UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C.
UNITED
STATES OF AMERICA
BEFORE
THE
BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON,
D.C.
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Written
Agreement by and between
THE
SOUTH FINANCIAL GROUP
Greenville,
South
Carolina
And
FEDERAL
RESERVE BANK OF
RICHMOND
Richmond,
Virginia
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Docket
No. 10-058-WA/XX-XX
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WHEREAS,
The South Financial Group, Greenville, South Carolina (“Bancorp”), a registered
bank holding company, owns and controls Carolina First Bank, Greenville, South
Carolina, a state nonmember bank (“Bank”), and various nonbank
subsidiaries;
WHEREAS,
it is the common goal of Bancorp and the Federal Reserve Bank of Richmond (the
“Reserve Bank”) to maintain the financial soundness of Bancorp so that Bancorp
may serve as a source of strength to the Bank;
WHEREAS,
Bancorp and the Reserve Bank have mutually agreed to enter into this Written
Agreement (the “Agreement”); and
WHEREAS,
on April 29, 2010, the board of directors of Bancorp, at a duly constituted
meeting, adopted a resolution authorizing and directing H. Xxxx Xxxxxx to enter
into this Agreement on behalf of Bancorp, and consenting to compliance with each
and every provision of this Agreement by Bancorp 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, Bancorp and the Reserve Bank agree as follows:
Source
of Strength
1. The board
of directors of Bancorp shall take appropriate steps to fully utilize Bancorp’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 Federal Deposit Insurance
Corporation (“FDIC”) on April 29, 2010 and any other supervisory action taken by
the Bank’s federal or state regulator.
Dividends
and Distributions
2. (a) Bancorp
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.
(b) Bancorp
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) Bancorp
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.
(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 Bancorp’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, Bancorp 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) Bancorp
and its nonbank subsidiaries 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) Bancorp
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 60
days of this Agreement, Bancorp shall submit to the Reserve Bank an acceptable
written plan to maintain sufficient capital at Bancorp 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
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 regulator;
and
(e) the
requirements of section 225.4(a) of Regulation Y of the Board of Governors that
Bancorp serve as a source of strength to the Bank.
5. Bancorp
shall notify the Reserve Bank, in writing, no more than 30 days after the end of
any quarter in which any of Bancorp’s capital ratios fall below the approved
plan’s minimum ratios. Together with the notification, Bancorp shall
submit an acceptable written plan that details the steps that Bancorp will take
to increase Bancorp’s capital ratios to or above the approved plan’s
minimums.
Cash
Flow Projections
6. Within
60 days of this Agreement, Bancorp shall submit to the Reserve Bank a written
statement of Bancorp’s planned sources and uses of cash for debt service,
operating expenses, and other purposes (“Cash Flow Projection”) for the
remainder of 2010. Bancorp shall submit to the 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.
Compliance
with Laws and Regulations
7. (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, Bancorp shall comply with
the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831(i) and
Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.). Bancorp
shall not appoint any individual to its board of directors or employ or change
the responsibilities of any individual as a senior executive officer if the
Reserve Bank notifies Bancorp of its disapproval within the time limits
prescribed by Subpart H of Regulation Y.
(b) Bancorp
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 FDIC’s
regulations (12 C.F.R. Part 359).
Progress
Reports
8. 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 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 Plan
9. (a) Bancorp
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, Bancorp shall adopt the approved
capital plan. Upon adoption, Bancorp 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
10. All
communications regarding this Agreement shall be sent to:
(a) Mr.
A. Xxxxxxx Xxxx, III
Vice President
Federal Reserve Bank of
Richmond
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxx
00000-0000
(b) Mr.
H. Xxxx Xxxxxx
President and Chief Executive
Officer
The South Financial Group
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx
00000
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11.
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Notwithstanding
any provision of this Agreement, the Reserve Bank may, in its sole
discretion, grant written extensions of time to Bancorp to comply with any
provision of this Agreement.
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12.
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The
provisions of this Agreement shall be binding upon Bancorp and its
institution-affiliated parties, in their capacities as such, and their
successors and assigns.
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13.
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Each
provision of this Agreement shall remain effective and enforceable until
stayed, modified, terminated, or suspended in writing by the Reserve
Bank.
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14.
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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 Bancorp, the Bank, any
nonbank subsidiary of Bancorp, or any of their current or former
institution-affiliated parties and their successors and
assigns.
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15.
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Pursuant
to section 50 of the FDI Act (12 U.S.C. § 181831aa), this Agreement is
enforceable by the Board of Governors under section 8 of the FDI Act (12
U.S.C. § 1818).
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the 4th day of May, 2010.
| THE SOUTH FINANCIAL GROUP | FEDERAL RESERVE BANK OF RICHMOND |
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By:
/s/ H. Xxxx
Xxxxxx
H. Xxxx
Xxxxxx
President &
Chief Executive Officer
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By: /s/ A. Xxxxxxx
Xxxx, III
A.
Xxxxxxx Xxxx, III
Vice
President
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