Written Agreement by and between Docket No. 11-124-WA /RB-HC MOUNTAIN NATIONAL BANCSHARES, INC. Sevierville, Tennessee and FEDERAL RESERVE BANK OF ATLANTA Atlanta, Georgia
Exhibit 10.1
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
Written Agreement by and between |
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Docket No. 11-124-WA /XX-XX | ||
MOUNTAIN NATIONAL |
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BANCSHARES, INC. |
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Sevierville, Tennessee |
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and |
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FEDERAL RESERVE BANK OF |
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ATLANTA |
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Atlanta, Georgia |
WHEREAS, Mountain and the Reserve Bank have mutually agreed to enter into this Written
Agreement (the “Agreement”); and
Source of Strength
1. The board of directors of Mountain shall take appropriate steps to fully utilize Mountain’s
financial and managerial resources, pursuant to section 38A of the FDI Act (12 U.S.C. § 1830 o-1)
and 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 Formal
Agreement entered into with the Office of the Comptroller of the Currency dated June 2, 2009, and
any other supervisory action taken by the Bank’s federal regulator.
2. (a) Mountain 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) Mountain 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) Mountain 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 Mountain’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, Mountain 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).
3. (a) Mountain 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) Mountain shall not, directly or indirectly, purchase or redeem any shares of its stock
without the prior written approval of the Reserve Bank.
4. Within 60 days of this Agreement, Mountain shall submit to the Reserve Bank an acceptable
written plan to maintain sufficient capital at Mountain 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;
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(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 38A of the FDI Act and section 225.4(a) of Regulation Y of the
Board of Governors that Mountain serve as a source of strength to the Bank.
5. Mountain shall notify the Reserve Bank, in writing, no more than 45 days after the end of
any quarter in which any of Mountain’s capital ratios fall below the approved plan’s minimum
ratios. Together with the notification, Mountain shall submit an acceptable written plan that
details the steps that Mountain will take to increase Mountain’s capital ratios to or above the
approved plan’s minimums.
Compliance with Laws and Regulations
6. (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, Mountain 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.).
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(b) Mountain 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).
7. Within 45 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
8. (a) Mountain shall submit a written capital plan that is acceptable to the Reserve Bank
within the applicable time periods set forth in paragraphs 4 and 5 of this Agreement.
(b) Within 10 days of approval by the Reserve Bank, Mountain shall adopt the approved capital
plan. Upon adoption, Mountain 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.
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9. All communications regarding this Agreement shall be sent to:
(a) | Mr. Xxxxxx Xxxxxxx Assistant Vice President Federal Reserve Bank of Atlanta 0000 Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx, Xxxxxxx 00000-0000 |
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(b) | Xx. Xxxxxx Xxxxxxxx President and Chief Executive Officer Mountain National Bancshares, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxxxxxx, Xxxxxxxxx 00000 |
Miscellaneous
10. Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole
discretion, grant written extensions of time to Mountain to comply with any provision of this
Agreement.
11. The provisions of this Agreement shall be binding upon Mountain and its
institution-affiliated parties, in their capacities as such, and their successors and assigns.
12. Each provision of this Agreement shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Reserve Bank.
13. 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 Mountain, the Bank, any nonbank subsidiary of Mountain, or any of their current or former
institution-affiliated parties and their successors and assigns.
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14. 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).
MOUNTAIN NATIONAL | FEDERAL RESERVE BANK | |||||||||
BANCSHARES, INC. | OF ATLANTA | |||||||||
By:
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/s/ Xxxxxxx X. Xxxxxxx
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By: | /s/ Xxxxxx Xxxxxxx
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Chairman | Assistant Vice President |
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