UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C.
EXHIBIT 10.4
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
| Written Agreement by and between | ||||
| Docket No. 10-094-WA/XX-XX | ||||
| PACIFIC CAPITAL BANCORP | ||||
| Santa Barbara, California | ||||
| and | ||||
| FEDERAL RESERVE BANK OF | ||||
| SAN FRANCISCO | ||||
| San Francisco, California | ||||
WHEREAS, Pacific Capital Bancorp (“PCB”), a registered bank holding company, owns and controls
Pacific Capital Bank, National Association, Santa Barbara, California (the “Bank”), a national bank, and
various nonbank subsidiaries;
WHEREAS, it is the common goal of PCB and the Federal Reserve Bank of San Francisco (the “Reserve
Bank”) to maintain the financial soundness of PCB so that PCB may serve as a source of strength to the Bank;
WHEREAS, PCB and the Reserve Bank have mutually agreed to enter into this Written Agreement (the
“Agreement”); and
WHEREAS, on May 7, 2010, the board of directors of PCB, at a duly constituted meeting, adopted
a resolution authorizing and directing Xxxxxx X. Xxxxx to enter into this Agreement on behalf of PCB, and
consenting to compliance with each and every provision of this Agreement by PCB and its 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. §§ 1813(u) and 1818(b)(3)).
NOW, THEREFORE, PCB and the Reserve Bank agree as follows:
Source of Strength
1. The board of directors of PCB shall take appropriate steps to fully utilize PCB’s financial and
managerial resources, pursuant to section 225.4(a) of Regulation Y of the Board of Governors of the Federal
Reserve System (the “Board of Governors”) (12 C.F.R. § 225.4(a)), to serve as a source of strength to the Bank,
including, but not limited to, taking steps to ensure that the Bank complies with the consent order entered into
with the Office of the Comptroller of the Currency on May 11, 2010 and any other supervisory action
taken by the Bank’s federal regulator.
Dividends and Distributions
2. (a) PCB shall not declare or pay any dividends without the prior written approval of the Reserve
Bank and the Director of the Division of Banking Supervision and Regulation (the “Director”) of the Board of
Governors of the Federal Reserve System (the “Board of Governors”).
(b) PCB shall not directly or indirectly take dividends or any other form of payment representing a
reduction in capital from the Bank without the prior written approval of the Reserve Bank.
(c) PCB and its nonbank subsidiaries shall not make any distributions of interest, principal, or
other sums on subordinated debentures or trust preferred securities without the prior written approval of the
Reserve Bank and the Director.
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(d) All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to
the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice
of deferral on trust preferred securities. All requests shall contain, at a minimum, current and projected
information on PCB’s capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings, and
allowance for loan and lease losses; and identification of the sources of funds for the proposed payment or
distribution. For requests to declare or pay dividends, PCB must also demonstrate that the requested declaration
or payment of dividends is consistent with the Board of Governors’ Policy Statement on the Payment of Cash
Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve
Regulatory Service, 4-877 at page 4-323) .
Debt and Stock Redemption
3. (a) PCB and any nonbank subsidiary shall not, directly or indirectly, incur, increase, or guarantee
any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall
contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the
planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt
repayment.
(b) PCB shall not, directly or indirectly, purchase or redeem any shares of its stock without the
prior written approval of the Reserve Bank.
Capital Plan
4. Within 90 days of this Agreement, PCB shall submit to the Reserve Bank an acceptable written plan
to maintain sufficient capital at PCB on a consolidated basis. The plan shall, at a minimum, address, consider,
and include:
(a) The consolidated organization’s and the Bank’s current and future capital
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requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding
Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y
of the Board of Governors (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines
for the Bank issued by the Bank’s federal regulator;
(b) the adequacy of the Bank’s capital, taking into account the volume of classified credits,
concentrations of credit, allowance for loan and lease losses, current and projected asset growth, and projected
retained earnings;
(c) the source and timing of additional funds necessary to fulfill the consolidated organization’s
and the Bank’s future capital requirements;
(d) supervisory requests for additional capital at the Bank or the requirements of any supervisory
action imposed on the Bank by its federal regulators; and
(e) the requirements of section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. §
225.4(a)) that PCB serve as a source of strength to the Bank.
5. PCB shall notify the Reserve Bank, in writing, no more than 30 days after the end of any quarter in
which any of PCB’s capital ratios fall below the approved plan’s minimum ratios. Together with the
notification, PCB shall submit an acceptable written plan that details the steps that PCB will take to increase
PCB’s capital ratios to or above the approved plan’s minimums.
Cash Flow Projections
6. Within 60 days of this Agreement, PCB shall submit to the Reserve Bank a written statement of its
planned sources and uses of cash for debt service, operating expenses, and other purposes (“Cash Flow
Projection”) for the remainder of 2010. PCB shall submit to the
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Reserve Bank a Cash Flow Projection for each calendar year subsequent to 2010 at least one month prior to
the beginning of that calendar year.
Affiliate Transactions
7. (a) PCB shall take all necessary action to ensure that the Bank complies with sections 23A and
23B of the Federal Reserve Act (12 U.S.C. §§ 371c and 371c-1) and Regulation W of the Board of Governors
(12 C.F.R. Part 223) in all transactions between the Bank and PCB.
(b) PCB shall not cause the Bank to violate any provision of sections 23A and 23B of the Federal
Reserve Act or Regulation W of the Board of Governors.
Compliance with Laws and Regulations
8. (a) In appointing any new director or senior executive officer, or changing the responsibilities of
any senior executive officer so that the officer would assume a different senior executive officer position, PCB
shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of
Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).
(b) PCB shall comply with the restrictions on indemnification and severance payments of section
18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s
regulations (12 C.F.R. Part 359).
Progress Reports
9. Within 30 days after the end of each calendar quarter following the date of this Agreement, the
board of directors shall submit to the Reserve Bank written progress reports detailing the form and manner of
all actions taken to secure compliance with the provisions of
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this Agreement and the results thereof, and a parent company only balance sheet, income statement, and, as
applicable, report of changes in stockholders’ equity.
Approval and Implementation of Plans
10. (a) PCB shall submit a written capital plan that is acceptable to the Reserve Bank within the
applicable time period set forth in paragraph 4 of this Agreement.
(b) Within 10 days of approval by the Reserve Bank, PCB shall adopt the approved capital plan.
Upon adoption, PCB shall promptly implement the approved plan, and thereafter fully comply with it.
(c) During the term of this Agreement, the approved capital plan shall not be amended or
rescinded without the prior written approval of the Reserve Bank.
Communications
11. All communications regarding this Agreement shall be sent to:
(a) Xx. Xxxxx Xxxxx
Vice President
Banking Supervision and Regulation
Federal Reserve Bank of San Francisco
000 Xxxxxx Xxxxxx, Mail Stop 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
(b) Xx. Xxxxxx X. Xxxxx
Chairman of the Board
Pacific Capital Bancorp
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Miscellaneous
12. Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion,
grant written extensions of time to PCB to comply with any provision of this Agreement.
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13. The provisions of this Agreement shall be binding upon PCB and its institution-affiliated parties, in
their capacities as such, and their successors and assigns.
14. Each provision of this Agreement shall remain effective and enforceable until stayed, modified,
terminated, or suspended in writing by the Reserve Bank.
15. The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors,
the Reserve Bank, or any other federal or state agency from taking any other action affecting PCB, the Bank,
any nonbank subsidiary of PCB, or any of their current or former institution-affiliated parties and their
successors and assigns.
16. Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the
Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the 11th day of
May, 2010.
| PACIFIC CAPITAL BANCORP | FEDERAL RESERVE BANK SAN FRANCISCO |
|||||||||
| By: | /s/ Xxxxxx X. Xxxxx |
By: | /s/ Xxxxx X. Xxxxxx |
|||||||
| Xxxxxx X. Xxxxx | Xxxxx X. Xxxxxx | |||||||||
| Chairman of the Board | Examining Officer | |||||||||
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