UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C.
Exhibit
99.1
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
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Docket No. 09-034-WA/XX-XX
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BAY
NATIONAL CORPORATION
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Lutherville,
Maryland
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and
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FEDERAL
RESERVE BANK OF RICHMOND
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Richmond,
Virginia
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WHEREAS,
Bay National Corporation, Lutherville, Maryland, (“Bay”), a registered bank
holding company, owns and controls Bay National Bank, Lutherville, Maryland (the
“Bank”), a national bank, and a nonbank
subsidiary;
WHEREAS,
it is the common goal of Bay and the Federal Reserve Bank of Richmond (the
“Reserve Bank”) to maintain the financial soundness of Bay so that it may serve
as a source of strength to the Bank;
WHEREAS,
Bay and the Reserve Bank have mutually agreed to enter into this Written
Agreement (the “Agreement”); and
WHEREAS,
on April 28, 2009, the board of directors of Bay, at a duly
constituted meeting, adopted a resolution authorizing and directing Xxxx X.
Xxxxxx to enter into this Agreement on behalf of Bay, and consenting to
compliance with each and every provision of this Agreement by Bay 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, Bay and the Reserve Bank agree as follows:
Dividends
1. (a) Bay
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 of the Federal Reserve
System (the “Board of Governors”).
(b) Bay 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) Bay 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 Bay’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, Bay 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
2.
(a) Bay
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) Bay 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
3.
(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, Bay 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) Bay 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
4. 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.
Communications
5. All
communications regarding this Agreement shall be sent to:
(a) Xx. Xxxxxx Xxxxxxx
Vice President
Federal Reserve Bank of Richmond
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
(b) Xx. Xxxx X.
Xxxxxx
Chairman, President and CEO
Bay National Corporation
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Miscellaneous
6. Notwithstanding
any provision of this Agreement, the Reserve Bank may, in its sole discretion,
grant written extensions of time to Bay to comply with any provision of this
Agreement.
7. The
provisions of this Agreement shall be binding upon Bay and its
institution-affiliated parties, in their capacities as such, and their
successors and assigns.
8. Each
provision of this Agreement shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Reserve Bank.
9. 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 Bay, the Bank, any other depository
institution subsidiary of Bay, any nonbank subsidiary of Bay, or any of their
current or former institution-affiliated parties and their successors and
assigns.
10. 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 28 day of April, 2009.
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BAY
NATIONAL CORPORATION
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FEDERAL
RESERVE BANK OF RICHMOND
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By:
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/s/
Xxxx X. Xxxxxx
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By:
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/s/
Xxxxxx
Xxxxxxx
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Xxxx
X. Xxxxxx
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Xxxxxx
Xxxxxxx
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Chairman,
President and CEO
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Vice
President
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