and Income or at an
examination by the FDIC or the State, the Bank shall, within 30 days after receipt of a written
notice of the capital deficiency from the Regional Director and the Commissioner, present to the
Regional Director and the Commissioner a plan to increase the Bank's Tier 1 Capital or to take
other measures to bring all the capital ratios to the percentages required by this ORDER. After
the Regional Director and the Commissioner respond to the plan, the Bank's Board shall adopt
the plan, including any modifications or amendments requested by the Regional Director and the
Commissioner.
(c)

Thereafter, the Bank shall immediately initiate measures detailed in the

plan, to the extent such measures have not previously been initiated, to increase the Bank's
Tier 1 Capital by an amount sufficient to bring all the capital ratios to the percentages required
by this ORDER within 30 days after the Regional Director and the Commissioner respond to the
plan.
(d)

If all or part of the increase in Tier 1 Capital required by this ORDER is to

be accomplished by the sale of new securities, the Bank's Board shall adopt and implement a
plan for the sale of such additional securities, including soliciting proxies and the voting of any
shares or proxies owned or controlled by them in favor of the plan. Should the implementation
of the plan involve a public distribution of the Bank's securities (including a distribution limited
only to the Bank's existing shareholders), the Bank shall prepare offering materials fully
describing the securities being offered, including an accurate description of the financial

4

 condition of the Bank and the circumstances giving rise to the offering, and any other material
disclosures necessary to comply with Federal securities laws. Prior to the implementation of the
plan, and in any event, not less than 20 days prior to the dissemination of such materials, the plan
and any materials used in the sale of the securities shall be submitted to the FDIC, Accounting
and Securities Disclosure Section, Washington, D.C. 20429, for review. Any changes requested
to be made in the plan or the materials by the FDIC shall be made prior to their dissemination. If
the increase in Tier 1 Capital is to be provided by the sale of non-cumulative perpetual preferred
stock, then all terms and conditions of the issue shall be presented to the Regional Director and
the Commissioner for prior approval.
(e)

In complying with the provisions of this ORDER and until such time as

any such public offering is terminated, the Bank shall provide to any subscriber and/or purchaser
of the Bank's securities written notice of any planned or existing development or other change
which is materially different from the information reflected in any offering materials used in
connection with the sale of the Bank's securities. The written notice required by this paragraph
shall be furnished within 10 days after the date such material development or change was
planned or occurred, whichever is earlier, and shall be furnished to every purchaser and/or
subscriber who received or was tendered the information contained in the Bank's original
offering materials.
(f)

The Capital Plan must include a contingency plan ("Contingency Plan")

that shall include a plan to sell or merge the Bank in the event that the Bank:
(1)

Fails to maintain the minimum capital ratios required by the
ORDER,

(2)

Fails to submit an acceptable Capital Plan, or

5

 (3)

Fails to implement or adhere to a Capital Plan to which no written
objection was provided by the Regional Director and the
Commissioner.

The Bank shall be required to implement the Contingency Plan only upon written notice from the
Regional Director and the Commissioner.
(g)

In addition, the Bank shall comply with the FDIC's Statement of Policy on

Risk-Based Capital found in Appendix A to Part 325 of the FDIC's Rules and Regulations,
12 C.F.R. Part 325, App. A.
(h)

For purposes of this ORDER, all terms relating to capital shall be

calculated according to the methodology set forth in Part 325 of the FDIC's Rules and
Regulations, 12 C.F.R. Part 325.
DIVIDEND RESTRICTION
3.

While this ORDER is in effect, the Bank shall not declare or pay any cash

dividend without the prior written consent of the Regional Director and the Commissioner.
HOLDING COMPANY - RESTRICTIONS ON PAYMENTS
4.

(a)

As of the effective date of this ORDER, the Bank shall not make any

payment, directly or indirectly, to or for the benefit of the Bank's holding company or any other
Bank affiliate, without the prior written consent of the Regional Director and the Commissioner.
(b)

The Bank shall not enter into any contract with its holding company or

any other Bank affiliate without submitting the new contract to the Regional Director and the
Commissioner for review and opportunity for comment.

6

 PROFIT PLAN
5.

(a)

Within 60 days after the effective date of this ORDER, and within the first

60 days of each calendar year thereafter, the Board shall develop a written profit plan consisting
of goals and strategies for improving the earnings of the Bank for each calendar year. The
written profit plan shall include, at a minimum:
(1)

Identification of the major areas in, and means by, which the Board
will seek to improve the Bank's operating performance;

(2)

Realistic and comprehensive budgets;

(3)

A budget review process to monitor the income and expenses of
the Bank to compare actual figures with budgetary projections on
not less than a quarterly basis; and

(4)

A description of the operating assumptions that form the basis for
and support major projected income and expense components.

(b)

Such written profit plan and any subsequent modification thereto shall be

submitted to the Regional Director and the Commissioner for review and comment. Within 30
days after the receipt of any comment from the Regional Director and the Commissioner, the
Bank's Board shall approve the written profit plan, which approval shall be recorded in the
minutes of the Bank's Board. Thereafter, the Bank, its directors, officers, and employees shall
follow the written profit plan and/or any subsequent modification.

7

 RESTRICTION ON ADVANCES TO CLASSIFIED BORROWERS
6.

(a)

While this ORDER is in effect, the Bank shall not extend, directly or

indirectly, any additional credit to or for the benefit of any borrower, or enter into any other
transaction with or for the benefit of any borrowers whose existing credit has been classified
Loss by the FDIC or the State as the result of its examination of the Bank, either in whole or in
part, and is uncollected, or to any borrower who is already obligated in any manner to the Bank
on any extension of credit, including any portion thereof, that has been charged off the books of
the Bank and remains uncollected. The requirements of this paragraph shall not prohibit the
Bank from renewing credit already extended to a borrower after full collection, in cash, of
interest due from the borrower.
(b)

While this ORDER is in effect, the Bank shall not extend, directly or

indirectly, any additional credit to or for the benefit of any borrower, or enter into any other
transaction with or for the benefit of any borrowers whose extension of credit is classified
Doubtful and/or Substandard by the FDIC or the State as the result of its examination of the
Bank, either in whole or in part, and is uncollected, unless the Bank's Board has signed a
detailed written statement giving reasons why failure to extend such credit would be detrimental
to the best interests of the Bank. The statement shall be placed in the appropriate loan file and
included in the minutes of the applicable Bank's Board meeting.
CLASSIFIED ASSETS - CHARGE-OFF AND PLAN FOR REDUCTION
7.

(a)

Within 60 days after the effective date of this ORDER, the Bank shall, to

the extent that it has not previously done so, eliminate from its books, by charge-off or
collection, all assets or portions of assets classified Loss by the FDIC or the State as a result of

8

 its examination of the Bank as of June 30, 2011. Elimination or reduction of these assets through
proceeds of loans made by the Bank shall not be considered "collection" for the purpose of this
paragraph.
(b)

Within 60 days after the effective date of this ORDER, the Bank shall

submit a written plan to reduce the remaining assets classified Doubtful and Substandard as of
September 12, 2011, ("Classified Asset Plan") to the Regional Director and the Commissioner
for review. The Classified Asset Plan shall address each asset so classified with a balance of
$1,000,000 or greater. The Classified Asset Plan shall include any classified assets identified
subsequent to the September 12, 2011 examination by the Bank internally or by the FDIC or the
State in a subsequent visitation or examination. For each identified asset, the Classified Asset
Plan should provide the following information:
(1)

The name under which the asset is carried on the books of the
Bank;

(2)

Type of asset;

(3)

Actions to be taken in order to reduce the classified asset; and

(4)

Time frames for accomplishing the proposed actions.

The plan shall also include, at a minimum:
(1)

Review the financial position of each such borrower, including the
source of repayment, repayment ability, and alternate repayment
sources; and

(2)

Evaluate the available collateral for each such credit, including
possible actions to improve the Bank's collateral position.

9

 (3)

For loans made for the purpose of constructing or developing real
estate the plan shall also include:
a.

the initial scheduled maturity date of the loan, the number
of extensions and/or renewals, and current maturity date;

b.

project development status;

c.

a comparison of development costs to budgeted amounts;

d.

a comparison of sales activity to original sales projections;

e.

amount of initial interest reserve and the amount of any
subsequent additions to the reserve; and

f.

any other significant information relating to the project.

In addition, the Bank's plan shall contain a schedule detailing the projected reduction of
total classified assets on a quarterly basis. Further, the plan shall contain a provision requiring
the submission of monthly progress reports to the Bank's Board and a provision mandating a
review by the Bank's Board.
(c)

The Bank shall present the plan to the Regional Director and the

Commissioner for review. Within 30 days after the Regional Director's and the Commissioner's
response, the plan, including any requested modifications or amendments shall be adopted by the
Bank's Board, which approval shall be recorded in the minutes of the meeting of the Bank's
Board. The Bank shall then immediately initiate measures detailed in the plan to the extent such
measures have not been initiated.
(d)

For purposes of the plan, the reduction of adversely classified assets as of

September 11, 2011, shall be detailed using quarterly targets expressed as a percentage of the
Bank's Tier 1 Capital plus the Bank's ALLL and may be accomplished by:

10

 (1)

Charge-off;

(2)

Collection;

(3)

Sufficient improvement in the quality of adversely classified assets
so as to warrant removing any adverse classification, as determined
by the FDIC or the State; or

(4)
(e)

Increase in the Bank's Tier 1 Capital.

While this ORDER is in effect, the Bank shall eliminate from its books, by

charge-off or collection, all assets or portions of assets classified Loss as determined at any
future visitation or examination conducted by the FDIC or the State. The Bank shall also update
the Classified Asset Plan as needed to reflect any assets subsequently classified as Doubtful or
Substandard by the Bank internally or by the FDIC or the State.
LOAN COMMITTEE AND LOAN REVIEW REQUIREMENTS
8.

(a)

Within 30 days after the effective date of this ORDER, the Bank's Board

shall establish a loan review committee to periodically review the Bank's loan portfolio and
identify and categorize problem credits. The committee shall file a report with the Bank's Board
at each Board meeting. This report shall include the following information:
(1)

The overall quality of the loan portfolio;

(2)

The identification, by type and amount, of each problem or
delinquent loan;

(3)

The identification of all loans not in conformance with the Bank's
lending policy; and

11

 (4)

The identification of all loans to officers, directors, principal
shareholders or their related interests.

(b)

At least 50 percent of the members of the loan review committee shall be

Independent Directors. For purposes of this ORDER, a person who is an Independent Director
shall be any individual:
(1)

Who is not an officer of the Bank any subsidiary of the Bank or
any of its affiliated organizations;

(2)

Who does not own more than 5 percent of the outstanding shares
of the Bank;

(3)

Who is not related by blood or marriage to an officer or director of
the Bank or to any shareholder owning more than 5 percent of the
Bank's outstanding shares, and who does not otherwise share a
common financial interest with such officer, director or
shareholder; and

(4)

Who is not indebted to the Bank, directly or indirectly, by
marriage, common financial interest, or the indebtedness of any
entity in which the individual has a substantial financial interest in
an amount exceeding 5 percent of the Bank's total Tier 1 Capital
and ALLL; or

(5)

Who is deemed to be an Independent Director for purposes of this
ORDER by the Regional Director and the Commissioner.

12

 LOAN POLICY
9.

(a)

Within 60 days after the effective date of this ORDER, and annually

thereafter, the Bank's Board shall review the Bank's loan policy and procedures for effectiveness
and, based upon this review, shall make all necessary revisions to the policy in order to
strengthen the Bank's lending procedures and abate additional loan deterioration. The revised
written loan policy shall be submitted to the Regional Director and the Commissioner for review
and comment upon its completion.
(b)

The initial revisions to the Bank's loan policy required by this paragraph,

at a minimum, shall include provisions:
(1)

Designating the Bank's normal trade area;

(2)

Establishing review and monitoring procedures to ensure that all
lending personnel are adhering to established lending procedures
and that the directorate is receiving timely and fully documented
reports on loan activity, including any deviations from established
policy;

(3)

Requiring that all extensions of credit originated or renewed by the
Bank be supported by current credit information and collateral
documentation, including lien searches and the perfection of
security interests; have a defined and stated purpose; and have a
predetermined and realistic repayment source and schedule. Credit
information and collateral documentation shall include current
financial information, profit and loss statements or copies of tax

13

 returns, and cash flow projections, and shall be maintained
throughout the term of the loan;
(4)

Requiring loan committee review and monitoring of the status of
repayment and collection of overdue and maturing loans, as well as
all loans classified "Substandard" in the Report of Examination;

(5)

Requiring the establishment and maintenance of a loan grading
system and internal loan watch list;

(6)

Requiring a written plan to lessen the risk position in each line of
credit identified as a problem credit on the Bank's internal loan
watch list;

(7)

Prohibiting the capitalization of interest or loan-related expenses
unless the Bank's Board formally approves such extensions of
credit as being in the best interest of the Bank and provides
detailed written support of its position in the Bank's Board
minutes;

(8)

Requiring that extensions of credit to any of the Bank's executive
officers, directors, or principal shareholders, or to any related
interest of such person, be thoroughly reviewed for compliance
with all provisions of Regulation O, 12 C.F.R. Part 215 and
Section 337.3 of the FDIC's Rules and Regulations, 12 C.F.R.
? 337.3;

(9)

Requiring prior written approval by the Bank's Board for any
extension of credit, renewal, or disbursement in an amount which,

14

 when aggregated with all other extensions of credit to that person
and related interests of that person, exceeds $1,000,000. For the
purpose of this paragraph "Related Interest" is defined as in
Section 215.2(n) of Regulation O, 12 C.F.R. ? 215.2(n);
(10)

Requiring a non-accrual policy in accordance with the Federal
Financial Institutions Examination Council's Instructions for the
Consolidated Reports of Condition and Income;

(11)

Requiring accurate reporting of past due loans to the Bank's Board
on at least a monthly basis;

(12)

Addressing concentrations of credit and diversification of risk,
including goals for portfolio mix, establishment of limits within
loan and other asset categories, and development of a tracking and
monitoring system for the economic and financial condition of
specific geographic locations, industries, and groups of borrowers;

(13)

Requiring guidelines and review of out-of-territory loans which, at
a minimum, shall include complete credit documentation, approval
by a majority of the Bank's Board prior to disbursement of funds,
and a detailed written explanation of why such a loan is in the best
interest of the Bank;

(14)

Establishing standards for extending unsecured credit;

(15)

Incorporating collateral valuation requirements, including:
a.

Maximum loan-to-collateral-value limitations;

15

 b.

A requirement that the valuation be completed prior to a
commitment to lend funds;

c.

A requirement for periodic updating of valuations; and

d.

A requirement that the source of valuations be documented
in Bank records;

(16)

Establishing standards for initiating collection efforts;

(17)

Establishing guidelines for timely recognition of loss through
charge-off;

(18)

Prohibiting the extension of a maturity date, advancement of
additional credit or renewal of a loan to a borrower whose
obligations to the Bank were classified "Substandard," "Doubtful,"
or "Loss," whether in whole or in part, as of September 12, 2011,
by the FDIC or State in a subsequent Report of Examination,
without the full collection in cash of accrued and unpaid interest,
unless the loans are well secured and/or are supported by current
and complete financial information, and the renewal or extension
has first been approved in writing by a majority of the Bank's
Board;

(19)

Establishing officer lending limits and limitations on the aggregate
level of credit to any one borrower which can be granted without
the prior approval of the Bank's Board;

(20)

Requiring that collateral appraisals be completed prior to the
making of secured extensions of credit, and that periodic collateral

16

 valuations be performed for all secured loans listed on the Bank's
internal watch list, criticized in any internal or outside audit report
of the Bank, or criticized in any Report of Examination of the
Bank by the FDIC or the State;
(21)

Prohibiting the issuance of standby letters of credit unless the
letters of credit are well secured and/or are supported by current
and complete financial information;

(22)

Prohibiting the payment of any overdraft in excess of $5,000
without the prior written approval of the Bank's Board and
imposing limitations on the use of Cash Items account;

(23)

Establishing limitations on the maximum volume of loans in
relation to total assets;

(24)

Establishing review and monitoring procedures to ensure
compliance with FDIC's regulation on appraisals pursuant to Part
323 of the FDIC's Rules and Regulations, 12 C.F.R. Part 323; and

(25)

Establishing guidelines and limitations on the use of interest
reserves, including prudent lines of authority for approving the use
of interest reserves, and procedures to identify and report
exceptions to the Board on a regular basis.

(c)

The Bank shall submit the foregoing policies to the Regional Director and

the Commissioner for comment. After the Regional Director and the Commissioner have
responded to the policies, the Bank's Board shall adopt the policies as amended or modified by

17

 the Regional Director and the Commissioner. The policies will be implemented immediately to
the extent that they are not already in effect at the Bank.
ASSET/LIABILITY COMMITTEE
10.

Within 30 days after the effective date of this ORDER, the Bank shall appoint

members to an Asset/Liability Committee ("ALCO"). The ALCO shall take an active role in
monitoring the Bank's liquidity and report monthly to the Bank's Board concerning the Bank's
liquidity.
INTEREST RATE RISK
11.

(a)

Within 60 days after the effective date of the ORDER, the Bank shall

develop, adopt, and implement an interest rate risk policy and procedures that shall include, at a
minimum:
(1)

Measures designed to control the nature and amount of interest rate
risk the Bank takes including those that specify risk limits and
defines lines of responsibilities and authority for managing risk;

(2)

A system for identifying and measuring interest rate risk;

(3)

A system for monitoring and reporting risk exposures; and

(4)

A system of internal controls, review, and audit to ensure the
integrity of the overall risk management process.

18

 LIQUIDITY/ASSET/LIABILITY MANAGEMENT
12.

(a)

Within 60 days after the effective date of this ORDER, the Bank shall

develop and submit to the Regional Director and the Commissioner for review and comment a
written plan addressing liquidity. Annually thereafter, while this ORDER is in effect, the Bank
shall review this plan for adequacy and, based upon such review, shall make necessary revisions
to the plan to maintain adequate provisions to meet the Bank's liquidity needs. The initial plan
shall include, at a minimum, provisions:
(1)

Limiting the Bank's ratio of total loans to total deposits to not
more than 80 percent;

(2)

Establishing a reasonable range for its net non-core funding ratio
as computed in the Uniform Bank Performance Report;

(3)

Identifying the source and use of borrowed and/or volatile funds;

(4)

Establishing lines of credit at correspondent banks, including the
Federal Home Loan Bank, that would allow the Bank to borrow
funds to meet depositor demands if the Bank's other provisions for
liquidity proved to be inadequate;

(5)

Requiring the retention of securities and/or other identified
categories of investments that can be liquidated within one day in
amounts sufficient (as a percentage of the Bank's total assets) to
ensure the maintenance of the Bank's liquidity posture at a level
consistent with short- and long-term liquidity objectives;

(6)

Establishing a minimum liquidity ratio and defining how the ratio
is to be calculated;

19

 (7)

Establishing contingency plans by identifying alternative courses
of action designed to meet the Bank's liquidity needs;

(8)

Addressing the use of borrowings (i.e., seasonal credit needs,
match funding mortgage loans, etc.) and providing for reasonable
maturities commensurate with the use of the borrowed funds;
addressing concentration of funding sources; and addressing
pricing and collateral requirements with specific allowable funding
channels (i.e., brokered deposits, internet deposits, Fed funds
purchased and other correspondent borrowings); and

(9)

Establishing procedures for managing the Bank's sensitivity to
interest rate risk which comply with the Joint Agency Statement of
Policy on Interest Rate Risk (June 26, 1996), and the Supervisory
Policy Statement on Investment Securities and End-user Derivative
Activities (April 23, 1998).

(b)

Within 30 days after the receipt of all such comments from the Regional

Director and the Commissioner, and after revising the plan as necessary, the Bank shall adopt the
plan, which adoption shall be recorded in the minutes of a Board meeting. Thereafter, the Bank
shall implement the plan.
BOARD SUPERVISION
13.

Within 30 days after the effective date of this ORDER, the Bank's Board shall

increase its participation in the affairs of the Bank by assuming full responsibility for the
approval of the Bank's policies and objectives and for the supervision of the Bank's

20

 management, including all the Bank's activities. The Board's participation in the Bank's affairs
shall include, at a minimum, monthly meetings in which the following areas shall be reviewed
and approved by the Board: reports of income and expenses; new, overdue, renewed, insider,
charged-off, delinquent, nonaccrued, and recovered loans; investment activities; operating
policies; and individual committee actions. The Bank's Board minutes shall document the
Board's reviews and approvals, including the names of any dissenting directors.
MANAGEMENT
14.

(a)

The Bank shall have and retain qualified management. Each member of

management shall possess qualifications and experience commensurate with his or her duties and
responsibilities at the Bank. The qualifications of management personnel shall be evaluated on
their ability to:
(1)

Comply with the requirements of the ORDER;

(2)

Operate the Bank in a safe and sound manner;

(3)

Comply with applicable laws and regulations; and

(4)

Restore all aspects of the Bank to a safe and sound condition,
including improving the Bank's asset quality, capital adequacy,
earnings, management effectiveness, liquidity, and its sensitivity to
market risk.

(b)

While this ORDER is in effect, the Bank shall notify the Regional

Director and the Commissioner in writing of any changes in management. The notification must
include the name(s) and background(s) of any replacement personnel and must be provided 30
days prior to the individual(s) assuming the new position(s).

21

 POLICY FOR REIMBURSEMENT OF INSIDERS' EXPENSES
15.

(a)

Within 60 days after the effective date of this ORDER, the Bank shall

formulate and submit to the Regional Director and the Commissioner for review and comment a
written policy covering expense reimbursements to its directors, officers, and employees. At a
minimum, the policy shall include:
(1)

Provisions which specify reasonable limitations for all categories
of expenses related to customer entertainment and business
development;

(2)

Provisions which require complete documentation of all expenses
related to customer entertainment and business development prior
to Bank reimbursement. At a minimum, the Bank shall require the
submission of original receipt(s), identification of the person(s)
entertained, and the business purpose of the expense; and

(3)

Provisions which prohibit the reimbursement of personal expenses
of the Bank's directors, officers, and employees.

(b)

While this ORDER is in effect, the Bank's Board shall conduct monthly

reviews of all expenses submitted for customer entertainment, business development, and/or any
other expense submitted by the Bank's officers and directors, with the results of the reviews
stated in the minutes of the meetings of the Board at which such reviews are performed. On a
monthly basis, the Bank shall either seek reimbursement for any expenses paid which are not in
conformance with the policy established pursuant to this paragraph or shall state in the minutes
of the Board meeting the full justification for deviations from the policy.

22

 (c)

Within 30 days after the receipt of any such comments from the Regional

Director and the Commissioner, and after adoption of any recommended changes, the Bank shall
approve the policy, which approval shall be recorded in the minutes of the Board meeting.
Thereafter, the Bank shall implement and follow the policy.
CORRECTION OF VIOLATIONS
16.

(a)

Within 30 days after the effective date of this ORDER, the Bank shall

eliminate and/or correct all violations of law and regulation noted in the Report of Examination.
(b)

Within 30 days after the effective date of this ORDER, the Bank shall

implement procedures to ensure future compliance with all applicable laws and regulations.
(c)

Within 30 days after the effective date of this ORDER, the Bank shall

address any contraventions of policy noted in the Report of Examination.
BUSINESS PLAN
17.

While this ORDER is in effect, the Bank shall not enter into any new line of

business without the prior written consent of the Regional Director and the Commissioner.
SHAREHOLDER NOTIFICATION
18.

After the effective date of this ORDER, the Bank shall send a copy of this

ORDER, or otherwise furnish a description of this ORDER, to its shareholders (1) in conjunction
with the Bank's next shareholder communication, and also (2) in conjunction with its notice or
proxy statement preceding the Bank's next shareholder meeting. The description shall fully
describe the ORDER in all material respects. The description and any accompanying

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 communication, statement, or notice shall be sent to the FDIC Accounting and Securities
Disclosure Section, Washington, D.C. 20429, for review at least 20 days prior to dissemination
to shareholders. Any changes requested by the FDIC shall be made prior to dissemination of the
description, communication, notice, or statement.
PROGRESS REPORTS
19.

Within 30 days after the end of the first calendar quarter following the effective

date of this ORDER, and within 30 days after the end of each successive calendar quarter, the
Bank shall furnish written progress reports to the Regional Director and the Commissioner
detailing the form and manner of any actions taken to secure compliance with this ORDER and
the results thereof. Such reports may be discontinued when the corrections required by the
ORDER have been accomplished and the Regional Director and the Commissioner have released
the Bank in writing from making additional reports.
The provisions of this ORDER shall not bar, stop, or otherwise prevent the FDIC, the
State, or any other federal or state agency or department from taking any other action against the
Bank or any of the Bank's current or former institution-affiliated parties.
This ORDER shall be effective on the date of issuance.
The provisions of this ORDER shall be binding upon the Bank, its institution-affiliated
parties, and any successors and assigns thereof.

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 The provisions of this ORDER shall remain effective and enforceable except to the extent
that and until such time as any provision has been modified, terminated, suspended, or set aside
by the FDIC and the State.
Issued pursuant to delegated authority this 23rd day of April 2012.

/s/
Kristie K. Elmquist
Regional Director
Dallas Region
Division of Risk Management Supervision
Federal Deposit Insurance Corporation

/s/
Mick Thompson
Commissioner
Oklahoma State Banking Department

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