Background
The
bank's board of directors appealed the supervisory office's decision
not to remove the Memorandum of Understanding (MOU). The bank has
been rated a 2 for the last three years and the board believes that
the most recent examination indicates stronger results in all areas
except for earnings.
The bank is in compliance with all articles except for the
article related to earnings performance.
The
board believes that they have met the intent of the MOU. While
earnings are marginal, they are consistent with the strategic plan
which includes expenses associated with the opening of a new
branch. The supervisory
office believes that compliance with the article regarding the
profit plan cannot be achieved until the bank demonstrates sustained
earnings.
Discussion and
Conclusions
The
Ombudsman conducted a review of the information submitted by the
bank and supporting documentation from the supervisory office. The review included
discussions with the bank's senior management as well as with
members of the supervisory office.
The
Ombudsman concluded that the existing MOU had served its intended
purpose and should be terminated. The bank's board of
directors had demonstrated a commitment to institutionalize a
culture of risk controls and processes that will serve the
institution well.
