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Exhibit 10.1
 
UNITED STATES OF AMERICA
Before The
OFFICE OF THRIFT SUPERVISION

     
In the Matter of:
)
   
)
 
Vantus Bank
)
OTS Order No.: CN 09-XX
Sioux City, Iowa
)
   
)
 
OTS Docket No. 00190
)
Effective Date: XXXXX, 2009
 
)
 

 
PROMPT CORRECTIVE ACTION DIRECTIVE
 
          WHEREAS, Vantus Bank, Sioux City, Iowa (Institution), is a federally
chartered savings association that is regulated by the Office of Thrift
Supervision (OTS);
 
          WHEREAS, Section 38 of the Federal Deposit Insurance Act (FDIA), 12
U.S.C. § 1831o, and Part 565 of the OTS Regulations, 12 C.F.R. Part 565, require
insured depository institutions that are undercapitalized to file a capital
restoration plan specifying the steps the insured depository institution will
take to become at least “adequately capitalized”;
 
          WHEREAS, Section 38 of FDIA, 12 U.S.C. § 1831o, requires the OTS to
take prompt corrective action to resolve the problems of insured depository
institutions at the least possible long-term loss to the deposit insurance fund;
 
          WHEREAS, Section 565.7 of the OTS Regulations, 12 C.F.R. § 565.7,
provides for the OTS’s issuance of directives to take prompt corrective action
to resolve the problems of insured depository institutions and to restore their
capital;
 
          WHEREAS, the OTS, on May 8, 2009, notified the Institution that it was
“significantly undercapitalized”for purposes of the prompt corrective action
provisions of Section 38 of FDIA, 12 U.S.C. § 1831o, and was required to submit
a Capital Restoration Plan no later than June 15, 2009;
 
          WHEREAS, the Institution also is not in compliance with the capital
standards required by Section 5(t) of the Home Owners’ Loan Act (HOLA), 12
U.S.C. § 1464(t);
 
          WHEREAS, Section 5(t)(6)(B)(ii) of HOLA, 12 U.S.C. §
1464(t)(6)(B)(ii), requires any institution not in compliance with the capital
standards to comply with a capital directive issued by the OTS;

 
 
 

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          WHEREAS, on June 15, 2009, the Institution submitted to the OTS a
capital restoration plan (Capital Restoration Plan) under Section 38(e)(2)(A) of
the FDIA, 12 U.S.C. § 1831o(e)(2)(A) ;
 
          WHEREAS, the OTS issued a Notice of Intent to Issue this Prompt
Corrective Action Directive (PCA Directive) onAugust 13, 2009 (Notice of
Intent), and has determined to issue this PCA Directive in order to resolve the
Institution’s problems at the least long term cost to the deposit insurance
fund, thereby effectuating the purpose of Section 38 of FDIA, 12 U.S.C. § 1831o;
 
          WHEREAS, the OTS has considered the Institution’s capital deficiency
and the submitted Capital Restoration Plan in accordance with Section 567.10 and
Section 38(e)(2) of the FDIA, 12 U.S.C. § 1831o(e)(2) and denied the Capital
Restoration Plan as set forth in the Notice of Intent; and
 
          WHEREAS, the Institution and its Board of Directors, by execution of
the attached Stipulation and Consent (Stipulation) to the issuance of this PCA
Directive, the terms of which are incorporated herein by this reference, have
stipulated and consented to the issuance of the PCA Directive.
 
          NOW THEREFORE, pursuant to Section 38 of FDIA, 12 U.S.C. § 1831o,
including but  not limited to subsection (f) thereof, Section 5(t)(6)(B)(ii) of
HOLA, 12 U.S.C. § 1464(t)(6)(B)(ii), and Section 565.7 of the OTS Regulations,
12 C.F.R. § 565.7, OTS directs the Institution and its Board of Directors to do
the following1:
 
PART I – IMPROVING CAPITAL
 
Section 1.1 Required Recapitalization through Merger, Acquisition, or Sale.
 
          Pursuant to 12 U.S.C. §§ 1831o(f)(2)(A)(iii) and (e)(5), the
Institution must be recapitalized prior to September 30, 2009, by (a) merging
with or being acquired by another financial institution, financial holding
company, or other entity2, or (b) the sale of all or substantially all of the
Institution’s assets and liabilities to another financial institution, financial
institution holding company, or other entity, whereby the resulting depository
institution would be at least “adequately capitalized,”as defined at 12 C.F.R. §
565.4(b).
 

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1 The OTS must impose one or more of the presumptive restrictions set forth in
12 U.S.C. § 1831o(f), especially 12 U.S.C. §§ 1831o(f)(3) and (4) if the
Institution: (1) is significantly or critically undercapitalized, (2) is
undercapitalized and did not submit an acceptable capital restoration plan, or
(3) fails to implement an approved capital restoration plan.
2 For purposes of this PCA Directive, “other entity” may include but is not
limited to an individual, a group of individuals, a partnership, a corporation,
or any other form of business organization that may, under applicable statutes
and regulations, merge with or acquire the Institution or purchase all or
substantially all of its assets and liabilities.

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 Section 1.2 Efforts to Obtain Capital.
 
          The Board of Directors of the Institution shall at all times make
diligent and good faith efforts to cause the Institution to become adequately
capitalized.
 
          The OTS requires this action pursuant to 12 U.S.C. § 1831o(f)(2)(J)
having determined that such actions will better carry out the purposes of 12
U.S.C. § 1831o.
 
Section 1.3 Prior Notice Required.
 
          (a) The Institution and any subsidiary thereof shall not issue any
securities or enter into any agreement, letter of intent, or understanding to
merge, consolidate, sell all or substantially all of its assets and liabilities,
or otherwise be acquired, or enter into any agreement or understanding to
reorganize unless (i) the Institution has provided the OTS with prior written
notice of its intention to take such action, and (ii) following such notice, the
OTS has provided the Institution with prior written notice of its non-objection
to the proposed action by the Institution.
 
          (b) The OTS requires this action pursuant to 12 U.S.C. §
1831o(f)(2)(J) having determined that such actions will better carry out the
purposes of 12 U.S.C. § 1831o.
 
Section 1.4 Ongoing Monitoring of Capital Category Required.
 
          (a) The Institution must monitor its own PCA capital ratios and if the
Institution should improve from a lower to a higher PCA capital category, it
must continue to comply with each provision of this PCA Directive except to the
extent the provision shall be modified, terminated, suspended or set aside by
the OTS in writing.
 
          (b) If the Institution falls into a lower PCA capital category, it
must comply immediately with the appropriate additional restrictions contained
in 12 U.S.C. § 1831o and 12 C.F.R. § 565.6.
 
          (c) The OTS requires this action pursuant to 12 U.S.C. §
1831o(f)(2)(J) and based upon a determination by the OTS that such action will
better carry out the purposes of Section 38 of the FDIA.
 
Section 1.5 Reports of Compliance.
 
          No later than the close of business on the 15th and 30th day of each
month following the Effective Date of this PCA Directive:
 
          (a) The Institution shall submit to the OTS, in a format acceptable to
the OTS, a summary of actions taken, during the immediately preceding week, by
the Institution and its Board of Directors and executive officers in furtherance
of the Institution’s efforts to become adequately capitalized.

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          (b) The management of the Institution shall prepare a written report
concerning the Institution’s compliance with each of the requirements of this
PCA Directive during the preceding week. The report shall include confirmation
that the Institution is in compliance with: (i) all restrictions that apply
automatically to an institution that is “significantly undercapitalized,” and
(ii) with the other restrictions and requirements contained in this PCA
Directive.
 
          (c) The Institution shall continue to provide weekly status reports
required by Section 1.5 (a) and (b) until directed otherwise by the Regional
Director. The OTS requires this action pursuant to 12 U.S.C. § 1831o(f)(2)(J)
and based upon a determination by the OTS that such action will better carry out
the purposes of Section 38 of the FDIA.
 
Section 1.6 Adequate Progress.
 
          If the OTS, in its sole discretion, determines that the Institution is
failing to make adequate progress towards achieving the requirements set forth
in Sections 1.1 of this Directive, the OTS may take such further supervisory,
enforcement or resolution action as it deems appropriate.
 
PART II - OPERATING RESTRICTIONS
 
Section 2.1 Compliance with Mandatory Restrictions.
 
          The Institution shall comply with all of the mandatory prompt
corrective action provisions set forth in 12 U.S.C. § 1831o and 12 C.F.R. §
565.6 that automatically apply to the Institution based upon the Institution’s
prompt corrective action capital category. These provisions are set forth as
follows:
 
          (a) No capital distributions shall be made without the prior written
approval of the OTS. 12 U.S.C. § 1831o(d)(1); 12 C.F.R. §§ 565.6(a)(1) and
(a)(2)(i).
 
          (b) No management fees shall be paid to any person having control of
the Institution if: (i) the Institution is not adequately capitalized or (ii)
after making the payment, the Institution would be undercapitalized. 12 U.S.C. §
1831o(d)(2); 12 C.F.R. §§ 565.6(a)(1) and (a)(2)(i).
 
          (c) The Institution shall not permit its average total assets during
any calendar quarter to exceed its average total assets during the preceding
quarter. 12 U.S.C. § 1831o(e)(3); 12 C.F.R. § 565.6(a)(2)(iv).
 
          (d) The Institution shall not, directly or indirectly, acquire any
interest in any company or insured depository institution, establish or acquire
any additional branch office, or engage in any new line of business, unless (i)
the OTS has accepted the Institution’s capital restoration plan, the Institution
is in compliance with the plan, and the OTS determines that the action is
consistent with, and will further achievement of the plan, or (ii) the FDIC
Board of Directors approves the action. 12 U.S.C. § 1831o(e)(4); 12 C.F.R. §
565.6(a)(2)(v).
 
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          (f) The Institution shall not, without the OTS’s prior written
approval, (i) pay any bonus to any Senior Executive Officer, as that term is
defined in 12 C.F.R. § 563.555 or (ii) provide compensation to any Senior
Executive Officer exceeding that Officer’s average rate of compensation
(excluding bonuses, stock options, and profit-sharing) during the 12 calendar
months preceding the calendar month in which the Institution became
undercapitalized. 12 U.S.C. § 1831o(f)(4); 12 C.F.R. § 565.6(a)(3).
 
Section 2.2 Affiliate Transactions.
 
          The Institution shall use its assets, facilities, and staff only for
the benefit of the Institution and shall not share or otherwise use, directly or
indirectly, its assets, facilities, or staff for the benefit of any affiliate or
other company.
 
Section 2.3 Restrictions on Interest Rates.
 
          The Institution shall restrict the rates it pays on deposits to the
prevailing rates of interest on deposits of comparable amounts and maturities in
the Institution’s normal market area, as determined by the OTS. Nothing herein
shall be construed as requiring a reduction of rates paid on outstanding time
deposits prior to their renewal. The OTS is imposing the restriction pursuant to
12 U.S.C. § 1831o(f)(2)(C).
 
Section 2.4 Restrictions on Activities Posing Excessive Risk.
 
          (a) The OTS imposes these restrictions pursuant to 12 U.S.C. §§
1831o(f)(2)(E) and (J), having determined that these activities pose excessive
risk to the Institution in view of its deteriorating financial condition. The
Institution, directly or indirectly, shall not do any of the following without
prior written approval from the OTS:

       
i.
release any borrower or guarantor from personal or corporate liability on any
loan or extension of credit granted by the Institution, except when the
outstanding balance of the loan and other outstanding loans to the borrower or
guarantor have been paid in full;
 
ii.
originate, acquire, or purchase any loan, extension of credit, line of credit,
or participation except as otherwise permitted by this PCA Directive;
 
iii.
make or commit to make any investment in any service corporation, finance
subsidiary, or operating subsidiary, or any subsidiary of a service corporation
in real estate or equity securities;
 
iv.
enter into any joint venture or limited partnership agreement, directly or
indirectly;
 
v.
engage in forward commitment, futures transaction, or financial options
transaction;
 
vi.
enter into any new contract or agreement for the purchase, sale, or lease of
goods, materials, equipment, supplies, services or capital assets, except;
however, this restriction does not apply to contracts or agreements to be
entered into in the normal course of business where the amount of each contract
or agreement does not exceed twenty thousand dollars ($20,000);

 
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vii.
enter into any lease or contract for the purchase or sale of real estate or of
any interest therein;
 
viii.
encumber any of its property or other assets, except; however, that the
Institution may pledge its assets in connection with borrowings necessary to
meet liquidity needs;
 
ix.
incur any material obligation or contingent liability, except as otherwise
permitted by this PCA Directive;
 
x.
establish any loan production office or agency office;
 
xi.
accept any non-cash capital contribution;
 
xii.
accept deposits or renewals or roll-overs of prior deposits, from correspondent
depository banks;
 
xiii.
accept new retirement or employee benefit plan deposits, 12 U.S.C.
§  1821(a)(1)(D)(ii);
 
xiv.
accept, renew, or rollover any deposits not fully insured by the FDIC
 
xv.
purchase any bank-owned life insurance (BOLI); or
 
xvi.
extend any credit to executive officers, directors, or principal shareholders.
 
          (b) The OTS permits these activities pursuant to 12 U.S.C. §§
1831o(f)(2)(J), having determined that these activities do not pose excessive
risk to the Institution in view of its deteriorating financial condition.
         
i.
the Institution shall limit its lending activity to the origination of
owner-occupied, Qualifying Mortgage Loans, as defined in 12 CFR § 567.1,
underwritten in accordance with the criteria established, at the time of loan
origination, for loans:
         
(A)
Purchased by Federal Home Loan Mortgage Corporation (FHLMC) or Federal National
Mortgage Association (FNMA),
   
(B)
Guaranteed by the Department of Veterans Affairs against default (“VA
Mortgage”), or
   
(C)
Insured by the Federal Housing Administration against default (“FHA Mortgage”);
         
ii.
the Institution may make loans fully secured by savings or time deposit accounts
over which the Institution establishes proper collateral controls;
       
iii.
the Institution may honor legally binding loan commitments as of the Effective
Date, including outstanding revolving lines of credit; and
       
iv.
the Institution may continue its Overdraft Courtesy Program.
     
Section 2.5 Cooperation with the FDIC
 
          The Institution shall cooperate fully with the FDIC’s efforts to avoid
a loss or otherwise minimize exposure to the Deposit Insurance Fund. Such
cooperation includes, but is not limited to, responding to requests for
information, providing full access to personnel, agents and service providers,
accommodating on-site visits, and permitting the FDIC to provide otherwise
confidential information to third parties to facilitate the liquidation or other
resolution of the Institution in anticipation of the possible appointment of the
FDIC as conservator, receiver, or other legal custodian.

 
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PART III - RELIEF FROM RESTRICTIONS
 
Section 3.1 Waiver Requests
 
          (a) The Institution may submit written requests to the OTS, requesting
the OTS to issue a notice of non-objection for the purpose of either relieving
the Institution from certain restrictions hereunder or requesting OTS to provide
notice of supervisory non-objection with respect to a particular specifically
identified transaction, loan, or investment.
 
          (b) Requests for written notice of the OTS’s non-objection pursuant to
subsection (a) above must be accompanied by a resolution of the Board, signed by
each individual member of the Board voting in favor of the resolution. All
documentation considered by the Board in adopting each such resolution shall be
explicitly referenced in the minutes of the meeting at which the resolution was
adopted and shall be made available to OTS representatives upon request.
 
PART IV - GENERAL PROVISIONS
 
Section 4.1 Jurisdiction
 
          This PCA Directive constitutes a final order under 12 U.S.C. § 1831o
and is enforceable under 12 U.S.C. § 1818(i).
 
Section 4.2 Definitions
 
          (a) All technical words or terms used in this PCA Directive, for which
meanings are not specified or otherwise provided by the provisions of this PCA
Directive, shall, insofar as applicable, have meanings as defined in Chapter V
of Title 12 of the Code of Federal Regulations, HOLA, FDIA, OTS Bulletins, or
OTS Examination Handbook. Any such technical words or terms used in this PCA
Directive and undefined in Code of Federal Regulations, HOLA, FDIA, OTS
Bulletins or OTS Examination Handbook shall have meanings that are in accordance
with the best custom and usage in the savings and loan industry.
 
          (b) Reference in this PCA Directive to provisions of statutes and
regulations shall be deemed to include references to all amendments to such
provisions as have been made as of the Effective Date and references to
successor provisions as they become applicable.

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Section 4.3 Notices
 
          Except as otherwise provided herein, any request, demand,
authorization, direction, notice, consent, waiver or other document provided or
permitted by the PCA Directive to be made upon, given or furnished to, delivered
to, or filed with the OTS or the Institution shall be in writing and sent by
first class U.S. mail (or by reputable overnight courier, electronic facsimile
transmission, or hand delivery via messenger) addressed as follows:
 

 
OTS:
Regional Director
   
Office of Thrift Supervision
   
One South Wacker Drive, Suite 2000
   
Chicago, Illinois 60606
   
Facsimile: (312) 917-5002
       
Institution:
President
   
Vantus Bank
   
329 Pierce Street
   
Sioux City, IA 51102
   
Facsimile: (712) 277-0224

 
Section 4.4 Duration, Termination or Suspension of the PCA Directive
 
          (a) The terms and provisions of this PCA Directive shall be binding
upon the Institution, its directors, officers, employees, agents, successors,
assigns, and other persons participating in the affairs of the Institution.
 
          (b) The PCA Directive shall remain in effect until terminated,
modified or suspended in writing by the OTS.
 
          (c) The OTS, in its discretion, may, by written notice, suspend any or
all provisions of the PCA Directive, except for Section 2.1 (Mandatory
Restrictions).
 
Section 4.5 Effect of Headings
 
          The Part and Section headings herein are for convenience only and
shall not affect the construction hereof.
 
Section 4.6 Separability Clause
 
          In case any provision in this PCA Directive is ruled to be invalid,
illegal or unenforceable by the decision of any court of competent jurisdiction,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby unless the OTS, in its sole
discretion, determines otherwise.
 
Section 4.7 No Violations Authorized; Consequences of PCA Directive
 
          Nothing in this PCA Directive, including, without limitation, any of
the timeframes for actions set forth in Part I, shall be construed as: (i)
allowing the Institution to violate any law, rule, regulation, or policy
statement to which it is subject or (ii) restricting the OTS from taking such
actions as are appropriate in fulfilling the responsibilities placed upon it by
law, including, without limitation, actions pursuant to 12 U.S.C. § 1831o, or
taking any other type of supervisory, enforcement, or resolution action that the
OTS determines to be appropriate.
 
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Section 4.8 Other Enforcement Document
 
          (a) The Order to Cease and Desist and its accompanying Stipulation and
Consent to the issuance by OTS issued against the Institution on July 31, 2009,
remains in effect.
 
          (b) Nothing contained in this PCA Directive shall affect or limit the
OTS’s ability to take enforcement action in connection with any violation of
this enforcement document.
 
Section 4.9 Incorporation of Stipulation
 
          The Stipulation is made a part hereof and is incorporated herein by
this reference.
 
Section 4.10 Effective Date of This PCA Directive
 
          The provisions of this PCA Directive are effective immediately upon
the issuance of the PCA Directive by the Regional Director, which is the date
indicated on the first page of this PCA Directive (Effective Date).

       
     IT IS SO ORDERED.
                  OFFICE OF THRIFT SUPERVISION            
By:
/s/ Daniel T. McKee      
Daniel T. McKee
     
Regional Director
     
Central Region
           
Date: See Effective Date on page 1
         

 
 
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