Exhibit 10.1
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.

                       
 
         
Written Agreement by and between

MONARCH COMMUNITY BANCORP, INC.
Coldwater, Michigan

and

FEDERAL RESERVE BANK OF
CHICAGO
Chicago, Illinois
     
Docket No. 10-193-WA/RB-HC
 
                     

     WHEREAS, Monarch Community Bancorp, Inc., Coldwater, Michigan (“Monarch”),
a registered bank holding company, owns and controls Monarch Community Bank,
Coldwater, Michigan (the “Bank”), a state nonmember bank;
     WHEREAS, it is the common goal of Monarch and the Federal Reserve Bank of
Chicago (the “Reserve Bank”) to maintain the financial soundness of Monarch so
that Monarch may serve as a source of strength to the Bank;
     WHEREAS, Monarch and the Reserve Bank have mutually agreed to enter into
this Written Agreement (the “Agreement”); and
     WHEREAS, on September 16, 2010, the board of directors of Monarch, at a
duly constituted meeting, adopted a resolution authorizing and directing Richard
J DeVries to enter into this Agreement on behalf of Monarch, and consenting to
compliance with each and every provision of this Agreement by Monarch and its
institution-affiliated parties, as defined in

 

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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, Monarch and the Reserve Bank agree as follows:
Source of Strength
     1. The board of directors of Monarch shall take appropriate steps to fully
utilize Monarch’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”) and the State of Michigan Office of Financial and Insurance
Regulation on May 6, 2010, and any other supervisory action taken by the Bank’s
federal or state regulator.
Dividends
     2. (a) Monarch 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.
         (b) Monarch 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) All requests for prior approval shall be received by the Reserve
Bank at least 30 days prior to the proposed dividend declaration date. All
requests shall contain, at a minimum, current and projected information on
Monarch’s capital, earnings, and cash flow; the Bank’s capital, asset quality,
earnings, and allowance for loan and lease losses; and identification

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of the sources of funds for the proposed payment or distribution. For requests
to declare or pay dividends, Monarch 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) Monarch 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) Monarch 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, Monarch 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, Monarch 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.
Compliance with Laws and Regulations
     5. (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

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executive officer position, Monarch 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.).
         (b) Monarch 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
     6. 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.
Communications
     7. All communications regarding this Agreement shall be sent to:

     (a)   Mr. Joseph J. Turk
Assistant Vice President
Federal Reserve Bank of Chicago
230 South LaSalle
Chicago, Illinois 60604

     (b)   Mr. Richard DeVries
President and Chief Executive Officer
Monarch Community Bancorp, Inc.
375 North Willowbrook
Coldwater, MI 49036

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Miscellaneous
     8. Notwithstanding any provision of this Agreement, the Reserve Bank may,
in its sole discretion, grant written extensions of time to Monarch to comply
with any provision of this Agreement
     9. The provisions of this Agreement shall be binding upon Monarch and its
institution-affiliated parties, in their capacities as such, and their
successors and assigns.
     10. Each provision of this Agreement shall remain effective and enforceable
until stayed, modified, terminated, or suspended in writing by the Reserve Bank.
     11. 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 Monarch, the Bank, or any of their
current or former institution-affiliated parties and their successors and
assigns.
     12. 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 21st day of September, 2010.

              MONARCH COMMUNITY
BANCORP, INC.   FEDERAL RESERVE BANK OF CHICAGO  
By:
  (-s- Richard DeVries) [k49641k4964101.gif]   By:   (-s- Mark Kawa)
[k49641k4964102.gif]
 
           
 
  Richard DeVries
President & CEO       Mark Kawa
Vice President

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