EXHIBIT 99.1
UNITED STATES OF AMERICA
BEFORE
THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
STATE OF KANSAS
OFFICE OF THE STATE BANK COMMISSIONER
TOPEKA, KANSAS
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)
Written Agreement by and among )
)
GOLD BANC CORPORATION, INC. )
Leawood, Kansas )
)
GOLD BANK )
Leawood, Kansas ) Docket Nos. 03-014-WA/XX-XX
) 03-014-WA/XX-XX
FEDERAL RESERVE BANK )
OF KANSAS CITY )
Kansas City, Missouri )
)
and )
)
OFFICE OF THE STATE BANK )
COMMISSIONER )
Topeka, Kansas )
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WHEREAS, in recognition of their common goal to restore and maintain the
financial soundness of Gold Banc Corporation, Inc., Leawood, Kansas ("Gold
Banc"), a registered bank holding company, and its subsidiary bank, the Gold
Bank, Leawood, Kansas (the "Bank"), a state chartered bank that is a member of
the Federal Reserve System, Gold Banc, the Bank, the Federal Reserve Bank of
Kansas City (the "Reserve Bank"), and the Office of the State Bank Commissioner
(the "OSBC") have mutually agreed to enter into this Written Agreement (the
"Agreement");
WHEREAS, as the result of the identification of deficiencies, the Bank is
taking steps to enhance and improve its programs and procedures for complying
with the Currency and Foreign Transactions Reporting Act (31 U.S.C. ss. 5311 et
seq.) (the Bank Secrecy Act (the "BSA")) and the rules and regulations issued
thereunder by the U.S. Department of the Treasury (31 C.F.R. Part 103), and with
the anti-money laundering ("AML") provisions of Regulation H (12 C.F.R. xx.xx.
208.62 and 208.63) of the Board of Governors of the Federal Reserve System (the
"Board of Governors"); and
WHEREAS, on August 26, 2003 the boards of directors of Gold Banc and the
Bank, at duly constituted meetings, adopted resolutions authorizing and
directing Xxxxxxx X. Xxxxx, President and Chief Executive Officer of Gold Banc
and the Bank, to enter into this Agreement on behalf of Gold Banc and the Bank,
respectively, and consented to compliance by Gold Banc and the Bank and their
institution-affiliated parties, as defined in sections 3(u) and 8(b)(3) of the
Federal Deposit Insurance Act, as amended (the "FDI Act") (12 U.S.C. xx.xx.
1813(u) and 1818(b)(3)), with each and every applicable provision of this
Agreement.
NOW, THEREFORE, Gold Banc, the Bank, the Reserve Bank, and the OSBC agree
as follows:
Internal Control Procedures
1. (a) Within 60 days of this Agreement, the Bank shall submit to the
Reserve Bank and the OSBC acceptable written procedures designed to strengthen
the Bank's internal controls. The procedures shall, at a minimum, address,
consider, and include:
(i) Monitoring transactions between Gold Banc and the Bank to
ensure compliance with section 23A of the Federal Reserve
Act (12 U.S.C. ss. 371c) and Regulation W of the Board of
Governors (12 C.F.R. Part 223);
(ii) guidelines for extending and documenting credit to Gold
Banc's and the Bank's directors, executive officers,
principal shareholders,
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their related interests, and immediate family members, to
ensure compliance with Regulation O of the Board of
Governors (12 C.F.R. Part 215);
(iii) guidelines for review and approval of the payment and
reimbursement of expenses to or on behalf of the Bank's
institution-affiliated parties, their related interests, and
immediate family members;
(iv) segregation of duties for processing, sending, reconciling,
and reviewing wire transfers;
(v) reconciliation of general and subsidiary ledger accounts,
and timely resolution of open items; and
(vi) corrective steps that address the internal control
deficiencies noted in the report of the examination of the
Bank conducted jointly by the Reserve Bank and the OSBC in
March 2003 (the "Report of Examination").
(b) For the purposes of this Agreement, the terms: (i) "director"
"executive officer", "principal shareholder", "related interest", and "immediate
family members" shall be defined as set forth in section 215.2 of Regulation O
of the Board of Governors (12 C.F.R. ss. 215.2).
Internal Audit
2. (a) Within 30 days of this Agreement, Gold Banc's board of directors
shall conduct a review of Gold Banc's internal audit program (the "Review") to
ensure that it is consistent with generally accepted auditing standards. The
Review shall include, but not be limited to, assessments of:
(i) The audit committee's composition, independence,
performance, and effectiveness;
(ii) the adequacy of the internal audit function;
(iii) Gold Banc's audit procedures manual;
(iv) compliance with the March 17, 2003 Interagency Policy
Statement on Internal Audit and Its Outsourcing;
(v) actions taken to appoint a qualified director of internal
audit;
(vi) compliance with the requirements of section 36 of the FDI
Act (12 U.S.C. ss. 1831m); and
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(vii) steps taken to address the internal audit deficiencies
noted in the Report of Examination and the report of the
inspection of Gold Banc conducted by the Reserve Bank in
April 2003 (the "Report of Inspection").
(b) Within 45 days of this Agreement, Gold Banc shall submit to the Reserve
Bank and the OSBC an acceptable plan detailing the specific actions the board of
directors will take to address fully the findings and recommendations of the
Review, including any proposed operational or managerial changes and any
proposed changes to the audit procedures manual.
(c) The Bank's board of directors shall take all actions necessary to
ensure the Bank's compliance with the plan described in paragraph 2(b) hereof.
3. Within 60 days of this Agreement, Gold Banc's board of directors shall
adopt a revised audit plan for 2003 that reflects the findings and
recommendations of the Review described in paragraph 2(a) hereof. The plan shall
provide for compliance with section 36 of the FDI Act (12 U.S.C. ss. 1831m) and
ensure that adequate documentation is maintained to support the required
attestations of Gold Banc's chief executive officer and chief financial officer.
Gold Banc shall forward a copy of the plan to the Reserve Bank and the OSBC, and
immediately notify the Reserve Bank and the OSBC, in writing, of any deviations
from the plan.
Information Technology
4. Within 90 days of this Agreement, Gold Banc and the Bank shall submit to
the Reserve Bank and the OSBC an acceptable joint written plan to improve the
information technology function of the consolidated organization. The plan
shall, at a minimum, address, consider, and include:
(a) An enterprise-wide information security risk assessment, as
required by Appendix D-2 to Regulation H of the Board of
Governors (12 C.F.R. Part 208, App. D-2) and Appendix F to
Regulation Y of the Board of Governors (12 U.S.C. Part 225, App.
F), to enable Gold Banc and the Bank to meet all applicable
requirements for protecting nonpublic
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customer information and to assist Gold Banc and the Bank in
making future appropriate adjustments to their information
security safeguards;
(b) an assessment of the current level of information technology
staffing to ensure that operations are performed by adequately
staffed and qualified personnel and management;
(c) revisions to current policies, procedures, and controls to
address logical information security;
(d) procedures and controls to strengthen the effectiveness and
integrity of the consolidated organization's information security
program; and
(e) the information technology deficiencies noted in the Report of
Examination and the Report of Inspection.
Regulation Y Compliance
5. Within 15 days of this Agreement, Gold Banc shall submit to the Reserve
Bank an acceptable written plan to comply promptly with the general purpose
hardware cost restrictions and data processing and transmission activities
restrictions set forth in sections 225.28(b)(14)(i)(B) and (ii) of Regulation Y
of the Board of Governors (12 C.F.R. xx.xx. 225.28(b)14(i)(B) and (ii)) in
regard to the operations of Gold Banc's wholly-owned nonbank subsidiary,
CompuNet Engineering, Inc., ("CompuNet"). Such plan shall address either full
compliance by Gold Banc and CompuNet with the revenue restrictions contained in
these sections of Regulation Y within 30 days of this Agreement or a plan for
divestiture of CompuNet (including execution of a sale agreement with timeframes
acceptable to the Reserve Bank) within 90 days of this Agreement.
Bank Secrecy Act and Regulation H Compliance
6. Within 60 days of this Agreement, the Bank shall submit to the Reserve
Bank and the OSBC an acceptable written program designed to improve the Bank's
system of internal controls to ensure compliance with the BSA and the rules and
regulations issued thereunder, as required by section 208.63 of Regulation H of
the Board of Governors (12 C.F.R. ss. 208.63).
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The program shall include procedures to identify and incorporate, on an ongoing
basis, the requirements of any amendments to the BSA and rules and regulations
issued thereunder. The program, at a minimum, shall provide for:
(a) Adequate AML and other internal controls to ensure compliance with the
BSA and rules and regulations issued thereunder, including (i) currency
transaction report exemption procedures, and (ii) effective monitoring of
incoming and outgoing wire transfers for suspicious or unusual activities;
(b) independent testing of compliance with the BSA and the rules and
regulations issued thereunder and compliance audits that are comprehensive and
performed frequently, are fully documented, and are conducted with the
appropriate segregation of duties; and
(c) the training of all appropriate personnel (including, but not limited
to tellers, and operations staff) conducted on a regular basis by competent
personnel in all aspects of regulatory and internal policies and procedures
related to the BSA.
Suspicious Activity and Customer Due Diligence
7. Within 60 days of this Agreement, the Bank shall submit to the Reserve
Bank and the OSBC an acceptable written customer due diligence program designed
to reasonably ensure the identification and timely, accurate, and complete
reporting of all known or suspected violations of law and suspicious activities
against or involving the Bank to law enforcement and supervisory authorities as
required by the suspicious activity reporting provisions of Regulation H of the
Board of Governors (12 C.F.R. ss. 208.62). At a minimum, the program shall
include:
(a) An effective system to ensure that all known or suspected violations of
law and suspicious activities are properly identified, reviewed, documented, and
reported in accordance with applicable reporting regulations and guidelines;
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(b) a risk-focused assessment of the Bank's customer base to:
(i) identify the categories of customers whose transactions and
banking activities are routine and usual; and
(ii) determine the appropriate level of enhanced due diligence
necessary for those categories of customers that the Bank
has reason to believe pose a heightened risk of illicit
activities at or through the Bank; and
(c) for those customers whose transactions require enhanced due diligence,
additional procedures to:
(i) determine the appropriate documentation necessary to confirm
the business activities of the customer;
(ii) understand the normal and expected transactions of the
customer; and
(iii)report known or suspected violations of law and suspicious
activities in compliance with the reporting requirements set
forth in Regulation H of the Board of Governors (12 C.F.R.
ss. 208.62).
Transaction Review
8. (a) Within 30 days of this Agreement, the Bank shall submit to the
Reserve Bank an acceptable plan that shall establish the (i) types of accounts
and transactions, (ii) methodology, and (iii) sampling procedures to be used in
a forensic review of account records from January 31, 2002 through the date of
this Agreement (the "Transaction Review") to determine whether suspicious
activity involving accounts or transactions at, by, or through the Bank was
properly identified and reported by the Bank in accordance with applicable
suspicious activity reporting regulations.
(b) Within 60 days after the date that the Reserve Bank approves the plan
described in paragraph 8(a) of this Agreement, the Bank shall conduct and
complete the Transaction Review.
(c) Within 30 days after completion of the Transaction Review, the Bank
shall submit to the Reserve Bank a written report of the findings of the
Transaction Review.
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(d) Within 45 days after completion of the Transaction Review, the Bank
shall ensure that all transactions previously required to be reported have been
reported in accordance with applicable regulations and guidelines.
Compliance with Laws and Regulations
9. (a) Gold Banc and the Bank shall promptly take all necessary steps
consistent with sound banking practices to correct all violations of laws and
regulations set forth in the Report of Examination and the Report of Inspection.
In addition, the boards of directors of Gold Banc and the Bank shall take
necessary steps to ensure Gold Banc's and the Bank's future compliance with all
applicable laws and regulations.
(b) In appointing any new officers or directors, Gold Banc and the Bank
shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C.
ss. 1831i) and Subpart H of Regulation Y of the Board of Governors.
(c) Gold Banc and the Bank shall comply with the restrictions on
indemnification and severance payments of section 18(k) of the FDI Act (12
U.S.C. ss. 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation's
regulations (12 C.F.R. Part 359).
Compliance with Agreement
10. (a) Within 15 days of this Agreement, the boards of directors of Gold
Banc and the Bank shall appoint a joint committee (the "Compliance Committee")
to monitor and coordinate Gold Banc's and the Bank's compliance with the
provisions of this Agreement. The Compliance Committee shall be comprised of
three or more outside directors who are not executive officers of Gold Banc or
the Bank. At a minimum, the Compliance Committee shall keep detailed minutes of
each meeting, and shall report its findings to the boards of directors of Gold
Banc and the Bank on a monthly basis.
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(b) Within 30 days after the end of each calendar quarter (September 30,
December 31, March 31, and June 30) following the date of this Agreement, the
boards of directors of Gold Banc and the Bank shall submit to the Reserve Bank
and OSBC written progress reports detailing the form and manner of all actions
taken to secure compliance with this Agreement and the results thereof. Such
reports may be discontinued when the corrections required by this Agreement have
been accomplished and the Reserve Bank and the OSBC have, in writing, released
the Gold Banc and the Bank from making further reports.
Approval of Plans, Policies, and Procedures
11. The written plans, programs, and procedures required by paragraphs
1(a), 2(b), 4, 5, 6, 7, and 8(a) of this Agreement shall be submitted to the
Reserve Bank, and where applicable, the OSBC for review and written approval.
Acceptable plans, programs, and procedures shall be submitted within the time
periods set forth in the Agreement. The Bank and Gold Banc, where applicable,
shall adopt all approved plans, programs, and procedures within 10 days of
approval by the Reserve Bank and the OSBC and then shall fully comply with them.
During the term of this Agreement, the approved plans, programs, and procedures
shall not be amended or rescinded without the prior written approval of the
Reserve Bank and the OSBC.
Communications
12. All communications regarding this Agreement shall be sent to:
(a) Xx. Xxxxx X. Xxxxxxx
Vice President
Federal Reserve Bank of Kansas City
000 Xxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
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(b) Xx. Xxxxxxxx X. Xxxxxx
Bank Commissioner
Office of the State Bank Commissioner
000 Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxx 00000
(c) Xx. Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Gold Banc Corporation, Inc.
Gold Bank
00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
Miscellaneous
13. Notwithstanding any provision of this Agreement to the contrary, the
Reserve Bank and the OSBC may, in their sole discretion, grant written
extensions of time to Gold Banc and the Bank to comply with any provision of
this Agreement.
14. The provisions of this Agreement shall be binding upon Gold Banc, the
Bank, and all of their institution-affiliated parties and regulated persons, in
their capacities as such, and their successors and assigns.
15. Each provision of this Agreement shall remain effective and enforceable
until stayed, modified, terminated or suspended by the Reserve Bank and the
OSBC.
16. The provisions of this Agreement shall not bar, estop, or otherwise
prevent the Board of Governors, the Reserve Bank, the OSBC, or any other federal
or state agency from taking any other action affecting Gold Banc or the Bank or
any of their current or former institution-affiliated parties and their
successors and assigns.
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17. This Agreement is a "written agreement" for the purposes of, and is
enforceable by the Board of Governors as an order issued under, section 8 of the
FDI Act (12 U.S.C. ss. 1818).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the 26th day of August, 2003.
GOLD BANC CORPORATION, INC. FEDERAL RESERVE BANK OF KANSAS CITY
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxxx
President and CEO Vice President
GOLD BANK STATE OF KANSAS
OFFICE OF THE STATE BANK
COMMISSIONER
By: /s/Xxxxxxx X. Xxxxx By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxx Xxxxxxxx X. Xxxxxx
President and CEO Bank Commissioner
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