Exhibit 10.13

 

SUPERVISORY AGREEMENT

 

This Supervisory Agreement (Agreement) is made this 3rd day of June, 2011, by
and through the Board of Directors (Board) of The Washington Savings Bank, FSB,
Bowie, Maryland, OTS Docket No. 08173 (Association) and the Office of Thrift
Supervision (OTS), acting by and through its Regional Director for the Southeast
Region (Regional Director);

 

WHEREAS, the OTS, pursuant to 12 U.S.C. § 1818, has the statutory authority to
enter into and enforce supervisory agreements to ensure the establishment and
maintenance of appropriate safeguards in the operation of the entities it
regulates; and

 

WHEREAS, the Association is subject to examination, regulation and supervision
by the OTS; and

 

WHEREAS, based on its examination of the Association, the OTS finds that the
Association has engaged in unsafe or unsound practices and/or violations of law
or regulation; and

 

WHEREAS, in furtherance of their common goal to ensure that the Association
addresses the unsafe or unsound practices and/or violations of law or regulation
identified by the OTS in the October 12, 2010 Report of Examination (2010 ROE),
the Association and the OTS have mutually agreed to enter into this Agreement;
and

 

WHEREAS, on May 3, 2011, the Association’s Board, at a duly constituted meeting,
adopted a resolution (Board Resolution) that authorizes the Association to enter
into this Agreement and directs compliance by the Association and its directors,
officers, employees, and other institution-affiliated parties with each and
every provision of this Agreement.

 

NOW THEREFORE, in consideration of the above premises, it is agreed as follows:

 

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Business Plan.

 

1.             By July 31, 2011, the Association shall submit a new business
plan for the second half of calendar year 2011 and calendar year 2012 (Business
Plan) that is acceptable to the Regional Director and that addresses all
corrective actions in the 2010 ROE relating to the Association’s Business Plan. 
Thereafter, the Association shall submit a new one (1) year Business Plan at
least sixty (60) days prior to the end of each calendar year.  At a minimum, the
Business Plan shall conform to applicable laws, regulations, and regulatory
guidance and include:

 

(a)           plans and strategies to ensure capital is sufficient given the
credit quality and other risks inherent in the Association’s balance sheet and
operations;

 

(b)           methods by which additional capital will be raised if needed,
including identifying the sources of such capital and timeframes for obtaining
additional capital;

 

(c)           plans and strategies to improve asset quality, strengthen and
improve earnings, and maintain appropriate levels of liquidity;

 

(d)           strategies for ensuring that the Association has the financial and
personnel resources necessary to implement and adhere to the Business Plan;

 

(e)           quarterly pro forma financial projections (balance sheet, capital
forecasts, and income statement) for each quarter covered by the Business Plan;
and

 

(f)            identification of all relevant assumptions made in formulating
the Business Plan and a requirement that documentation supporting such
assumptions be retained by the Association.

 

2.             Upon receipt of written notification from the Regional Director
that the Business Plan is acceptable, the Board shall adopt and ensure that the
Association implements and adheres to the Business Plan.  A copy of the Business
Plan and the Board meeting minutes reflecting the Board’s adoption thereof shall
be provided to the Regional Director within ten (10) days after the Board
meeting.

 

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3.             Any material modifications(8) to the Business Plan must receive
the prior written non-objection of the Regional Director.  The Association shall
submit proposed modifications to the Regional Director at least forty-five (45)
days prior to the proposed date of implementation of the proposed modifications.

 

4.             Within forty-five (45) days after the close of each calendar
quarter, beginning with the calendar quarter ending September 30, 2011, the
Board shall review quarterly variance reports on the Association’s compliance
with the Business Plan (Quarterly Business Plan Variance Reports).  The
Quarterly Business Plan Variance Reports shall:

 

(a)           identify material variances(9) in the Association’s actual
performance during the preceding quarter as compared to the projections set
forth in the Business Plan;

 

(b)           contain an analysis and explanation of identified variances; and

 

(c)           discuss the specific measures taken or to be taken to address
identified variances.

 

5.             The Board’s review of the Quarterly Business Plan Variance
Reports, including any corrective actions adopted by the Board, shall be fully
documented in the Board meeting minutes.  A copy of the Quarterly Business Plan
Variance Report and the Board meeting minutes detailing the Board’s review shall
be provided to the Regional Director within ten (10) days after the Board
meeting.

 

Problem Assets.

 

6.             Effective immediately, the Association shall identify problem
assets, including but not limited to:

 

(a)           conducting periodic asset quality reviews to identify problem
assets and the appropriate classification of all assets;

 

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(8)   A modification shall be considered material under this section of the
Agreement if the Association plans to: (a) engage in any activity that is
inconsistent with the Business Plan; or (b) exceed the level of any activity
contemplated in the Business Plan or fail to meet target amounts established in
the Business Plan by more than ten percent (10%), unless the activity involves
assets risk-weighted fifty percent (50%) or less, in which case a modification
of more than twenty-five percent (25%) shall be deemed to be a material
modification.

(9)   A variance shall be considered material under this section of the
Agreement if the Association: (a) engaged in any activity that is inconsistent
with the Business Plan; or (b) exceeded the level of any activity contemplated
in the Business Plan or failed to meet target amounts established in the
Business Plan by more than ten percent (10%), unless the activity involved
assets risk-weighted fifty percent (50%) or less, in which case a variance of
more than twenty-five percent (25%) shall be deemed to be a material variance.

 

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(b)           conducting internal impairment analyses for all problem assets
identified by the review required by subparagraph (a) above; and

 

(c)           estimating potential losses in identified problem assets and
establishing the appropriate allowance for loan and lease losses (ALLL) for all
classified assets, consistent with all applicable laws, regulations, and
regulatory guidance.

 

7.             Within sixty (60) days, the Association shall prepare and adopt a
detailed, written plan with specific strategies, targets, and timeframes to
reduce(10) the Association’s level of criticized assets(11) (Problem Asset
Plan).  At a minimum, the Problem Asset Plan shall require Management to prepare
and submit for Board review individual written asset resolution plans for each
criticized asset and delinquent loan or group of loans to the same borrower of
Five Hundred Thousand Dollars ($500,000.00) or greater (Asset Resolution Plans).

 

8.             Within forty-five (45) days after the end of each calendar
quarter, beginning with the quarter ending September 30, 2011, the Board shall
review a quarterly written asset status report (Quarterly Asset Report).  The
Quarterly Asset Report shall include, at a minimum:

 

(a)           the current status of all Asset Resolution Plans;

 

(b)           a detailed analysis of the calculation and adequacy of the
Association’s ALLL levels and comparison of ALLL levels to the total level of
classified assets;

 

(c)           a comparison of classified assets to core and risk based capital;

 

(d)           a comparison of classified assets at the current quarter end with
the preceding quarter;

 

(e)           a breakdown of classified assets by type (residential, acquisition
and development, construction, land loans, etc.);

 

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(10) For purposes of this Paragraph, “reduce” means to collect, sell, charge
off, or improve the quality of an asset sufficient to warrant its removal from
adverse criticism or classification.

(11) The term “criticized assets” shall include all classified assets, assets
designated special mention, all nonperforming assets and all delinquent loans,
that are ninety (90) or more days delinquent.

 

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(f)            an assessment of the Association’s compliance with the Problem
Asset Plan; and

 

(g)           a discussion of the actions taken during the preceding quarter to
reduce the Association’s level of criticized assets and delinquent loans.

 

9.             The Board’s review of the Quarterly Asset Reports, and any
corrective actions adopted by the Board, shall be fully documented in the Board
meeting minutes.  A copy of the Quarterly Asset Report and the Board meeting
minutes detailing the Board’s review shall be provided to the Regional Director
within thirty (30) days after the Board meeting.

 

Allowance for Loan and Lease Losses.

 

10.           Within sixty (60) days, the Association shall revise its policies,
procedures, and methodology relating to the timely establishment and maintenance
of an adequate ALLL level (ALLL Policy) to address all corrective actions set
forth in the 2010 ROE relating to ALLL.  The ALLL Policy shall comply with
applicable laws, regulations, and regulatory guidance and shall:

 

(a)           incorporate the results of all internal loan reviews and
classifications;

 

(b)           incorporate specific valuation allowance increases for impaired,
collateral-dependent loans in the loss history for purposes of determining an
appropriate allowance for pass loans pursuant to Statement of Financial
Accounting Standards (SFAS) 5;

 

(c)           address the historical loan loss rates of the Association in
compliance with regulatory guidance;

 

(d)           include an estimate of the potential loss exposure on each
significant(12) credit;

 

(e)           require the stress testing of loss rates and delinquency rates to:
(i) determine the sensitivity of the ALLL methodology to changes from primary
inputs, and (ii) evaluate the appropriateness of the ALLL in a range of credit
environments;

 

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(12)  A credit shall be considered significant for the purposes of assessing,
establishing, and maintaining an appropriate level of ALLL if it has (i) a
current balance, or (ii) a current balance plus a committed amount, of Five
Hundred Thousand Dollars ($500,000.00) or greater.

 

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(f)            address the level and impact of the Association’s current
concentrations of credit, including geographic concentrations; and

 

(g)           take into consideration current and prospective market and
economic conditions.

 

11.           Effective immediately, the Association shall ensure that all
impaired or otherwise troubled loans have updated appraisals or evaluations
where needed and ensure that adequate fair values are determined and that losses
are appropriately and timely recognized.  Fair values for impaired loans shall
be updated on a periodic basis, as appropriate, in accordance with all
applicable laws, regulations, and regulatory guidance.

 

12.           Within forty-five (45) days after the end of each quarter,
beginning with the quarter ending September 30, 2011, the Association shall
analyze the adequacy of the ALLL consistent with its ALLL Policy (Quarterly ALLL
Report).  The Board’s review of the Quarterly ALLL Report, including, but not
limited to, all qualitative factors considered in determining the adequacy of
the Association’s ALLL, shall be fully documented in the Board meeting minutes. 
Any deficiency in the ALLL shall be remedied by the Association in the quarter
in which it is discovered and before the Association files its Thrift Financial
Report (TFR) with the OTS.  A copy of the Quarterly ALLL Report and the Board
meeting minutes detailing the Board’s review shall be provided to the Regional
Director within thirty (30) days after the Board meeting.

 

Liquidity Management.

 

13.           Within sixty (60) days, the Association shall revise its liquidity
and funds management policies and procedures (Liquidity Management Policy) to
address all corrective actions set forth in the 2010 ROE relating to liquidity
and funds management.  The Liquidity Management Policy shall comply with all
applicable laws, regulations and regulatory guidance, including the Interagency
Policy Statement on Funding and Liquidity Risk Management (March 17, 2010) (the
Liquidity IPS).  The Liquidity

 

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Management Policy shall incorporate a projected sources and uses of funds
analysis that is consistent with the guidance set forth in the Liquidity IPS.

 

14.           The Liquidity Management Policy shall include a Contingency
Funding Plan, which shall, at a minimum, include:

 

(a)           alternative funding sources for meeting extraordinary demands or
to provide liquidity in the event the sources identified are insufficient.  Such
alternative funding sources must consider, at a minimum, the selling of assets,
obtaining secured lines of credit, recovering charged-off assets, injecting
additional equity capital, and the priority of their implementation; and

 

(b)           sources and uses of funds projections under various stress
scenarios including, but not limited to, (i) falling below Prompt Corrective
Action (PCA) well-capitalized status; (ii) restricted access to brokered
deposits; (iii) restricted access to Federal Home Loan Bank (FHLB) borrowings;
(iv) loss of uninsured deposits; and (v) limitations on deposit offering rates.

 

15.           Beginning on June 30, 2011, the Association shall submit to the
Regional Director a quarterly written assessment of its current liquidity
position (Liquidity Report).  The Liquidity Report shall be acceptable to the
Regional Director and include an assessment of the Association’s compliance with
its Liquidity Management Policy and Contingency Funding Plan.  At a minimum, the
Liquidity Report shall include:

 

(a)           cash on hand;

 

(b)           a maturity schedule of certificates of deposit, including, but not
limited to, large uninsured deposits, brokered deposits, and public funds
deposits;

 

(c)           the volatility of deposits;

 

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(d)           a listing of funding sources, including federal funds sold;
unpledged assets and assets available for sale; and borrowing lines by lender,
including original amount, remaining availability, type and book value of
collateral pledged, terms, and maturity date, if applicable;

 

(e)           an analysis of the continuing availability and volatility of
present funding sources;

 

(f)            an analysis of the impact of decreased cash flow from the
Association’s loan portfolio resulting from delinquent and non-performing loans;

 

(g)           an analysis of the impact of decreased cash flow from the sale of
loans or loan participations; and

 

(h)           a schedule of deposit offering rates by type and maturity compared
to national offering rates as published by the Federal Deposit Insurance
Corporation.

 

16.           Within ten (10) days after receipt of communication from a Federal
Home Loan Bank, Federal Reserve Bank, correspondent bank, or government agency
with collateralized public unit deposits regarding changes in the Association’s
borrowing and/or collateral requirements, the Association shall notify the
Regional Director of such communication.

 

Brokered Deposits.

 

17.           Effective immediately, the Association is prohibited from
increasing the dollar amount of brokered deposits(13) at the Association without
receiving the prior written non-objection of the Regional Director.  The
Association’s written request for non-objection shall be submitted to the
Regional Director at least forty-five (45) days prior to the anticipated date of
acceptance of additional brokered deposits.

 

18.           Within sixty (60) days, the Association shall submit a detailed
brokered deposit plan that is acceptable to the Regional Director covering July
1, 2011 through December 31, 2012 (Brokered

 

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(13)         The term “brokered deposit” is defined at 12 C.F.R. § 337.6(a)(2).

 

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Deposit Plan).  At a minimum, the Brokered Deposit Plan shall include:

 

(a)           a detailed description of the current level and composition of the
Association’s brokered deposits, including the source of each deposit and its
maturity date;

 

(b)           comprehensive cash flow and brokered deposit projections
forecasting funding needs and sources for each calendar quarter covered by the
Brokered Deposit Plan; and

 

(c)           detailed strategies to reduce the current level of brokered
deposits, which shall include target dates and amounts.

 

19.           Upon receipt of written non-objection from the Regional Director,
the Association shall implement and adhere to the Brokered Deposit Plan.  A copy
of the Brokered Deposit Plan shall be provided to the Regional Director within
twenty (20) days after the Board meeting.

 

20.           Any modifications to the Brokered Deposit Plan must receive the
prior written non-objection of the Regional Director.  The Association shall
submit any proposed modifications to the Regional Director at least forty-five
(45) days prior to implementation of any modifications.

 

21.           Within forty-five (45) days after the close of each quarter,
beginning with the quarter ending September 30, 2011, the Board shall review
quarterly variance reports on the Association’s compliance with the Brokered
Deposit Plan (Brokered Deposit Variance Reports).  A copy of the Brokered
Deposit Variance Reports shall be provided to the Regional Director within
twenty (20) days after the Board meeting.

 

Concentrations of Credit.

 

22.           Within thirty (30) days, the Association shall revise its written
program for identifying, monitoring, and controlling risks associated with
concentrations of credit (Concentration Program) to ensure that it addresses all
corrective actions set forth in the 2010 ROE relating to concentrations of
credit.  The Concentration Program shall comply with all applicable laws,
regulations, and regulatory

 

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guidance and shall:

 

(a)           establish prudent concentration limits expressed as a percentage
of Tier 1 (Core) Capital plus ALLL, and document the appropriateness of such
limits based on the Association’s risk profile;

 

(b)           establish stratification categories of the Association’s
concentrations of credit (e.g., nonresidential permanent loans, construction
loans, acquisition and development loans) and establish enhanced risk analysis,
monitoring, and management for each stratification category;

 

(c)           contain specific review procedures and reporting requirements,
including written reports to the Board, designed to identify, monitor, and
control the risks associated with concentrations of credit and periodic market
analysis for the various property types and geographic markets represented in
its portfolio; and

 

(d)           contain a written action plan, including specific time frames, for
bringing the Association into compliance with its concentration of credit
limits.

 

23.           Within sixty (60) days, the Association shall submit its
Concentration Program to the Regional Director for review and comment.  Upon
receipt of written notification from the Regional Director that the
Concentration Program is acceptable, the Association shall implement and adhere
to the Concentration Program.  The Board’s review of the Concentration Program
shall be documented in the Board meeting minutes.

 

24.           Beginning with the quarter ending June 30, 2011, the Board shall
review the appropriateness of the Association’s concentration limits given
current conditions and the Association’s compliance with its Concentration
Program.  The Board’s review of the Association’s Concentration Program shall be
documented in the Board meeting minutes.  A copy of the Board meeting minutes
shall be provided to the Regional Director within sixty (60) days after the end
of each quarter, beginning with the quarter

 

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ending June 30, 2011.

 

Financial Recordkeeping and Reporting.

 

25.           Effective immediately, the Association shall ensure that its books
and records and financial reports and statements are timely and accurately
prepared and filed in compliance with generally accepted accounting principles
and all applicable laws, regulations, and regulatory guidance including, but not
limited to, 12 C.F.R. Part 562 and the TFR instructions.

 

26.           Effective immediately, the Association shall ensure that it
maintains at all times books and records that are separate and distinct from
those of its holding company, WSB Holdings, Inc., Bowie, Maryland, OTS Docket
No. H-4468 (Holding Company).  The books and records for each legal entity shall
accurately reflect and fully support the financial condition of the Association
and the Holding Company respectively.

 

Reporting Deferred Tax Assets.

 

27.           Effective immediately, the Association shall take all necessary
steps to properly report deferred tax assets on Item SC690 of Schedule SC and
Item CCR133 of Schedule CCR of the Thrift Financial Report (TFR) in accordance
with 12 C.F.R. §§560.160 and 567.12(h), OTS Thrift Bulletin 56, and SFAS 109.

 

Violations of Law.

 

28.           Within sixty (60) days, the Association shall ensure that all
violations of law and/or regulation discussed in the 2010 ROE are corrected and
that adequate policies, procedures and systems are established or revised and
thereafter implemented to prevent future violations.

 

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Growth.

 

29.           Effective immediately, the Association shall not increase its
total assets during any quarter in excess of an amount equal to net interest
credited on deposit liabilities during the prior quarter without the prior
written notice of non-objection of the Regional Director.

 

Directorate and Management Changes.

 

30.           Effective immediately, the Association shall comply with the prior
notification requirements for changes in directors and Senior Executive
Officers(14) set forth in 12 C.F.R. Part 563, Subpart H.

 

Dividends and Other Capital Distributions.

 

31.           Effective immediately, the Association shall not declare or pay
dividends or make any other capital distributions, as that term is defined in 12
C.F.R. § 563.141, without receiving the prior written approval of the Regional
Director in accordance with applicable regulations and regulatory guidance.  The
Association’s written request for approval shall be submitted to the Regional
Director at least thirty (30) days prior to the anticipated date of the proposed
declaration, dividend payment or distribution of capital.

 

Employment Contracts and Compensation Arrangements.

 

32.           Effective immediately, the Association shall not enter into,
renew, extend, or revise any contractual arrangement relating to compensation or
benefits for any Senior Executive Officer or director of the Association, unless
it first provides the Regional Director with not less than thirty (30) days
prior written notice of the proposed transaction.  The notice to the Regional
Director shall include a copy of the proposed employment contract or
compensation arrangement or a detailed, written description of the compensation
arrangement to be offered to such officer or director, including all benefits
and perquisites.  The Board shall ensure that any contract, agreement or
arrangement submitted to the Regional Director fully complies with the
requirements of 12 C.F.R. Part 359, 12 C.F.R. §§ 563.39 and 563.161(b), and 12
C.F.R. Part 570 — Appendix A.

 

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(14) The term “Senior Executive Officer” is defined at 12 C.F.R. § 563.555.

 

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Golden Parachute and Indemnification Payments.

 

33.           Effective immediately, the Association shall not make any golden
parachute payment(15) or prohibited indemnification payment(16) unless, with
respect to such payment, the Association has complied with the requirements of
12 C.F.R. Part 359 and, as to indemnification payments, 12 C.F.R. § 545.121.

 

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(15) The term “golden parachute payment” is defined at 12 C.F.R. § 359.1(f).

(16) The term “prohibited indemnification payment” is defined at 12 C.F.R. §
359.1(l).

 

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Third Party Contracts.

 

34.           Effective immediately, the Association shall not enter into any
arrangement or contract with a third party service provider that is significant
to the overall operation or financial condition of the Association(17) or
outside the Association’s normal course of business unless, with respect to each
such contract, the Association has: (a) provided the Regional Director with a
minimum of thirty (30) days prior written notice of such arrangement or contract
and a written determination that the arrangement or contract complies with the
standards and guidelines set forth in Thrift Bulletin 82a (TB 82a); and (b)
received written notice of non-objection from the Regional Director.

 

Transactions with Affiliates.

 

35.           Effective immediately, the Association shall not engage in any new
transaction with an affiliate unless, with respect to each such transaction, the
Association has complied with the notice requirements set forth in 12 C.F.R. §
563.41(c)(4), which shall include the information set forth in 12 C.F.R. §
563.41(c)(3).

 

36.           Within sixty (60) days, the Association shall revise its
transaction with affiliates policies to ensure that all transactions with an
affiliate comply with all applicable laws, regulations, and regulatory guidance,
including the requirements of 12 C.F.R. § 563.41 and Regulation W, 12 C.F.R.
Part 223.

 

Board Oversight of Compliance with Agreement.

 

37.           Within thirty (30) days, the Board shall designate a committee to
monitor and coordinate the Association’s compliance with the provisions of this
Agreement and the completion of all corrective actions required in the 2010 ROE
(Oversight Committee).  The Oversight Committee shall be comprised

 

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(17) A contract will be considered significant to the overall operation or
financial condition of the Association where the annual contract amount equals
or exceeds two percent (2%) of the Association’s total capital, where there is a
foreign service provider, or where it involves information technology that is
critical to the Association’s daily operations without regard to the contract
amount.

 

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of four (4) or more directors, the majority of whom shall be independent(18)
directors.

 

38.           Within thirty (30) days after the end of each quarter, beginning
with the quarter ending September 30, 2011, the Oversight Committee shall submit
a written compliance progress report to the Board (Compliance Tracking Report). 
The Compliance Tracking Report shall, at a minimum:

 

(a)           separately list each corrective action required by this Agreement
and the 2010 ROE;

 

(b)           identify the required or anticipated completion date for each
corrective action; and

 

(c)           discuss the current status of each corrective action, including
the action(s) taken or to be taken to comply with each corrective action.

 

39.           Within forty-five (45) days after the end of each quarter,
beginning with the quarter ending September 30, 2011, the Board shall review the
Compliance Tracking Report and all reports required to be prepared by this
Agreement.  Following its review, the Board shall adopt a resolution: (a)
certifying that each director has reviewed the Compliance Tracking Report and
all required reports; and (b) documenting any corrective actions adopted by the
Board.  A copy of the Compliance Tracking Report and the Board resolution shall
be provided to the Regional Director within fifteen (15) days after the Board
meeting.

 

40.           Nothing contained herein shall diminish the responsibility of the
entire Board to ensure the Association’s compliance with the provisions of this
Agreement.  The Board shall review and adopt all

 

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(18) For purposes of this Agreement, an individual who is “independent” with
respect to the Association shall be any individual who:

 

(a)                                  is not employed in any capacity by the
Association, its subsidiaries, or its affiliates, other than as a director;

(b)                                 does not own or control more than ten
percent (10%) of the outstanding shares of the Association or any of its
affiliates;

(c)                                is not related by blood or marriage to any
officer or director of the Association or any of its affiliates, or to any
shareholder owning more than ten percent (10%) of the outstanding shares of the
Association or any of its affiliates, and who does not otherwise share a common
financial interest with any such officer, director or shareholder;

(d)                                 is not indebted, directly or indirectly, to
the Association or any of its affiliates, including the indebtedness of any
entity in which the individual has a substantial financial interest, in an
amount exceeding 15 percent (15%) of the Association’s total Tier 1 (Core)
capital; and

(e)                                  has not served as a consultant, advisor,
underwriter, or legal counsel to the Association or any of its affiliates.

 

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policies and procedures required by this Agreement prior to submission to the
OTS.

 

Effective Date.

 

41.           This Agreement is effective on the Effective Date as shown on the
first page.

 

Duration.

 

42.           This Agreement shall remain in effect until terminated, modified
or suspended, by written notice of such action by the OTS, acting by and through
its authorized representatives.

 

Time Calculations.

 

43.           Calculation of time limitations for compliance with the terms of
this Agreement run from the Effective Date and shall be based on calendar days,
unless otherwise noted.

 

Submissions and Notices.

 

44.           All submissions to the OTS that are required by or contemplated by
the Agreement shall be submitted within the specified timeframes.

 

45.           Except as otherwise provided herein, all submissions, requests,
communications, consents or other documents relating to this Agreement shall be
in writing and sent by first class U.S. mail (or by reputable overnight carrier,
electronic facsimile transmission or hand delivery by messenger) addressed as
follows:

 

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(a)

 

To the OTS(19):

 

 

James G. Price, Regional Director

 

 

Attn: Robert A. Mitchell, Assistant Director

 

 

Office of Thrift Supervision

 

 

1475 Peachtree Street, NE

 

 

Atlanta, Georgia 30309

 

 

404.897.1861 (Facsimile)

 

 

 

(b)

 

To the Association:

 

 

Phillip C. Bowman, CEO

 

 

The Washington Savings Bank, FSB

 

 

4201 Mitchellville Road, Suite 200

 

 

Bowie, Maryland 20716

 

 

301.352.3121 (Facsimile)

 

No Violations Authorized.

 

46.           Nothing in this Agreement shall be construed as allowing the
Association, its Board, officers or employees to violate any law, rule, or
regulation.

 

OTS Authority Not Affected.

 

47.           Nothing in this Agreement shall inhibit, estop, bar or otherwise
prevent the OTS from taking any other action affecting the Association if at any
time the OTS deems it appropriate to do so to fulfill the responsibilities
placed upon the OTS by law.

 

Other Governmental Actions Not Affected.

 

48.           The Association acknowledges and agrees that its execution of the
Agreement is solely for the purpose of resolving the matters addressed herein,
consistent with Paragraph 47 above, and does not otherwise release, discharge,
compromise, settle, dismiss, resolve, or in any way affect any actions, charges
against, or liability of the Association that arise pursuant to this action or
otherwise, and that may be or have been brought by any governmental entity other
than the OTS.

 

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(19) Following the Transfer Date, see Dodd-Frank Wall Street Reform and Consumer
Protection Act, Pub. Law No. 111-203, § 311, 124 Stat. 1520 — 21 (2010), all
submissions, requests, communications, consents or other documents relating to
this Agreement shall be directed to the Comptroller of the Currency, or to the
individual, division, or office designated by the Comptroller of the Currency.

 

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Miscellaneous.

 

49.           The laws of the United States of America shall govern the
construction and validity of this Agreement.

 

50.           If any provision of this Agreement 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 Regional Director in his or her sole discretion determines otherwise.

 

51.           All references to the OTS in this Agreement shall also mean any of
the OTS’s predecessors, successors, and assigns.

 

52.           The section and paragraph headings in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.

 

53.           The terms of this Agreement represent the final agreement of the
parties with respect to the subject matters thereof, and constitute the sole
agreement of the parties with respect to such subject matters.

 

Enforceability of Agreement.

 

54.           This Agreement is a “written agreement” entered into with an
agency within the meaning and for the purposes of 12 U.S.C. § 1818.

 

Signature of Directors/Board Resolution.

 

55.           Each Director signing this Agreement attests that he or she voted
in favor of a Board Resolution authorizing the consent of the Association to the
issuance and execution of the Agreement.  This Agreement may be executed in
counterparts by the directors after approval of execution of the Agreement at a
duly called board meeting.  A copy of the Board Resolution authorizing execution
of this Agreement shall be delivered to the OTS, along with the executed
original(s) of this Agreement.

 

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WHEREFORE, the OTS, acting by and through its Regional Director, and the Board
of the Association, hereby execute this Agreement.

 

[Remainder of this Page Intentionally Left Blank]

 

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THE WASHINGTON SAVINGS BANK, FSB

 

OFFICE OF THRIFT SUPERVISION

Bowie, Maryland

 

 

 

 

 

By:

/s/

 

By:

/s/

 

William J. Harnett

 

 

James G. Price

 

Chairman

 

 

Regional Director, Southeast Region

 

 

 

 

 

Date: See Effective Date on Page 1

 

 

 

 

 

 

 

/s/

 

 

/s/

Phillip C. Bowman

 

George Q. Conover

Director

 

Director

 

 

 

 

 

 

 

/s/

 

 

/s/

Charles A. Dukes

 

Kevin P. Huffman

Director

 

Director

 

 

 

 

/s/

 

 

/s/

Eric S. Lodge

 

Charles W. McPherson

Director

 

Director

 

 

 

 

/s/

 

 

Michael J. Sullivan

 

 

Director

 

 

 

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