SUPERVISORY AGREEMENT
This Supervisory Agreement (Agreement) is made this 30th
day of April, 2010, by and through the Board of Directors
(Board) of North American Savings Bank, FSB, Grandview,
Missouri, OTS Docket No. 03927 (Association) and the Office
of Thrift Supervision (OTS), acting by and through its
Regional Director for the Western Region (Regional Director);
WHEREAS, the OTS, pursuant to 12 U.S.C. 1818, has the
statutory authority to enter into and enforce supervisory
agreements to ensure the establishment and maintenance of
appropriate safeguards in the operation of the entities it
regulates; and
WHEREAS, the Association is subject to examination,
regulation, and supervision by the OTS; and
WHEREAS, based on its January 11, 2010 examination of
the Association, the OTS finds that the Association has
engaged in unsafe or unsound practices and/or violations of
law or regulation; and
WHEREAS, in furtherance of their common goal to ensure
that the Association addresses the unsafe or unsound
practices and/or violations of law or regulation identified
in the OTS January 11, 2010 report of examination (▇▇▇), the
Association and the OTS have mutually agreed to enter into
this Agreement; and
WHEREAS, on April 27th, 2010, the Association's Board,
at a duly constituted meeting, adopted a resolution (Board
Resolution) that authorizes the Association to enter into
this Agreement and directs compliance by the Association and
its directors, officers, employees and other institution-
affiliated parties with each and every provision of this
Agreement.
NOW, THEREFORE, in consideration of the above premises,
it is agreed as follows:
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Compliance with Laws and Regulations.
1. The Association shall comply with all applicable laws,
regulations, and regulatory guidelines, including, but not
limited to:
(a) 12 C.F.R. 560.160 (Asset Classification); and
(b) 12 C.F.R. 560.172 (Appraisals on Real Estate
Owned).
Internal Asset Review.
2. By May 5, 2010, the Association shall obtain and submit
to the Regional Director a written report (IAR Report) from
an independent qualified third-party consultant(s) (IAR
Consultant), acceptable to the Regional Director, addressing
the adequacy of the Association's internal asset review (IAR)
structure, policies, procedures, and practices (IAR System)
in accordance with applicable regulatory guidance. The IAR
Report shall set forth the IAR Consultant's findings and
recommendations regarding its assessment on whether:
(a) the IAR System promptly identifies potential
credit weaknesses and relevant trends that may affect credit
quality;
(b) the IAR System adequately reviews for compliance
with internal loan policies, underwriting guidelines, and
regulatory requirements;
(c) the IAR System provides timely, accurate, and
relevant information to the Board and Management to assess
the adequacy of the allowance for loan and lease losses
(ALLL);
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(d) the IAR System provides Management and the Board
with timely and accurate information on the quality of the
Association's loan portfolio;
(e) the modifications to the IAR System under
consideration by Management are necessary and/or sufficient;
and
(f) the IAR System needs any other modifications.
3. By May 20, 2010, the Association shall submit a written
plan that specifically addresses each finding and
recommendation set forth in the IAR Report (IAR Plan) to the
Regional Director for review and comment. The IAR Plan shall
provide: (a) a written schedule for implementation of
corrective actions, including, but not limited to, the
adoption of revised policies and procedures; and (b) assigned
accountability for the implementation of the corrective
actions.
4. Upon written notification from the Regional Director
that the IAR Plan is acceptable, the Association shall
implement and comply with the IAR Plan.
Loan Review.
5. By May 5, 2010, the Association shall obtain and submit
to the Regional Director a written report (Asset
Classification Report) from an independent qualified third-
party consultant(s) (Loan Review Consultant), acceptable to
the Regional Director, regarding its asset classification
review of no less than seventy percent (70%) of the
Association's non-homogeneous loan portfolio. The Loan Review
Consultant's review shall be conducted consistent with the
requirements of applicable laws, regulations, and regulatory
guidance. The Asset Classification Report shall set forth the
Loan Review Consultant's findings and recommendations
regarding its assessment of:
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(a) the Association's non-homogeneous loan portfolio,
beginning with the largest borrowing relationship, then
progressively addressing the next largest relationship until
the seventy percent (70%) coverage ratio is reached;
(b) the results of its independent testing of the
Association's internal risk rating/loan grading practices;
(c) the Association's compliance with credit
underwriting, documentation, and administration policies and
procedures and applicable laws, regulations, and regulatory
guidance requirements;
(d) whether there is any inadequate credit supervision
or underwriting practices at the Association, and, if so,
what those are;
(e) the adequacy of the Association's cash flow
analysis;
(f) whether there are any concentration risks in the
non-homogeneous portfolio;
(g) the Association's loan documentation and
monitoring practices; and
(h) the Association's specific allocations to the ALLL
and/or establishment of specific valuation allowances, where
appropriate.
6. By May 20, 2010, the Association shall submit a written
plan (Asset Classification Plan) that specifically addresses
each finding and recommendation, including, but not limited
to, recommended classification changes set forth in the Asset
Classification Report to the Regional Director for review and
comment. The Asset Classification Plan shall set forth: (a) a
written schedule for implementation of corrective actions,
including, but not limited to, the adoption of revised plans
and procedures; and (b) assigned accountability for
implementation of corrective actions.
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7. Upon written notification from the Regional Director
that the Asset Classification Plan is acceptable, the
Association shall implement and comply with the Asset
Classification Plan.
ALLL Review.
8. By May 5, 2010, the Association shall obtain and submit
to the Regional Director a written report (ALLL Report) from
an independent qualified third-party consultant(s) (ALLL
Consultant), acceptable to the Regional Director regarding:
(a) an assessment of whether the Association's ALLL
methodology is consistent with applicable laws, regulations,
and regulatory guidance; and (b) a determination whether the
Association's ALLL is adequate, given the Association's risk
profile and in light of the findings set forth in the IAR
Report and the Asset Classification Report.
9. By May 20, 2010, the Association shall submit a written
plan (ALLL Plan) that addresses each finding and
recommendation set forth in the ALLL Report to the Regional
Director for review and comment. The ALLL Plan shall include:
(a) a written schedule for implementation of corrective
actions, including, but not limited to, the adoption of
revised policies and procedures; and (b) assigned
accountability for implementation of corrective actions.
10. Upon written notification from the Regional Director
that the ALLL Plan is acceptable, the Association shall
implement and comply with the ALLL plan.
Reclassification of Non-homogeneous Loans.
11. Effective immediately, the Association shall not
upgrade an internal asset classification on a non-homogeneous
loan without the prior written notice of non-objection of the
Regional Director, unless the classified asset is sold or
paid off. The Association may submit a request for an
exemption from this restriction to the Regional Director
after: (a) the OTS has received and reviewed the IAR Report,
the Asset Classification Report, and the ALLL Report required
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by this Agreement; and (b) the Association has implemented
the IAR Plan, the Asset Classification Plan, and the ALLL
Plan required by this Agreement; and (c) the OTS has
completed an on-site review of the Association.
Reduction of Classified Assets.
12. By June 15, 2010, the Association shall submit a
comprehensive written plan to reduce classified assets
(Classified Asset Reduction Plan) to the Regional Director
for review and comment. The Classified Asset Reduction Plan,
at a minimum, shall include:
(a) targets for the level of classified assets as a
percentage or Tier 1 (Core) capital and ALLL and the
timeframe for each such target;
(b) a description of the manner of, and methods for,
reducing the Association's level of classified assets to the
targets set forth therein; and
(c) all relevant assumptions and projections and
documentation supporting such assumptions and projections.
13. Upon written notification from the Regional Director
that the Classified Asset Reduction Plan is acceptable, the
Association shall implement and comply with the Classified
Asset Reduction Plan.
14. Any material modification to the Classified Asset
Reduction Plan must receive the prior written notice of non-
objection of the Regional Director. The Association shall
submit proposed material modifications to the Classified
Asset Reduction Plan to the Regional Director at least sixty
(60) days prior to implementation.
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15. Within thirty (30) days after the end of each quarter,
beginning with the quarter ending June 30, 2010, the
Association shall prepare a quarterly written asset status
report regarding the implementation of the Classified Asset
Reduction Plan (Quarterly Classified Asset Report). Each
Quarterly Classified Asset Report shall: (a) set forth the
Association's efforts to reduce the Association's level of
classified assets during the prior quarter; and (b) report
and explain in detail any variances of actual results from
the targets set forth in the Classified Asset Reduction Plan.
The Board's review of the Quarterly Classified Asset Report
shall be fully documented in the board meeting minutes, which
also shall set forth the corrective actions and/or measures
that have been implemented, proposed, or under consideration
to correct any deviation to the Classified Asset Reduction
Plan.
Dividends.
16. Effective immediately, the Association shall not
declare or pay dividends or make any other capital
distributions, as that term is defined in 12 C.F.R. 563.141,
without receiving the prior written approval of the Regional
Director. The Association's written request for written
approval shall be submitted to the Regional Director at least
forty-five (45) days prior to the anticipated date of the
proposed declaration, dividend payment, or distribution of
capital.
Brokered Deposits.
17. Effective immediately, the Association is prohibited
from increasing the dollar amount of brokered deposits at the
Association, excluding interest credited, beyond the amount
at the Association as of February 25, 2010, without receiving
the prior written notice of non-objection of the Regional
Director. The Association's written request for non-objection
shall be submitted to the Regional Director at least forty-
five (45) days prior to the anticipated date of acceptance of
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additional brokered deposits.
18. By May 15, 2010, the Association shall submit a written
detailed brokered deposit plan covering the period of June
30, 2010 through June 30, 2012 (Brokered Deposit Plan) to the
Regional Director for review and comment. The Brokered
Deposit Plan, at a minimum, shall include:
(a) a detailed description of the current level and
composition of the Association's brokered deposits, including
the source of each deposit and its maturity date;
(b) comprehensive cash flow and brokered deposit
projections forecasting funding needs and sources for each
quarter covered by the Brokered Deposit Plan; and
(c) detailed strategies to reduce the current level of
brokered deposits, which shall include quarter end target
dates and amounts.
19. Upon written notification from the Regional Director
that the Brokered Deposit Plan is acceptable, the Association
shall implement and comply with the Brokered Deposit Plan.
20. Any modification to the Brokered Deposit Plan must
receive the prior written notice of non-objection of the
Regional Director. The Association shall submit any proposed
modifications to the Regional Director at least sixty (60)
days prior to implementation of any modifications.
21. Within thirty (30) days after the end of each quarter,
beginning with the quarter ending June 30, 2010, the Board
shall review quarterly variance reports on the Association's
compliance with the Brokered Deposit Plan (Brokered Variance
Reports).
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Board Compliance with the Agreement.
22. Within thirty (30) days after the end of each quarter,
beginning with the quarter ending June 30, 2010, the Board
shall adopt and submit to the Regional Director a board
resolution (Compliance Resolution), formally resolving that
the Association complied with each provision of this
Agreement currently in effect during the immediately
preceding quarter, except as otherwise stated. The Compliance
Resolution shall: (a) specify in detail any instance of
noncompliance; (b) set forth the corrective action initiated
or taken in each instance of noncompliance; and (c) identify
all notices of exemption or non-objection issued by the
Regional Director.
Effective Date.
23. This Agreement is effective on the Effective Date as
shown on the first page.
Duration.
24. This Agreement shall remain in effect until terminated,
modified, or suspended, by written notice of such action
by the OTS, acting by and through its authorized
representatives.
Time Calculations.
25. Calculation of time limitations for compliance with the
terms of this Agreement run from the Effective Date and shall
be based on calendar days, unless otherwise noted.
Submissions and Notices.
26. All submissions to the OTS that are required by or
contemplated by the Agreement shall be submitted within the
specified timeframes.
27. Except as otherwise provided herein, all submissions,
requests, communications, consents, or other documents
relating to this Agreement shall be in writing and sent by
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first class U.S. mail (or by reputable overnight carrier,
electronic facsimile transmission, or hand delivery by
messenger) addressed as follows:
(a) To the OTS:
▇.▇. ▇▇▇, Regional Director
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Director
Office of Thrift Supervision
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) To the Association:
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and CEO
North American Savings Bank, FSB
▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
No Violations Authorized.
28. Nothing in this Agreement shall be construed as
allowing the Association, its Board, officers, or employees
to violate any law, rule, or regulation.
OTS Authority Not Affected.
29. Nothing in this Agreement shall inhibit, estop, bar, or
otherwise prevent the OTS from taking any other action
affecting the Association if at any time the OTS deems it
appropriate to do so to fulfill the responsibilities placed
upon the OTS by law.
Other Governmental Actions Not Affected.
30. The Association acknowledges and agrees that its
execution of the Agreement is solely for the purpose of
resolving the matters addressed herein, consistent with
Paragraph 29 above, and does not otherwise release,
discharge, compromise, settle, dismiss, resolve, or in any
way affect any actions, charges against, or liability of the
Association that arise pursuant to this action or otherwise,
and that may be or have been brought by any governmental
entity other than the OTS.
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Miscellaneous.
31. The laws of the United States of America shall govern
the construction and validity of this Agreement.
32. If any provision of this Agreement is ruled to be
invalid, illegal, or unenforceable by the decision of any
Court of competent jurisdiction, the validity, legality, and
enforceability of the remaining provisions hereof shall not
in any way be affected or impaired thereby, unless the
Regional Director in his or her sole discretion determines
otherwise.
33. All references to the OTS in this Agreement shall also
mean any of the OTS's predecessors, successors, and assigns.
34. The section and paragraph headings in this Agreement
are for convenience only and shall not affect the
interpretation of this Agreement.
35. The terms of this Agreement represent the final
agreement of the parties with respect to the subject matters
thereof, and constitute the sole agreement of the parties
with respect to such subject matters.
Enforceability of Agreement.
36. This Agreement is a "written agreement" entered into
with an agency within the meaning and for the purposes of 12
U.S.C. 1818.
Signature of Directors/Board Resolution.
37. Each Director signing this Agreement attests that he or
she voted in favor of a Board Resolution authorizing the
consent of the Association to the issuance and execution of
the Agreement. This Agreement may be executed in counterparts
by the directors after approval of execution of the Agreement
at a duly called board meeting. A copy of the Board
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Resolution authorizing execution of this Agreement shall be
delivered to the OTS, along with the executed original(s) of
this Agreement.
WHEREFORE, the OTS, acting by and through its Regional
Director, and the Board of the Association, hereby execute
this Agreement.
NORTH AMERICAN SAVINGS BANK, FSB
Grandview, Missouri
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
/S/ ▇▇▇▇▇ ▇. ▇▇▇
Director and President
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Director and Executive Vice President
/S/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Director
/S/ ▇▇▇▇▇ ▇▇▇▇▇
Director
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
/S/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Director
OFFICE OF THRIFT SUPERVISION
By: /S/ ▇.▇. ▇▇▇
Regional Director, Western Region
Date: April 30th, 2010
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