Written Agreement by and between Docket No. 10-243-WA/RB-HC COMMUNITY SHORES BANK CORPORATION Muskegon, Michigan and FEDERAL RESERVE BANK OF CHICAGO Chicago, Illinois
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. 10-243-WA/XX-XX | ||
COMMUNITY SHORES BANK CORPORATION |
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Muskegon, Michigan |
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and |
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FEDERAL RESERVE BANK OF CHICAGO |
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Chicago, Illinois |
WHEREAS, Community Shores Bank Corporation, Muskegon, Michigan (“Community Shores”), a
registered bank holding company, owns and controls Community Shores Bank, Muskegon, Michigan
(“Bank”), a state-chartered nonmember bank, and various nonbank subsidiaries;
WHEREAS, Community Shores and the Reserve Bank have mutually agreed to enter into this Written
Agreement (the “Agreement”); and
Xxxxxxx to enter into this Agreement on behalf of Community Shores, and consenting to
compliance with each and every provision of this Agreement by Community Shores 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)).
1. The board of directors of Community Shores shall take appropriate steps to fully utilize
Community Shores’ 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”) and the Michigan Office of Financial and Insurance Regulation on
September 2, 2010, and any other supervisory action taken by the Bank’s federal or state regulator.
2. (a) Community Shores 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) Community Shores 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) Community Shores 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,
or required notice of deferral on trust preferred securities. All requests shall contain, at a
minimum, current and projected information on Community Shores’ 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. For requests to declare or pay
dividends, Community Shores 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) Community Shores 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, the planned source(s) for debt
repayment, and an analysis of the cash flow resources available to meet such debt repayment.
(b) Community Shores shall not, directly or indirectly, purchase or redeem any shares of its
stock without the prior written approval of the Reserve Bank.
Cash Flow Projections
4. Within 30 days of this Agreement, Community Shores 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 first full calendar quarter following the date of
this Agreement. For each subsequent calendar quarter, Community Shores shall submit to the Reserve
Bank a Cash Flow Projection for that calendar quarter at least thirty days prior to the beginning
of that quarter.
Affiliate Transactions
5. (a) Community Shores shall take all necessary actions to ensure that the Bank complies with
sections 23A and 23B of the Federal Reserve Act and Regulation W of the Board of Governors (12
C.F.R. Part 223) in all transactions between the Bank and its affiliates, including, but not
limited to, Community Shores and its nonbank subsidiaries.
(b) Community Shores and its nonbank subsidiaries 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.
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, Community Shores 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) Community Shores 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).
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,
report of changes in stockholders’ equity.
8. All communications regarding this Agreement shall be sent to:
| (a) | Xx. Xxxxxx X. Xxxx Assistant Vice President Federal Reserve Bank of Chicago 000 Xxxxx XxXxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000 |
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| (b) | Xx. Xxxxxxx X. Xxxxxxx President and CEO Community Shores Bank Corporation 0000 Xxxx Xxxxxx Xxxxxx Xxxxxxxx, Xxxxxxxx 00000 |
9. Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole
discretion, grant written extensions of time to Community Shores to comply with any provision of
this Agreement.
10. The provisions of this Agreement shall be binding upon Community Shores and its
institution-affiliated parties, in their capacities as such, and their successors and assigns.
11. Each provision of this Agreement shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Reserve Bank.
12. 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 Community Shores, the Bank, any nonbank subsidiaries of Community Shores, or any of their
current or former institution-affiliated parties and their successors and assigns.
13. 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).
| COMMUNITY SHORES BANK CORPORATION | FEDERAL RESERVE BANK OF CHICAGO | |||||||||
By:
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/s/ Xxxxxxx X. Xxxxxxx | By: | /s/ Xxxx X. Xxxx | |||||||
| Xxxxxxx X. Xxxxxxx | Xxxx X. Xxxx | |||||||||