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

 

TENNESSEE COMMERCE BANCORP, INC.

Franklin, Tennessee

 

and

 

FEDERAL RESERVE BANK OF

ATLANTA

Atlanta, Georgia

 

 

Docket No. 11-123-WA/RB-HC

 

WHEREAS, Tennessee Commerce Bancorp, Inc., Franklin, Tennessee (“TCB”), a
registered bank holding company, owns and controls Tennessee Commerce Bank,
Franklin, Tennessee (the “Bank”), a state chartered nonmember bank;

 

WHEREAS, it is the common goal of TCB and the Federal Reserve Bank of Atlanta
(the “Reserve Bank”) to maintain the financial soundness of TCB so that TCB may
serve as a source of strength to the Bank;

 

WHEREAS, TCB and the Reserve Bank have mutually agreed to enter into this
Written Agreement (the “Agreement”); and

 

WHEREAS, on November 10, 2011, the board of directors of TCB, at a duly
constituted meeting, adopted a resolution authorizing and directing Michael R.
Sapp, to enter into this Agreement on behalf of TCB, and consenting to
compliance with each and every provision of this Agreement by TCB and its
institution-affiliated parties, as

 

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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, TCB and the Reserve Bank agree as follows: 

 

Source of Strength

 

1.                                       The board of directors of TCB shall
take appropriate steps to fully utilize TCB’s financial and managerial
resources, pursuant to section 38A of the FDIC Act ( 12 U.S.C. 1831o-1) and
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 the Consent Order entered into with the Federal
Deposit Insurance Corporation on May 25, 2011, and any other supervisory action
taken by the Bank’s federal or state regulator. 

 

Dividends and Distributions

 

2.                                       (a)                                 
TCB 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.

 

(b)                                 TCB 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)                                  TCB 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

 

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subordinated debentures, and required notice of deferral on trust preferred
securities.  All requests shall contain, at a minimum, current and projected
information on TCB’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, TCB 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)                                 
TCB 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)                                 TCB shall not, directly or indirectly,
purchase or redeem any shares of its stock without the prior written approval of
the Reserve Bank.

 

Capital Plan

 

4.                                       Within 30 days of this Agreement, TCB
shall submit to the Reserve Bank an acceptable written plan to maintain
sufficient capital at TCB on a consolidated basis. The plan shall, at a minimum,
address, consider, and include:

 

(a)                                  The consolidated organization’s and the
Bank’s current and future capital requirements, including compliance with the
Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and
Tier 1 Leverage Measure, Appendices A and D of

 

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Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D) and
the applicable capital adequacy guidelines for the Bank issued by the Bank’s
federal regulator;

 

(b)                                 the adequacy of the Bank’s capital, taking
into account the volume of classified credits, concentrations of credit,
allowance for loan and lease losses, current and projected asset growth, and
projected retained earnings;

 

(c)                                  the source and timing of additional funds
necessary to fulfill the consolidated organization’s and the Bank’s future
capital requirements;

 

(d)                                 supervisory requests for additional capital
at the Bank or the requirements of any supervisory action imposed on the Bank by
its federal or state regulator; and

 

(e)                                  the requirements of section 38A of the FDI
Act and section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. §
225.4(a)) that TCB serve as a source of strength to the Bank.

 

5.                                       TCB shall notify the Reserve Bank, in
writing, no more than 30 days after the end of any quarter in which any of TCB’s
capital ratios fall below the approved plan’s minimum ratios. Together with the
notification, TCB shall submit an acceptable written plan that details the steps
that TCB will take to increase TCB’s capital ratios to or above the approved
plan’s minimums.

 

Audit

 

6.                                       Within 60 days of this Agreement, TCB
shall submit to the Reserve Bank an acceptable written plan to enhance the audit
program that shall, at a minimum, provide for:

 

(a)                                  Written responses by management to each
audit finding;

 

(b)                                 written action plans to address audit
findings; and

 

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(c)                                  timely resolution of audit and examination
findings and follow-up reviews to ensure completion of the corrective measures. 

 

Affiliate Transactions

 

7.                                       (a)                                 
TCB shall take all necessary actions to ensure that the Bank complies with
sections 23A and 23B of the Federal Reserve Act (12 U.S.C. §§ 371c and 371c-1)
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
TCB and its nonbank subsidiaries.

 

(b)                                 TCB 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.

 

8.                                       Within 30 days of this Agreement, TCB
shall submit to the Reserve Bank an acceptable intercompany service level
agreement between TCB, its nonbank subsidiaries, and the Bank that, at a
minimum, addresses, considers, and includes:

 

(a)                                  Services provide by and between TCB, its
nonbank subsidiaries, and the Bank;

 

(b)                                 the methodology and rationale for
determining fees and costs;

 

(c)                                  supporting documentation regarding expenses
involving TCB, its nonbank subsidiaries, and the Bank; and

 

(d)                                 the timing and method of payments.

 

Compliance with Laws and Regulations

 

9.                                       (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, TCB shall comply with the
notice provisions of section 32 of the FDI

 

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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)                                 TCB 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

 

10.                                 Within 45 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, and consolidated,
balance sheet, income statement, and, as applicable, report of changes in
stockholders’ equity.

 

Approval and Implementation of Plans and Agreement

 

11.                                 (a)                                  TCB
shall submit plans and an agreement that are acceptable to the Reserve Bank
within the applicable time period set forth in paragraphs 4, 6, and 8 of this
Agreement.

 

(b)                                 Within 10 days of approval by the Reserve
Bank, TCB shall adopt the approved plans and agreement.  Upon adoption, TCB
shall promptly implement the approved plans and agreement, and thereafter fully
comply with them.

 

(c)                                  During the term of this Agreement, the
approved plans and agreement shall not be amended or rescinded without the prior
written approval of the Reserve Bank.

 

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Communications

 

12.                                 All communications regarding this Agreement
shall be sent to:

 

(a)                                  Mr. Robert D. Hawkins  
Assistant Vice President
Federal Reserve Bank of Atlanta
1000 Peachtree Street N.E.  
Atlanta, Georgia 30309-4470

 

(b)                                 Mr. Michael R. Sapp
Chairman, President, and Chief Executive Officer   
Tennessee Commerce Bancorp, Inc.
381 Mallory Station Road, Suite 207   
Franklin, Tennessee 37067

 

Miscellaneous

 

13.                                 Notwithstanding any provision of this
Agreement, the Reserve Bank may, in its sole discretion, grant written
extensions of time to TCB to comply with any provision of this Agreement.

 

14.                                 The provisions of this Agreement shall be
binding upon TCB and its institution-affiliated parties, in their capacities as
such, and their successors and assigns.

 

15.                                 Each provision of this Agreement shall
remain effective and enforceable until stayed, modified, terminated, or
suspended in writing by the Reserve Bank.

 

16.                                 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 TCB,
the Bank, any nonbank subsidiary of TCB, or any of their current or former
institution-affiliated parties and their successors and assigns.

 

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17.                                 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 16th day of November, 2011.

 

TENNESSEE COMMERCE BANKCORP, INC.

FEDERAL RESERVE BANK OF ATLANTA

 

 

 

 

 

 

 

 

By:

/s/ Michael R. Sapp

 

By:

/s/ Robert D. Hawkins

 

Michael R. Sapp

 

Robert D. Hawkins

 

President, Chairman, and CEO

 

Assistant Vice President

 

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