AGREEMENT BY AND BETWEEN First National Bank of Georgia Carrollton, GA and The Comptroller of the Currency
Exhibit
10.1
AGREEMENT
BY AND BETWEEN
First
National Bank of Georgia
Carrollton,
GA
and
The
Comptroller of the Currency
First
National Bank of Georgia, Carrollton, GA (“Bank”) and the Comptroller of the
Currency of the United States of America (“Comptroller”) wish to protect the
interests of the depositors, other customers, and shareholders of the Bank,
and,
toward that end, wish the Bank to operate safely and soundly and in accordance
with all applicable laws, rules and regulations.
The
Comptroller has found unsafe and unsound banking practices relating to the
levels of concentrations and classified assets of construction, acquisition
and
development lending in the bank’s loan portfolio.
In
consideration of the above premises, it is agreed, between the Bank, by and
through its duly elected and acting Board of Directors (“Board”), and the
Comptroller, through his authorized representative, that the Bank shall operate
at all times in compliance with the articles of this Agreement.
ARTICLE
I
JURISDICTION
(1) This
Agreement shall be construed to be a “written agreement entered into with the
agency” within the meaning of 12 U.S.C. § 1818(b)(1).
(2) This
Agreement shall be construed to be a “written agreement between such depository
institution and such agency” within the meaning of 12 U.S.C. § 1818(e)(1) and 12
U.S.C. § 1818(i)(2).
(3) This
Agreement shall be construed to be a “formal written agreement” within the
meaning of 12 C.F.R. § 5.51(c)(6)(ii). See
12
U.S.C. § 1831i.
(4) This
Agreement shall be construed to be a “written agreement” within the meaning of
12 U.S.C. § 1818(u)(1)(A).
(5) All
reports or plans which the Bank or Board has agreed to submit to the Assistant
Deputy Comptroller pursuant to this Agreement shall be forwarded
to:
Xxxxx
X.
XxXxxx, Xx.
Assistant
Deputy Comptroller
Georgia Field Xxxxxx
Georgia Field Xxxxxx
0
Xxxxxxx
Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxxx, XX 00000
ARTICLE
II
COMPLIANCE
COMMITTEE
(1) Within
fifteen (15) days of the date of this Agreement, the Board shall appoint a
Compliance Committee of at least seven (7) directors, of which no more than
two
(2) shall be an employee or controlling shareholder of the Bank or any of its
affiliates (as the term “affiliate” is defined in 12 U.S.C. § 371c(b)(1)), or a
family member of any such person. Upon appointment, the names of the members
of
the Compliance Committee and, in the event of a change of the membership, the
name of any new member shall be submitted in writing to the Assistant Deputy
Comptroller. The Compliance Committee shall be responsible for monitoring and
coordinating the Bank’s adherence to the provisions of this
Agreement.
(2) The
Compliance Committee shall meet at least monthly.
(3) Within
forty-five (45) days of the date of this Agreement and every quarter thereafter,
the Compliance Committee shall submit a written progress report to the Board
setting forth in detail:
(a)
|
a
description of the action needed to achieve full compliance with
each
Article of this Agreement;
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2
(c)
|
the
results and status of those
actions.
|
(4) The
Board
shall forward a copy of the Compliance Committee’s report, with any additional
comments by the Board, to the Assistant Deputy Comptroller within ten (10)
days
of receiving such report.
ARTICLE
III
ACTION
PLAN
(1) Within
forty five (45) days, the Board shall adopt, implement, and thereafter ensure
Bank adherence to a written action plan detailing the Board’s assessment of what
needs to be done to improve the Bank, specifying how the Board will implement
the plan, and setting forth a timetable for the implementation of the
plan.
(2) Upon
completion of the plan, the Board shall submit the plan to the Assistant Deputy
Comptroller for review and prior written determination of no supervisory
objection. Upon receiving a determination of no supervisory objection, the
Bank
shall implement and adhere to the plan.
(3) In
the
event the Assistant Deputy Comptroller recommends changes to the action plan,
the Board shall immediately incorporate those changes into the
plan.
(4) The
plan
shall be implemented pursuant to the time frames set forth within the plan
unless events dictate modifications to the plan. Where the Board considers
modifications appropriate, those modifications shall be submitted to the
Assistant Deputy Comptroller for prior written determination of no supervisory
objection. Upon receiving a determination of no supervisory objection from
the
Assistant Deputy Comptroller, the Bank shall implement and adhere to the
plan.
3
ARTICLE
IV
CONCENTRATIONS
OF CREDIT
(1) Within
forty-five (45) days, the Board shall adopt, implement, and thereafter ensure
Bank adherence to a written asset diversification program. The program shall
include, but not necessarily be limited to, the following:
(a)
|
an
update to the Bank’s regular review of the balance sheet to identify any
concentrations of credit;
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(b)
|
an
update to the Bank’s routine written analysis of any concentration of
credit identified above in order to identify and assess the inherent
credit, liquidity, and interest rate
risk;
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(c)
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a
review of current policies and procedures to control and monitor
concentrations of credit; and
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(d)
|
an
action plan approved by the Board to reduce the risk of any concentration
deemed imprudent in the above
analysis.
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(2) For
purposes of this Article, a concentration of credit is as defined in the “Loan
Portfolio Management” booklet of the Comptroller’s
Handbook.
(3) A
copy of
the plan shall be submitted to the Assistant Deputy Comptroller for review
and
prior written determination of no supervisory objection. Upon receiving a
determination of no supervisory objection from the Assistant Deputy Comptroller,
the Bank shall implement and adhere to the program.
(4) The
Board
shall continue to ensure that future concentrations of credit are subjected
to
the analysis required by subparagraph (b) and that the analysis demonstrate
that
the concentration will not subject the Bank to undue credit or interest rate
risk.
4
(5) The
Board
shall forward a copy of any analysis performed on existing or potential
concentrations of credit to the Assistant Deputy Comptroller immediately
following the review.
ARTICLE
V
CRITICIZED
ASSETS
(1) The
Bank
shall continue to take action to protect its interest in those assets criticized
in the XXX, in any subsequent Report of Examination, by internal or external
loan review, or in any list provided to management by the National Bank
Examiners.
(2) Within
ninety (90) days, the Board shall adopt, implement, and thereafter ensure Bank
adherence to a written program designed to eliminate the basis of criticism
of
assets criticized in the XXX, in any subsequent Report of Examination, or by
any
internal or external loan review, or in any list provided to management by
the
National Bank Examiners as “doubtful,” “substandard,” or “special mention.” This
program shall include, at a minimum:
(a)
|
an
identification of the expected sources of
repayment;
|
(b)
|
the
appraised value of supporting collateral and the position of the
Bank’s
lien on such collateral where
applicable;
|
(c)
|
an
analysis of current and satisfactory credit information, including
cash
flow analysis where loans are to be repaid from operations;
and
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(d)
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the
proposed action to eliminate the basis of criticism and the time
frame for
its accomplishment.
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(3) Upon
adoption, a copy of the program for all criticized assets equal to or exceeding
one million dollars ($1MM) shall be forwarded to the Assistant Deputy
Comptroller for review and prior written determination of no supervisory
objection. Upon receiving a determination of no supervisory objection from
the
Assistant Deputy Comptroller, the Bank shall implement and adhere to the
program.
5
(4) The
Board
shall ensure that the Bank has processes, personnel, and control systems to
ensure implementation of and adherence to the program developed pursuant to
this
Article.
(5) The
Executive Loan Committee of the Board shall continue to conduct a review, on
at
least a quarterly basis, to determine:
(a)
|
the
status of each criticized asset or criticized portion thereof that
equals
or exceeds one million dollars
($1MM);
|
(b)
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management’s
adherence to the program adopted pursuant to this
Article;
|
(c)
|
the
status and effectiveness of the written program;
and
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(d)
|
the
need to revise the program or take alternative
action.
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(6) A
copy of
each review shall be forwarded to the Assistant Deputy Comptroller on a
quarterly basis (in a format similar to Appendix A, attached
hereto).
(7) The
Bank
may extend credit, directly or indirectly, including renewals, extensions or
capitalization of accrued interest, to a borrower whose loans or other
extensions of credit are criticized in the XXX, in any subsequent Report of
Examination, in any internal or external loan review, or in any list provided
to
management by the National Bank Examiners and whose aggregate loans or other
extensions exceed five hundred thousand ($500M) only if each of the following
conditions is met:
6
(b)
|
a
comparison to the written program adopted pursuant to this Article
shows
that the Board’s formal plan to collect or strengthen the criticized asset
will not be compromised.
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(8) A
copy of
the approval of the Board or of the designated committee shall be maintained
in
the file of the affected borrower.
ARTICLE
VI
LOAN
WORKOUT DEPARTMENT
(1) Within
sixty (60) days, the Board shall establish a Loan Workout Department for the
purpose of restoring and reclaiming classified assets, including commercial
real
estate loans.
(2) Within
sixty (60) days, the Board shall identify and employ an individual with
demonstrated experience and skills in managing a bank workout program to manage
the Loan Workout Department. This individual shall report to the Chief Executive
Officer of the Bank and shall be independent of the Bank’s credit origination
function.
(3) The
Loan
Workout Department shall take all steps necessary to improve the operation
of
the Bank’s workout function including, but not limited to:
(a)
|
the
establishment of policies and procedures to distinguish assets that
shall
be managed by the Loan Workout Department from assets that shall
be
managed by the originating unit;
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7
(b)
|
the
establishment of policies and procedures to require assets that remain
with the originating unit are managed according to the standards
of the
Loan Workout Department;
|
(c)
|
the
development and implementation of management information systems
to track
workloads and staffing requirements within the Loan Workout Department;
and
|
(d)
|
the
development and implementation of management information systems
to
measure the success of workout
activities.
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(4) The
Board
shall ensure that the Loan Workout Department receives staffing and funding
support necessary to maintain its sound operation.
ARTICLE
VII
BUDGET/BUSINESS
PLAN
(1) Within
ninety (90) days, the Board shall update, implement, and thereafter ensure
Bank
adherence to a written three-year business plan that shall include a projection
of major balance sheet and income statement components, and shall provide for
injections of equity capital, as necessary. The business plan shall also include
a written profit plan and a detailed budget. Specifically, the plan shall
describe the Bank’s objectives for improving Bank earnings, contemplated
strategies and major capital expenditures required to achieve those objectives.
Such strategies shall include specific market segments that the Bank intends
to
promote or develop. Procedures shall also be established to monitor the Bank’s
actual results against these projections and to provide for appropriate
adjustments to the budget and profit plan. The plan shall set forth specific
time frames for the accomplishment of these objectives.
8
ARTICLE
VIII
PROGRESS
REPORTING - QUARTERLY
(1) The
Board
shall submit quarterly progress reports to the Assistant Deputy Comptroller,
Georgia Field Office, 0 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000. These
reports shall set forth in detail:
(a)
|
actions
taken to comply with each Article of the
Agreement;
|
(b)
|
results
of those actions; and
|
(c)
|
a
description of the actions needed to achieve full compliance with
each
Article of this Agreement.
|
(2) The
progress reports shall also include any actions initiated by the Board and
the
Bank pursuant to the criticisms and comments in the Report of Examination or
in
any future Report of Examination.
(3) The
first
progress report shall be submitted for the period ending December 31, 2008
and
will be due within fifteen (15) days of that date. Thereafter, progress reports
will be due within fifteen (15) days after the quarter end.
ARTICLE
IX
CLOSING
(1) Although
the Board has agreed to submit certain programs and reports to the Assistant
Deputy Comptroller for review or prior written determination of no supervisory
objection, the Board has the ultimate responsibility for proper and sound
management of the Bank.
(2) It
is
expressly and clearly understood that if, at any time, the Comptroller deems
it
appropriate in fulfilling the responsibilities placed upon him by the several
laws of the United States of America to undertake any action affecting the
Bank,
nothing in this Agreement shall in any way inhibit, estop, bar, or otherwise
prevent the Comptroller from so doing.
9
(3) Any
time
limitations imposed by this Agreement shall begin to run from the effective
date
of this Agreement. Such time requirements may be extended in writing by the
Assistant Deputy Comptroller for good cause upon written application by the
Board.
(4) The
provisions of this Agreement shall be effective upon execution by the parties
hereto and its provisions shall continue in full force and effect unless or
until such provisions are amended in writing by mutual consent of the parties
to
the Agreement or excepted, waived, or terminated in writing by the
Comptroller.
(5) This
Agreement is intended to be, and shall be construed to be, a supervisory
“written agreement entered into with the agency” as contemplated by 12 U.S.C. §
1818(b)(1), and expressly does not form, and may not be construed to form,
a
contract binding on the Comptroller or the United States. Notwithstanding the
absence of mutuality of obligation, or of consideration, or of a contract,
the
Comptroller may enforce any of the commitments or obligations herein undertaken
by the Bank under his supervisory powers, including 12 U.S.C. § 1818(b)(1),
and not as a matter of contract law. The Bank expressly acknowledges that
neither the Bank nor the Comptroller has any intention to enter into a contract.
The Bank also expressly acknowledges that no officer or employee of the Office
of the Comptroller of the Currency has statutory or other authority to bind
the
United States, the U.S. Treasury Department, the Comptroller, or any other
federal bank regulatory agency or entity, or any officer or employee of any
of
those entities to a contract affecting the Comptroller’s exercise of his
supervisory responsibilities. The terms of this Agreement, including this
paragraph, are not subject to amendment or modification by any extraneous
expression, prior agreements or prior arrangements between the parties, whether
oral or written.
10
IN
TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller, has hereunto
set his hand on behalf of the Comptroller.
/s/
Xxxxx X. Xxxxxx, Xx.
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November 12, 2008 | |
Xxxxx
X. Xxxxxx, Xx.
|
Date
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|
Assistant
Deputy Comptroller
|
||
Georgia
Field Office
|
11
IN
TESTIMONY WHEREOF, the undersigned, as the duly elected and acting Board of
Directors of the Bank, have hereunto set their hands on behalf of the
Bank.
/s/ Xxxxx X. Xxxxxxx | November 12, 2008 | |
Xxxxx
X. Calhounac
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Date
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/s/ Xxxxx X. Xxxx | November 12, 2008 | |
Xxxxx
Xxxxxxx Xxxx
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Date
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/s/ Xxxx Xxxxxxxxx | November 12, 2008 | |
Xxxx
Xxxxxxxxx
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Date
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/s/ Xxxxxxx X. Xxxxxx | November 12, 2008 | |
Xxxxxxx
X. Xxxxxx
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Date
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/s/ Xxxxxxx Xxxxx | November 12, 0000 | |
Xxxxxxx
Xxxxx
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Date
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/s/ X.X. Xxxxx, Xx. | November 12, 2008 | |
W.T.
(Xxxxx) Green, Jr.
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Date
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/s/ Xxxxxx X. Xxxxx | November 12, 2008 | |
Xxxxxx
X. Xxxxx
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Date
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/s/ Xxx X. Xxxxxx | November 12, 2008 | |
Xxx
X. Xxxxxx
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Date
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/s/ Xxxx Xxxxxx | November 12, 2008 | |
Xxxx
Xxxxxx
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Date
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/s/ H.B. (Rocky) Xxxxxx, III | November 12, 2008 | |
H.B.
(Rocky) Xxxxxx, III
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Date
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/s/ Xxxxx Xxxx | November 12, 2008 | |
Xxxxx
Xxxx
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Date
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/s/ Xxxx X. Xxxxxx | November 12, 2008 | |
Xxxx
X. Xxxxxx
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Date
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/s/ R. Xxxxx Xxxxx | November 12, 2008 | |
R.
Xxxxx Xxxxx
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Date
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12
/s/ Xxxxxxx X. Xxxxxxxx | November 12, 2008 | |
Xxxxxxx
X. Xxxxxxxx
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Date
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/s/ Xxxxxx X. Xxxxx, III | November 12, 2008 | |
Xxxxxx
X. Xxxxx, III
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Date
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/s/ Xxx X. Xxxxxx | November 12, 2008 | |
Xxx
X. Xxxxxx
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Date
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/s/ Xxxxxx X. Xxxxxxxx | November 12, 2008 | |
Xxxxxx
X. Xxxxxxxx
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Date
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/s/ Xxxxx Xxxx Xxxxxxx | November 12, 2008 | |
Xxxxx
Xxxx Xxxxxxx
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Date
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/s/ Xxxxxxx X. Xxxxxx | November 12, 2008 | |
Xxxxxxx
X. Xxxxxx
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Date
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/s/ Xxxxxxx X. Xxxxx | November 12, 0000 | |
Xxxxxxx
X. Xxxxx
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Date
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/s/ Xxxxx X. Xxxxxxxxx, III | November 12, 2008 | |
Xxxxx
X. (Xxxxx) Xxxxxxxxx, III
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Date
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/s/ J. Xxxxxx Xxxxx | November 12, 2008 | |
J.
Xxxxxx Xxxxx
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Date
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/s/ Xxxxx Xxxxxx | November 12, 2008 | |
Xxxxx
Xxxxxx
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Date
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/s/ Xxxxxxx X. Xxxxxx, Xx. | November 12, 2008 | |
Date
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13
APPENDIX
A
First
National Bank of Georgia
Carrollton,
GA
CRITICIZED
ASSET REPORT AS OF:
0;
BORROWER(S):
ASSET
BALANCE(S) AND OCC RATING (SM, SUBSTANDARD, DOUBTFUL OR LOSS):
$ CRITICISM
AMOUNT CHARGED OFF TO DATE
AMOUNT CHARGED OFF TO DATE
FUTURE
POTENTIAL CHARGE-OFF
PRESENT
STATUS (Fully explain any increase in outstanding balance; include past due
status, nonperforming, significant progress or deterioration,
etc.):
;
FINANCIAL
AND/OR COLLATERAL SUPPORT (include brief summary of most current financial
information, appraised value of collateral and/or estimated value and date
thereof, bank’s lien position and amount of available equity, if any,
guarantor(s) info, etc.):
;
PROPOSED
PLAN OF ACTION TO ELIMINATE ASSET CRITICISM(S) AND TIME FRAME FOR ITS
ACCOMPLISHMENT:
;
IDENTIFIED
SOURCE OF REPAYMENT AND DEFINED REPAYMENT PROGRAM (repayment program should
coincide with source of repayment):
;
Use
this
form for reporting each criticized asset that exceeds one million dollars
($1,000,000.00) and retain the original in the credit file for review by the
examiners. Submit your reports quarterly
until
notified otherwise, in writing, by the Assistant Deputy
Comptroller.