State of Connecticut Department of Banking

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THE GREATER NORWALK AREA
CREDIT UNION

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CONSENT ORDER

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 667, Title 36a of the Connecticut General Statutes;

WHEREAS, The Greater Norwalk Area Credit Union (“Credit Union”) is a Connecticut credit union, and, as such, subject to the jurisdiction of the Commissioner;

WHEREAS, Pursuant to Section 36a-17 of the Connecticut General Statutes, the Commissioner, has conducted an investigation and examination of the Credit Union and, based upon his findings, believes that the Credit Union has engaged in unsafe and unsound practices and that grounds exist to initiate an administrative action against the Credit Union pursuant to Section 36a-53 of the Connecticut General Statutes;

WHEREAS, the Credit Union solely for the purpose of obviating the need for formal administrative proceedings based upon the allegations contained herein, agrees to the issuance of this Consent Order;

WHEREAS, the Credit Union, through its execution of this Consent Order, voluntarily waives the right to be afforded notice and an opportunity for a hearing and seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order.

WHEREAS, an administrative proceeding initiated under Section 36a-53 would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;

WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law.

AND WHEREAS, on July 26, 2011, the Credit Union by and through its duly elected and acting Board of Directors (“Board”) executed a Stipulation to the Issuance of a Consent Order, wherein the Credit Union stipulated and agreed to the issuance of this Consent Order.

NOW THEREFORE, IT IS HEREBY ORDERED THAT:

1. The Credit Union 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 Credit Union.  Within thirty (30) days after the effective date of this Consent Order, the Board of Directors shall conduct an evaluation of management.  The qualifications of management personnel shall be evaluated on their ability to:  comply with the requirements of this Consent Order; operate the Credit Union in a safe and sound manner; comply with applicable laws and regulations; and restore all aspects of the Credit Union to a safe and sound condition, including improve the Credit Union’s asset quality, capital adequacy, earnings, management effectiveness, liquidity, and sensitivity to market risk.
2. The Board shall immediately establish a supervisory committee that meets the requirements of Sections 36a-451(a).  The supervisory committee shall meet at least quarterly while this Consent Order is in effect.
3. The Credit Union shall immediately notify the Commissioner and the National Credit Union Administration (NCUA) in writing of any resignation or termination of any member of its Board, credit committee, supervisory committee, or senior management.  In addition, the Credit Union shall notify the Commissioner in writing of any proposed new member of the Board, any committee or senior management at least thirty (30) days prior to the date such new member is to begin service.  Such service may not commence until receipt of approval from the Commissioner.
4. Within ninety (90) days after the effective date of this Consent Order, the Credit Union shall develop a plan to reduce the level of delinquent loans (“Delinquency Reduction Plan”) and submit it to the Commissioner for review and comment.  Within thirty (30) days after the receipt of any comments and after adoption of any recommended changes, the Board shall approve the revised Delinquency Reduction Plan and record its approval in the Board meeting minutes.  Within thirty (30) days after the end of each month following the effective date of this Consent Order, the Board shall forward to the Commissioner and the NCUA the Credit Union’s delinquency report.
5. Within thirty (30) days after the receipt of any Report of Examination of the Credit Union from the Commissioner, the Credit Union shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified “Loss” that have not been previously collected or charged off.  The Board shall ensure that the Credit Union adheres to its Charge-Off Policy.
6. Within ninety (90) days after the effective date of this Consent Order, the Credit Union shall develop a Net Worth Plan to ensure the net worth of the Credit Union is restored to a minimum of 7% and thereafter remains above 7%.  The Board shall review, on a monthly basis, the Credit Union’s compliance with the Net Worth Plan and its targets, provide an explanation for why the targets have not been met and make adjustments to operations in order to meet the targets.
7. Within sixty (60) days after the effective date of this Consent Order, the Credit Union shall engage an independent party to perform a comprehensive audit and a one hundred percent (100%) verification of member accounts. The audit shall include a statement as to the reasonableness of the Credit Union’s methodology for calculating the Allowance for Loan and Lease Loss ratio and funding methodology for the Allowance for Loan and Lease Losses Account.  Upon completion, a copy of the audit and results of the verification shall be submitted to the Commissioner and the NCUA.
8. The Credit Union shall not declare or pay any cash dividends without the prior written approval of the Commissioner and the NCUA.
9. Within ninety (90) days after the effective date of this Consent Order, the Credit Union shall adopt a comprehensive written strategic plan covering an operating period of at least three years (“Strategic Plan”) and submit it to the Commissioner and the NCUA for review and comment.  Within thirty (30) days after the receipt of any comments and after adoption of any recommended changes, the Board shall approve the revised Strategic Plan and record its approval in the Board meeting minutes.  The Strategic Plan shall:  (a) include an assessment of the Credit Union’s current financial condition and a description of the operating assumptions that form the basis for major projected income and expense components, and (b) address short-term goals and operating plans to comply with the terms of this Consent Order and correct all regulatory criticisms.  Within thirty (30) days after the end of each calendar quarter following the adoption of the Strategic Plan, the Board shall evaluate the Credit Union’s performance in relation to the Strategic Plan and record the results of the evaluation and any actions taken to meet the plan by the Credit Union in the Board meeting minutes.
10. Within ninety (90) days after the effective date of this Consent Order, and within the first 30 days of each calendar year thereafter, the Board shall develop and fully implement a written budget consisting of goals and strategies, consistent with sound banking practices, and taking into account the Credit Union’s other written plans, policies, or other actions as required by this Consent Order.  The Board shall develop a budget review process to monitor the revenue and expenses of the Credit Union whereby actual performance is compared against budgetary projections not less than monthly, and the results of the evaluation and any actions taken by the Credit Union are recorded in the Board meeting minutes.  The written budget shall include, at a minimum:

(a)
identification of the major areas in, and means by which, the Board will seek to improve the Credit Union's operating performance;
(b) specific goals to improve the net interest margin, increase interest income, reduce discretionary expenses, improve and sustain earnings, and maintain adequate provisions to the Allowance for Loan and Lease Losses; and
(c) a description of the operating assumptions that form the basis for, and adequately support, material projected revenue and expense components.

11. Within sixty (60) days after the effective date of this Consent Order, and annually thereafter, the Board shall ensure that:  (a) all Credit Union employees and Board members are provided Bank Secrecy Act (“BSA”) training, and (b) a comprehensive and independent review of the Credit Union’s BSA program is performed.  The Credit Union shall submit the review to the Commissioner and the NCUA.
12. The Credit Union shall file with the NCUA 5300 Call Reports that accurately reflect the financial condition of the Credit Union as of the reporting period.  In particular, the Credit Union shall ensure that all delinquency is properly reported and the Allowance for Loan and Lease Losses Account is adequately funded.  The accuracy of such Call Reports shall be attested to by at least two directors of the Credit Union.
13. Within thirty (30) days after the effective date of this Consent Order, the Credit Union shall take steps, consistent with safe and sound practices, that are necessary to eliminate or correct all violations of laws, rules, regulations, and contraventions of policy cited in the latest Report of Examination and comply with any orders or agreements.  In addition, within sixty (60) days after the effective date of this Consent Order, the Credit Union shall adopt and implement appropriate procedures to ensure future compliance with all applicable laws, rules, regulations, policies, orders, and agreements.
14. This Consent Order shall become final upon issuance.
15. The provisions of this Consent Order shall be binding upon the Credit Union, and its directors, officers, and employees.
16. The provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as, any provision of this Consent Order shall have been modified, suspended, or terminated in writing by the Commissioner.
17. Issuance of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner and the NCUA to take enforcement action against the Credit Union based upon a violation of this Consent Order if the Commissioner or the NCUA determines that compliance with the terms herein is not being observed.

Dated at Hartford, Connecticut
this 26th day of July 2011.           

________/s/_________
HOWARD F. PITKIN
Banking Commissioner

Administrative Orders and Settlements