At examinations performed in 1994, 1995, and April 1996, the bank continued
to be rated a Composite “5.” During that time the Chairman continued to inject capital into the bank
as needed and by the end of 1996, his total capital investment in the bank was over $17 million,
according to FDIC records. The bank was upgraded to a composite “4” rating at the December
1996 examination, in part, due to the additional capital from the Chairman. Apparent improvement
in the bank’s condition noted in the October 1998 examination resulted in an upgrade in the
composite rating to a “3,” the termination of the two outstanding C&D orders, and the adoption of
an informal Memorandum of Understanding (MOU) between the bank, the FDIC, and the Banking
Commissioner of the State of Connecticut. As part of the MOU, bank management agreed to,
among other things, establish prudent lending limits, devise plans to reduce problem assets,
maintain minimum capital levels, and notify the FDIC’s Regional Director and the Connecticut
Banking Commissioner of any new lines of business under consideration by the bank.