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.
|
Written
Agreement by and between
EUROBANCSHARES,
INC.
San
Xxxx, Puerto Rico
and
FEDERAL
RESERVE BANK OF
NEW
YORK
New
York, New York
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Docket
No. 09-137-WA/XX-XX
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WHEREAS,
Eurobancshares, Inc., San Xxxx, Puerto, Rico (“Eurobancshares”), a registered
bank holding company, owns and controls Eurobank, San Xxxx, Puerto Rico, a state
chartered nonmember bank (the “Bank”);
WHEREAS,
it is the common goal of Eurobancshares and the Federal Reserve Bank of New York
(the “Reserve Bank”) to maintain the financial soundness of Eurobancshares so
that Eurobancshares may serve as a source of strength to the Bank;
WHEREAS,
Eurobancshares and the Reserve Bank have mutually agreed to enter into this
Written Agreement (the “Agreement”); and
WHEREAS,
on September 26, 2009, the board of directors of Eurobancshares, at a
duly
constituted meeting, adopted a resolution authorizing and directing Xxxxxx
Xxxxxxxxx-Xxxxxxx, Xx. to enter into this Agreement on behalf of Eurobancshares,
and consenting to compliance with each and every provision of this Agreement by
Eurobancshares 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, Eurobancshares and the Reserve Bank agree as follows:
Capital
Plan
1. Within
60 days of this Agreement, Eurobancshares shall submit to the Reserve Bank an
acceptable written plan to maintain sufficient capital at Eurobancshares, on a
consolidated basis, and the Bank, as a separate legal entity on a stand-alone
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 (“ALLL”),
current and projected asset growth, and projected retained
earnings;
(c) the
source and timing of additional funds 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 or state regulator;
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 Eurobancshares serve as a source of strength to the
Bank.
2. Eurobancshares
shall notify the Reserve Bank, in writing, no more than 30 days after the end of
any quarter in which Eurobancshares’ consolidated capital ratios or the Bank’s
capital ratios (total risk-based, tier 1 risk-based, or leverage) fall below the
respective plan’s minimum ratios. Together with the notification,
Eurobancshares shall submit an acceptable written plan that details the steps
Eurobancshares will take to increase its and/or the Bank’s capital ratios above
the plan’s minimums.
Dividends
3.
(a) Eurobancshares
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 of the Board of Governors (the “Director”).
(b) Eurobancshares
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) Eurobancshares
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 Eurobancshares’ capital, earnings, and cash flow; the
Bank’s capital, asset quality, earnings, and ALLL; and identification of the
sources of funds for the proposed payment or distribution. For requests to declare
or pay dividends, Eurobancshares 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
4.
(a) Eurobancshares
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) Eurobancshares
shall not, directly or indirectly, purchase or redeem any shares of its stock
without the prior written approval of the Reserve Bank.
Compliance
with Laws and Regulations
5. 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, Eurobancshares 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.).
6. Eurobancshares
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
7. 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, a
report of changes in stockholders’ equity.
Approval
and Implementation of Plan, Policies, and Procedures
8.
(a) Eurobancshares
shall submit a written capital plan that is acceptable to the Reserve Bank
within the applicable time periods set forth in paragraph 1 of this
Agreement.
(b) Within
10 days of approval by the Reserve Bank, Eurobancshares shall adopt the approved
capital plan. Upon adoption, Eurobancshares 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
9. All
communications regarding this Agreement shall be sent to:
(a) Xx.
Xxxxxx Xxxxxx
Assistant Vice President
Federal Reserve Bank of New
York
00 Xxxxxxx Xxxxxx
New York, New York 10045
(b) Xx.
Xxxxxx Xxxxxxxx-Xxxxxxx
Chairman
Eurobancshares, Inc.
P.O. Box 191009
San Xxxx, Puerto Rico
00919-1009
Miscellaneous
10. Notwithstanding
any provision of this Agreement, the Reserve Bank may, in its sole discretion,
grant written extensions of time to Eurobancshares to comply with any provision
of this Agreement.
11. The
provisions of this Agreement shall be binding upon Eurobancshares 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 Eurobancshares, the Bank, any nonbank
subsidiary of Eurobancshares, or any of their current or former
institution-affiliated parties and their successors and assigns.
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).
IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed as of the 30th day of September,
2009.
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EUROBANCSHARES,
INC.
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FEDERAL
RESERVE BANK OF
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NEW
YORK
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By:
/s/ Xxxxxx
Xxxxxxxx-Xxxxxxx, Xx.
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By:
/s/ Xxxxxx
Xxxxxx
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Xxxxxx Xxxxxxxx-Xxxxxxx
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Xxxxxx Xxxxxx
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Chairman
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Assistant Vice President
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