UNITED BEFORE THE BOARD

STATES

OF AMERICA OF THE FEDERAL D.C. OF AUDIT RESERVE SYSTEM

OF GOVERNORS

WASHINGTON, WYOMING DEPARTMENT

DIVISION

OF BANKING

_______--__--------------------I

In the Matter

of County

Frontier Bank of Laramie Cheyenne, Wyoming

I , ; I

DOCKET

NO.

98-030-B-SM

I

Cease and Desist Order Issued on Consent Pursuant to the Federal Deposit Insurance Act, as Amended and 13-3-104(b)of the Wyoming Statutes

I _______-___---------------------

WHEREAS, financial of Laramie chartered the Board

in recognition and Year Cheyenne,

of their 2000

common

goal

to maintain

the Bank

soundness County, bank that

readiness

of the Frontier a State

Wyoming

(the “Bank"),

is a member

of the Federal Reserve

Reserve System

System, (the "Board of

of Governors

of the Federal Department

of Governors"), Banking agreed

the Wyoming

of Audit, and the Bank

Division have

(the "Division to enter

of Banking"), consent

mutually (the

into this

Cease

and Desist

Order

l'Order") ; and WHEREAS,
On-e+--lgg81

the board a resolution: (1) authorizing

of directors

of the

Bank

adopted

and directing

to enter and consenting this Order defined amended issuance forth taking

into this Order, with each

2

on behalf

of the Bank of as as

to compliance and

and every

provision

by the Bank

its institution-affiliated Deposit

parties, Act, the

in section

3(u) of the Federal (12 U.S.C.

Insurance (2) waiving

(the "FDI Act") of a notice

1813(u));

of charges (3) waiving

and of hearing a hearing

on any matter of

set

in this Order; evidence

for the purpose

on any matter

set forth

in this Order; the issuance to 12 U.S.C. pursuant to and of this 1818,

(4) waiving Order

any and all rights of Governors

to contest pursuant

by the Board

12 C.F.R. sections

263, and the Division 13-3-104(d)

of Banking

and 16-3-114

of the Wyoming

Statutes;

(5) waiving manner,

any and all rights issuance,

to challenge

or contest,

in any or

the basis,

validity,

terms,

effectiveness, hereof.

enforceability

of .this Order

or any provision

NOW,

THEREFORE,

before

the taking

of any testimony

or

adjudication and without allegation Division

of, or finding this Order made

on, any issue of fact or law herein, an admission of any or the

constituting

or implied

by the Board with

of Governors

of Banking

in connection

this proceeding:

IT IS HEREBY the FDI Act

ORDERED

that,

pursuant

to section

8(b)(l)

of of the

(12 U.S.C.

1818(b) (1)) and section

13-3-104(b)

3

Wyoming cease

Statutes,

the Bank

and its institution-affiliated action as follows:

parties

and desist

and take affirmative

1. the prior City

The Bank written

shall

not declare

or pay any dividends Reserve Bank

without

approval Bank"),

of the Federal the Director

of Kansas of and

(the "Reserve Supervision

of the Division

Banking

and Regulation Requests

of the Board for approval of Banking date

of Governors, shall

the Division

of Banking. Bank

be received 30 days

by the Reserve prior

and the Division dividend

at least and shall

to the proposed

declaration

contain,

but need not be limited on earnings, cash

to, current capital

and projected levels and asset

information quality

flow,

of the Bank.

2.

(a)

During

the term of this Order full-time

and thereafter, with and

the

Bank shall demonstrated operations therewith, FDI Act Statutes.

employ

a permanent

president

experience of a bank, shall

in lending

and the management with

and in connection with

any new appointments of section 32 of the

comply

the provisions

(12 U.S.C.

1831i)

and section

13-3-104(b)

of the Wyoming

(b) such actions cashier

Within

15 days of this Order, to employ

the Bank

shall

take

as are necessary

a permanent

full-time portfolio and

with demonstrated

experience

in investment

I
.

4 interest operations Reports section filling rate risk management, including and Income. of the Wyoming and management the preparation The Bank Statutes shall with of the daily of Consolidated also comply to with

of a bank,

of Condition 13-3-104(b)

respect

this position.

3. retain Reserve

(a)

Within

20 days public

of this Order, accounting of Banking, audit firm,

the Bank

shall to the

an independent Bank

acceptable

and the Division

to conduct,

by no later financial be conducted and

than March statements

1, 1999,

a full scope

of the Bank's shall

as of December with

31, 1998. accepted

The audit auditing

in accordance shall include

generally

standards,

a review

of the effectiveness The scope

of the Bank's firm's is

internal engagement acceptable

control shall

structure. be set forth

of the accounting letter

in an engagement and the Division

that

to the Reserve

Bank

of Banking.

(b) effect,

For each with

calendar 1999,

year

that this Order shall retain

remains

in

commencing

the Bank

a public

accounting of Banking, audit

firm, acceptable to conduct, Bank's

to the Reserve 90 days statements set forth

Bank

and the Division a full in 3(a) scope

within

of year-end,

of.the

financial

for the year, in paragraph

accordance hereof.

with

the procedures

(c) statements, Division resulting audit

Within

10 days of receipt shall provide

of the audited Bank and the letter of the the

the Bank

the Reserve

of Banking

the audit

report

and management

from the audit. and management

Within

45 days

of the receipt shall

report Bank

letter,

the Bank

provide plan,

Reserve

and the Division time report

of Banking

its written

including noted

acceptable

frames

to correct

any deficiencies

in the audit

or management

letter.

4.

Within Bank

30 days of this Order, and the Division designed

the Bank

shall

submit

to

the Reserve policies .Bank's

of Banking to strengthen

acceptable

written the

and procedures

and maintain and

records

and internal address,

controls.

The policies

procedures actions controls

shall

consider,

and include

corrective internal

aimed

at addressing

the criticisms

of the Bank's of

set forth

in the September

21, 1998 Report

Examination comments

(the "Report

of Examination"), controls

in particular transfer

those and

pertaining securities

to dual areas,

in the wire

investment general review

segregation

of duties

regarding

ledger

postings check

and reconcilements, logs and general

and the periodic ledger reconcilements

of cashiers

and backdated

transactions.

6 5.

(a)

Within

60 days

of this Order,

the Bank

shall

take

all steps information which

necessary

to correct

all documentation loan files

and credit (a list of Bank), flow

deficiencies

in the Bank's

was provided obtaining

to the Bank's accurate lacking shall

management

by the Reserve and cash During

including statements

and current such

financial

on credits

information.

the term to

of this Order, maintain consistent

the Bank

take all steps documentation

necessary on all

current with

and complete

loans,

its loan policy.

(b) submit plan

Within

60 days Bank

of this Order,

the Bank of Banking on each

shall a written loan that as

to the Reserve

and the Division position

designed

to improve

the Bank's

was past

due as to principal of this Order, other

or interest

in excess

of 90 days of

of the date $30,000, classified

and on each asset

in excess

including

real estate,

that was adversely by Reserve Bank examiners

or listed

as special

mention

in the Report liquidation,

of Examination additional

through

amortization, means,

repayment, whichever may

collateral shall

or other

be appropriate. without Division the prior

This plan written

not be amended

or rescinded Bank and the

approval

of the Reserve shall

of Banking, to cover

except loans

that the plan or other

be amended of $30,000 at

periodically

assets

in excess

that are adversely any subsequent

classified

or listed

for special of the Bank

mention

examination

or visitation

or that are

7 past due as to principal of each or interest for more than 90 days as of

the date

subsequent

examination

or visitation.

(c) due assets shall assets

Quarterly

progress

reports required

on classified by paragraph values

and past 12 hereof,

in excess

of $30,000

include,

at a minimum:

(i) the carrying

of such and value reduction, for loan for of the recent current of or

as of the date collateral;

of the report; (iii) plans

(ii) the nature

supporting elimination repayments; reductions payment internal

for improvement, of funds

of the asset; (v) specific in classified and

(iv) the sources target assets; levels

and timetables

(vi) a description most

history; watch

(vii) a copy of the Bank's

list.

6.

Within

10 days

of this Order,

the Bank

shall

eliminate or

from its books, portions

by charge-off classified

or collection, "loss"

all assets of

of assets which

in the Report

Examination, charged charge off.

have not been previously the Bank shall of assets

collected

in full or manner by the

Thereafter,

in a timely classified

off assets

or portions

"loss"

management

or board

of directors of Banking.

of the Bank or by the Reserve

Bank or the Division

I

8

7. submit business concerning This plan

(a)

.Within 60 days of this Order, Bank and the Division board

the Bank of Banking

shall a written

to the Reserve plan, approved

by the Bank's business

of directors, for 1999.

the Bank's shall

proposed

activities

contain and,

provisions

that address include:

the requirements

of this Order,

at a minimum,

(i) including capital, plans for asset

financial growth,

performance earnings,

objectives, and financial

liquidity pro forma

supported

by detailed,

quarterly

statements;

(ii.) management, objectives, Report given the condition

lending

and operational as reflected in the

of the Bank

of Examination, and

and the specific

strategies

for achieving

such objectives;

(iii) the means by which

identification.of will seek

the major

areas

in and

the Bank

to improve

its operational

performance.

(b) after

A written

business

plan

for each

calendar and the

year

1999 shall

be submitted

to the Reserve

Bank

9

Division calendar

of Banking year.

by the end of the first

month

of that

8.

Within Bank

60 days

of this Order,

the Bank

shall

submit

to

the Reserve comprehensive

and the Division procedures

of Banking for managing

acceptable, the Bank's interest position. The

written

rate risk and maintaining procedures shall,

an adequate

liquidity

at a minimum,

address

and consider:

(a) vulnerability rates in order

The establishment of net interest to ensure

of a system

to monitor

the

earnings

to changes

in interest established

compliance

with

the limits policy;

in the Bank's asset/liability

management

(b) include public data

enhancement

of the Bank's

liquidity

report

to

concerning

the Bank's

unfunded

loan commitments,

deposits,

and large

certificates

of deposit;

(c)
periodic

the preparation reports with

and submission

of regular, that document include,

written

to the board the policies review

of directors

the Bank's compliance at a minimum: position ratios

and that shall

(i) a complete targeted

of the Bank's then-current and interest or steps sensitivity taken during and

in meeting

liquidity

and

(ii) an analysis period

of strategies deviations

the reporting

to address

from the policies;

10

(d) reviews

controls

to ensure

that

the board

of directors rate risk, or

and monitors plans,

the Bank's liquidity, and approves

interest

and investment sales.

any securities

purchases

9.

The Bank

shall

take

the following

actions

to ensure are Year

that

its internal

and external

mission-critical

systems

2000 compliant:

(a) manager, Banking

Within

10 days

of this Order, Bank

appoint

a senior of be

acceptable

to the Reserve

and the Division

and accountable

to the board

of directors, Year amount 2000

who will readiness to Year staff is

responsible efforts

for supervising devote

the Bank's

and will

a substantial

of time

2000

compliance necessary

matters, to support

and appoint

whatever

additional

this effort;

(b) allocate

within

10 days of this Order, resources

identify

and Year

financial

and other

necessary

to achieve

2000 compliance;

(c) Reserve Bank

within

30 days

of this Order,

submit

to the test plans

and the 'Division of Banking

acceptable

11

for all renovated critical systems

or modified that comply

internal with

and external

missionset forth Standards on in for

the time-frames Year 2000

the Interagency Safety October

Guidelines

Establishing

and Soundness, 15, 1998;

published

in the Federal

Reqister

Cd) corporate

within

30 days of this Order, Year 2000 compliance disruption

evaluate

large if

borrowers'

efforts

to determine

they are sufficient operations

to avoid

of the borrowers' the borrowers' to conduct subsequent

that could

significantly

affect

creditworthiness, periodic

and establish and

time-frames

evaluations;

(e) Reserve

within

30 days of this Order, of Banking

submit

to the

Bank and the Division plan to ensure

an acceptable of business in.

contingency the event systems

the prompt

resumption

that any of the Bank's January sources

information

or environmental includes to provide payments.

fails on or after of back-up

1, 2000 that

identification liquidity,

and lines of credit for the Bank's

and third-party

processors

10.

(a)

The Bank with

shall sound

immediately banking

take all necessary to eliminate

actions and/or

consistent correct

practices,

the violation

of section

208.3(d) (1) of

12 Regulation and Title H of the Board'of 13 of the Wyoming Governors Statutes (12 C.F.R. set forth 208.3(d)(l)) of

in the Report

Examination.

(b) in any violation State

The Bank

shall

not engage,

directly

or indirectly, of

of Regulation law.

H or applicable

provisions

of Wyoming

(c) directors shall

Within

10 days

of this Order,

the Bank's

board

of

establish

a committee with shall

(the "Compliance the provisions be comprised of this

Committee"), Order. three Bank,

to monitor

compliance Committee

The Compliance outside directors,

of at least of the

who are not executive 215.2(d)

officers

as defined

in section

of Regulation The Compliance

0 of the Board Committee on a

of Governors shall report

(12 C.F.R.

215.2(d)).

to the Bank's board

of directors

at least

quarterly

basis.

11.

The plans, by paragraphs

policies, 3(a) and

procedures,

and engagement 9(c) and and

letter (e) of

required hereof Banking

lb), 4, 8, and Bank

shall

be submitted

to the Reserve

the Division policies, to the

for review

and approval.

Acceptable shall

plans,

procedures, Reserve periods. Bank

and an engagement and the Division shall adopt

letter

be submitted

of Banking

within

the required policies,

time and

The Bank

all approved

plans,

13 procedures within 10 days of receipt of approval by the Reserve fully comply with

Bank and the Division them. During

of Banking

and then shall

the term of this Order, and engagement the prior

the approved letter shall

plans, not be amended

policies,

procedures, without

or rescinded

written

approval

of the Reserve

Bank and the Division

of Banking.

12. (December

Within

30 days
31,

after June

the end of each

calendar

quarter the Bank

31, March

30 and September shall written furnish progress taken

30) following

date of this Order, and the Division

the Bank

to the Reserve reports

of Banking

detailing

the form and manner with this Order

of all actions

to secure including

compliance updated 5(b) 9

and the results improvement readiness

thereof, plans efforts

reports hereof, hereof. required

on all asset and Year 2000

required required when

by paragraph by paragraph

Such reports

may be discontinued

the corrections and the Reserve released the

by this Order

have been accomplished of Banking reports.

Bank and the Division Bank from making

have, .in writing,

further

14 13.
to:

All

communications

regarding

this Order

shall

be sent

(a)

Mr. James H. Jonson Vice President Federal Reserve Bank of Kansas 925 Grand Boulevard Kansas City, Missouri 64198

City

lb)

Mr. L. Bruce Hendrickson Wyoming State Banking Commissioner Department of Audit, Division of Banking Herschler Building, 3rd Floor East Wing Cheyenne, Wyoming 82002 Mr. Nick Anest Chairman of the Board Frontier Bank of Laramie County 1501 South Greeley Highway Cheyenne, Wyoming 82003-5720

(cl

14.

The provisions

of this Order

shall

be binding in their

upon

the

Bank and its institution-affiliated as such, and their successors

parties,

capacities

and assigns.

15. enforceable the Board

Each provision until stayed,

of this Order modified,

shall

remain

effective by

and

terminated

or suspended

of Governors

and the Division

of Banking.

16. contrary, their Bank

Notwithstanding the Reserve Bank

any provision

of this Order of Banking

to the may, in

and the Division written

sole discretion, to comply with

grant

extensions

of time

to the

any provision

of this Order.

15

17.

The provisions of this Order shall not bar, estop or the

otherwise prevent the Board of Governors, the Reserve Bank,

Division of Banking or any federal or state agency or department from taking any other action affecting the Bank or any of its current or former institution-affiliated parties.

By order of the Board of Governors of the Federal Reserve System and the Division of Banking effective this /$"day of

Wyoming Department of Audit

Board of Governors of the Federal Reserve System

State Bk(nking Commissioner

w

Secr&tary of the Board

Frontier Bank ofsamie

County

Chairman of the Board The undersigned directors of the Bank each acknowledges having read the foregoing Order and approves of the consent thereto by the Bank.

Saul Weingarten

CERTIFICATE EXECUTION

OF RESOLUTION OF A CEASE AND

AUTHORIZING DESIST ORDER

corporation adopted at a special meeti directors of copy of a resolution the Corporation duly

called, convened and held o bylaws; that said resolution way the been modified, directors of the set forth repealed below. tha/ to execute on behalf (“ Board of 1966, of the or rescinded have Corporation duly

in accordance with its sR/ t said meeting and has not in any but is in full force ratified and and effect; said and that resolution all in affirmed

the form

Resolved,

be and he hereby Corporation the

is, authorized and Desist

and directed

Cease

Order, Docket No.~S-&+,~~e the Federal Reserve System Institutions and approved Further Supervisory at this that Act meeting.

“ Order” ), to be issued on consent by of Governors” ) pursuant to the Financial as amended in the form presented to

resolved,

the Corporation

shall

take

such

steps

as are necessary of the

to ensure compliance by the directors, officers, agents and employees Corporation with each and every provision of the Order. Further resolved, that the Corporation hereby waives evidence any and all rights: on any matter

a)

to a hearing in the Order;

for the purpose

of taking

set forth

b)

to contest to judicial to challenge

the issuance review

of the Order; by the Board of Governors; of the and Order.
I day

cl
d)

of the Order

or contest

the viability

of the provisions thi

d and the seal of the Corporation 2Il9PC