Temecula Valley Bank, a wholly owned subsidiary of Temecula Valley Bancorp, has entered into an agreement with the Federal Deposit Insurance Corporation and the California Department of Financial Institutions to adopt an action program designed to enhance the strength and stability of its operations.
The company has also entered into an agreement with the Federal Reserve Bank of San Francisco (FRB) intended to augment the company’s ability to act as a source of strength to the bank.
As part of the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Institutions (DFI) agreement, the bank said that it consented to the issuance of an order to cease-and-desist, which formally outlines specific areas the bank agrees to address through the adoption and implementation of policies that further enhance the soundness of the bank.
Additionally, the bank is required to maintain specified capital levels, notify the FDIC and the DFI of director and management changes and obtain prior approval of dividend payments.
The FRB agreement requires that the company obtain FRB approval before paying dividends, taking dividends from the bank, making payments on subordinated debt or trust preferred securities, incurring debt or purchasing/redeeming company stock. It also requires the company to submit a capital plan, obtain FRB approval before appointing new directors or senior executive officers, and comply with certain payment restrictions on golden parachute payments and indemnification restrictions.
Marty Plourd, president and COO, said: As we move forward with these agreements, we will continue to act aggressively on our strategy to strengthen our balance sheet, align our operations with the current market environment and restore the bank to profitability.
