Exhibit 10.1

 

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.

 

STATE OF COLORADO

DIVISION OF BANKING

DENVER, COLORADO

 

Written Agreement by and among

Docket Nos. 

09-177-WA/RB-HC

 

 

09-177-WA/RB-SM

GUARANTY BANCORP

 

Denver, Colorado

 

 

 

GUARANTY BANK & TRUST COMPANY

 

Denver, Colorado

 

 

 

FEDERAL RESERVE BANK

 

OF KANSAS CITY

 

Kansas City, Missouri

 

 

 

and

 

 

 

STATE OF COLORADO

 

DIVISION OF BANKING

 

Denver, Colorado

 

 

WHEREAS, in recognition of their common goal to maintain the financial soundness
of Guaranty Bancorp, Denver, Colorado (“Bancorp”), a registered bank holding
company, and its subsidiary, Guaranty Bank & Trust Company, Denver, Colorado
(the “Bank”), a state chartered bank that is a member of the Federal Reserve
System, Bancorp, the Bank, the Federal Reserve Bank of Kansas City (the “Reserve
Bank”), and the Colorado Division of Banking (the “Division”) have mutually
agreed to enter into this Written Agreement (the “Agreement”); and

 

WHEREAS, on January 22, 2010, the boards of directors of Bancorp and the Bank,
at duly constituted meetings, adopted resolutions authorizing and directing
Daniel M. Quinn, Chief Executive Officer, to enter into this Agreement on behalf
of Bancorp and the Bank, and

 

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consenting to compliance with each and every applicable provision of this
Agreement by Bancorp and the Bank, and their institution-affiliated parties, as
defined in Section 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, Bancorp, the Bank, the Reserve Bank, and the Division agree as
follows:

 

Board Oversight

 

1.                                     Within 60 days of this Agreement, the
board of directors of the Bank shall submit to the Reserve Bank and the Division
a written plan to strengthen board oversight of the management and operations of
the Bank. The plan shall, at a minimum, address, consider, and include:

 

(a)                                  The actions that the board of directors
will take to improve the Bank’s condition and maintain effective control over,
and supervision of, the Bank’s major operations and activities, including but
not limited to, credit risk management, processes to mitigate risks associated
with credit concentrations, asset liability management, and earnings;

 

(b)                                 the responsibility of the board of directors
to monitor management’s adherence to approved policies and procedures; and

 

(c)                                  a description of the information and
reports that will be regularly reviewed by the board of directors in its
oversight of the operations and management of the Bank, including information on
the Bank’s adversely classified assets, concentrations of credits, allowance for
loan and lease losses (“ALLL”), capital, liquidity, and earnings.

 

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Credit Risk Management

 

2.                                     Within 60 days of this Agreement, the
Bank shall submit to the Reserve Bank and the Division an acceptable written
plan to strengthen credit risk management practices. The plan shall, at a
minimum, address, consider, and include:

 

(a)                                  The responsibility of the board of
directors to establish appropriate risk tolerance guidelines and risk limits;

 

(b)                                 periodic review and revision of risk
exposure limits to address changes in market conditions; and

 

(c)                                  strategies to minimize credit losses and
reduce the level of problem assets.

 

Concentrations of Credit

 

3.                                       Within 60 days of this Agreement, the
Bank shall submit to the Reserve Bank and the Division an acceptable written
plan to strengthen the Bank’s management of commercial real estate (“CRE”)
concentrations, including steps to reduce or mitigate the risk of concentrations
in light of current market conditions. The plan shall be consistent with the
Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound
Risk Management Practices, dated December 12, 2006 (SR 07-1), and, at a minimum,
address, consider, and include:

 

(a)                                  Establishment of concentration of credit
risk tolerances or limits by types of loan products, geographic locations, and
other common risk characteristics or sensitivities;

 

(b)                                 ongoing risk assessments;

 

(c)                                  strategic planning regarding risks
associated with CRE concentrations, including steps to control and mitigate such
risks; and

 

(d)                                 enhanced periodic reporting to management
and the board of directors.

 

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Asset Improvement

 

4.                                       The Bank shall not, directly or
indirectly, extend, renew, or restructure any credit to or for the benefit of
any borrower, including any related interest of the borrower, whose loans or
other extensions of credit are criticized in the report of examination of the
Bank conducted by the Reserve Bank that commenced on May 4, 2009 (the “Report of
Examination”) or in any subsequent report of examination, without the prior
approval of a majority of the full board of directors or a designated committee
thereof. The board of directors or its committee shall document in writing the
reasons for the extension of credit, renewal, or restructuring, specifically
certifying that: (i) the Bank’s risk management policies and practices for loan
workout activity are acceptable; (ii) the extension of credit is necessary to
improve and protect the Bank’s interest in the ultimate collection of the credit
already granted and maximize its potential for collection; (iii) the extension
of credit reflects prudent underwriting based on reasonable repayment terms and
is adequately secured; and all necessary loan documentation has been properly
and accurately prepared and filed; (iv) the Bank has performed a comprehensive
credit analysis indicating that the borrower has the willingness and ability to
repay the debt as supported by an adequate workout plan, as necessary; and
(v) the board of directors or its designated committee reasonably believes that
the extension of credit will not impair the Bank’s interest in obtaining
repayment of the already outstanding credit and that the extension of credit or
renewal will be repaid according to its terms. The written certification shall
be made a part of the minutes of the meetings of the board of directors or its
committee, as appropriate, and a copy of the signed certification, together with
the credit analysis and related information that was used in the determination,
shall be retained by the Bank in the borrower’s credit file for subsequent

 

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supervisory review. For purposes of this Agreement, the term “related interest”
is defined as set forth in section 215.2(n) of Regulation O of the Board of
Governors (12 C.F.R. § 215.2(n)).

 

5.                                       (a)                                 
Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank and
the Division an acceptable written plan designed to improve the Bank’s position
through repayment, amortization, liquidation, additional collateral, or other
means on each loan, relationship, or other asset in excess of $1,000,000,
including other real estate owned (“OREO”), that is past due as to principal or
interest more than 90 days as of the date of this Agreement, is on the Bank’s
problem loan list, or was adversely classified in the Report of Examination.

 

(b)                                 Within 30 days of the date that any
additional loan, relationship, or other asset in excess of $1,000,000, including
OREO, becomes past due as to principal or interest for more than 90 days, is on
the Bank’s problem loan list, or is adversely classified in any subsequent
report of examination of the Bank, the Bank shall submit to the Reserve Bank and
the Division an acceptable written plan to improve the Bank’s position on such
loan, relationship, or asset.

 

(c)                                  Within 30 days after the end of each
calendar quarter thereafter, the Bank shall submit a written progress report to
the Reserve Bank and the Division to update each asset improvement plan, which
shall include, at a minimum, the carrying value of the loan or other asset and
changes in the nature and value of supporting collateral, along with a copy of
the Bank’s current problem loan list, a list of all loan renewals and extensions
without full collection of interest in the last quarter, and past
due/non-accrual report. The board of directors shall review the progress reports
before submission to the Reserve Bank and the Division and shall document the
review in the minutes of the board of directors’ meetings.

 

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Allowance for Loan and Lease Losses

 

6.                                       (a)                                 
Within 10 days of this Agreement, the Bank shall eliminate from its books, by
charge-off or collection, all assets or portions of assets classified “loss” in
the Report of Examination that have not been previously collected in full or
charged off. Thereafter the Bank shall, within 30 days from the receipt of any
federal or state report of examination, charge off all assets classified “loss”
unless otherwise approved in writing by the Reserve Bank and the Division.

 

(b)                                 Within 60 days of this Agreement, the Bank
shall review and revise its ALLL methodology consistent with relevant
supervisory guidance, including the Interagency Policy Statements on the
Allowance for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and
December 13, 2006 (SR 06-17), and the findings and recommendations regarding the
ALLL set forth in the Report of Examination, and submit a description of the
revised methodology to the Reserve Bank. The revised ALLL methodology shall be
designed to maintain an adequate ALLL and shall address, consider, and include,
at a minimum, the reliability of the Bank’s loan grading system, the volume of
criticized loans, concentrations of credit, the current level of past due and
nonperforming loans, past loan loss experience, evaluation of probable losses in
the Bank’s loan portfolio, including adversely classified loans, and the impact
of market conditions on loan and collateral valuations and collectability.

 

(c)                                  Within 60 days of this Agreement, the Bank
shall submit to the Reserve Bank and the Division an acceptable written program
for the maintenance of an adequate ALLL. The program shall include policies and
procedures to ensure adherence to the Bank’s revised ALLL methodology and
provide for periodic reviews and updates to the ALLL methodology, as
appropriate. The program shall also provide for a review of the ALLL by the
board of directors

 

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on at least a quarterly calendar basis. Any deficiency found in the ALLL shall
be remedied in the quarter it is discovered, prior to the filing of the
Consolidated Reports of Condition and Income, by additional provisions. The
board of directors shall maintain written documentation of its review, including
the factors considered and conclusions reached by the Bank in determining the
adequacy of the ALLL. During the term of this Agreement, the Bank shall submit
to the Reserve Bank and the Division, within 30 days after the end of each
calendar quarter, a written report regarding the board of directors’ quarterly
review of the ALLL and a description of any changes to the methodology used in
determining the amount of the ALLL for that quarter.

 

Capital Plan

 

7.                                       Within 60 days of this Agreement,
Bancorp shall submit to the Reserve Bank an acceptable written plan to maintain
sufficient capital at Bancorp, on a consolidated basis, and Bancorp and the Bank
shall jointly submit to the Reserve Bank and the Division an acceptable written
plan to maintain sufficient capital at the Bank, as a separate legal entity on a
stand-alone basis. These plans shall, at a minimum, address, consider, and
include:

 

(a)                                  Bancorp’s current and future capital needs,
including compliance with the Capital Adequacy Guidelines for Bank Holding
Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of
Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D);

 

(b)                                 the Bank’s current and future capital needs,
including compliance with the Capital Adequacy Guidelines for State Member
Banks: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and B of
Regulation H of the Board of Governors (12 C.F.R. Part 208, App. A and B);

 

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(c)                                  the adequacy of the Bank’s capital, taking
into account the volume of  classified credits, concentrations of credit, ALLL,
current and projected asset growth, and projected retained earnings;

 

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

 

(e)                                  the requirements of Section 225.4(a) of
Regulation Y of the Board of Governors (12 C.F.R. § 225.4(a)) that Bancorp serve
as a source of strength to the Bank.

 

8.                                       Bancorp and the Bank shall notify the
Reserve Bank and the Division, in writing, no more than 30 days after the end of
any quarter in which any of Bancorp’s consolidated capital ratios or the Bank’s
capital ratios (total risk-based, Tier 1, or leverage) fall below the approved
capital plan’s minimum ratios. Together with the notification, Bancorp and the
Bank shall submit an acceptable written plan that details the steps Bancorp or
the Bank, as appropriate, will take to increase Bancorp’s or the Bank’s capital
ratios to, or above, the approved capital plan’s minimums.

 

Liquidity/Funds Management

 

9.                                       Within 60 days of this Agreement, the
Bank shall submit to the Reserve Bank and the Division an acceptable written
plan to improve management of the Bank’s liquidity position and funds management
practices. The plan shall, at a minimum, address, consider, and include measures
to diversify funding sources and reduce reliance on wholesale funding, including
brokered deposits.

 

10.                                 Within 60 days of this Agreement, the Bank
shall revise and submit to the Reserve Bank and the Division an acceptable
written contingency funding plan that, at a

 

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minimum, includes adverse scenario planning and identifies and quantifies
available sources of liquidity for each scenario.

 

Brokered Deposits

 

11.                                 (a)                                  At all
times during the term of this Agreement that the Bank is well capitalized, the
Bank shall not accept any new brokered deposits. For purposes of this
subparagraph, the term “brokered deposits” is defined as set forth in
Section 337.6(a) of the regulations of the FDIC (12 C.F.R. § 337.6(a)) and
includes deposits funded by third party agents or nominees for depositors; and
the term “new brokered deposits” is defined not to include contractual renewals
or rollovers of brokered deposits.

 

(b)                                 Within 30 days of this Agreement, the Bank
shall submit to the Reserve Bank and the Division an acceptable written plan for
reducing its reliance on brokered deposits. The plan shall detail the current
composition of the Bank’s brokered deposits by maturity and explain the means by
which such deposits will be paid at maturity.

 

12.                                 The Bank shall comply with the provisions of
Section 29 of the FDI Act (12 U.S.C. § 1831f) and the FDIC’s accompanying
regulations at 12 C.F.R. § 337 that are applicable to the Bank. The Bank shall
notify the Reserve Bank and the Division, in writing, if the Bank requests any
waiver of the restrictions imposed by Section 29 from the FDIC and shall notify
the Reserve Bank of the FDIC’s disposition of any request for such a waiver.

 

Earnings Plan and Budget

 

13.                                 (a)                                  Within
60 days of this Agreement, the Bank shall submit to the Reserve Bank and the
Division a written business plan for 2010 to improve the Bank’s earnings and
overall condition. The plan, at a minimum, shall provide for or describe:

 

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(i)                               a realistic and comprehensive budget for
calendar year 2010, including income statement and balance sheet projections;
and

 

(ii)                            a description of the operating assumptions that
form the basis for, and adequately support, major projected income, expense, and
balance sheet components.

 

(b)                                 During the term of this Agreement, a
business plan and budget for each calendar year subsequent to 2010 shall be
submitted to the Reserve Bank and the Division at least 30 days prior to the
beginning of that calendar year.

 

Dividends and Distributions

 

14.                                 (a)                                  Bancorp
and the Bank 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 (the “Director”), and, as
to the Bank, the Division.

 

(b)                                 Bancorp shall not take any other form of
payment representing a reduction in capital from the Bank without the prior
written approval of the Reserve Bank.

 

(c)                                  Bancorp 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 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, as appropriate, on Bancorp’s
capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings
and ALLL needs; and identification of the sources of funds for the proposed
payment or distribution. Bancorp and the Bank, as appropriate, must also

 

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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

 

15.                                 (a)                                  Bancorp
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)                                 Bancorp shall not, directly or indirectly,
purchase or redeem any shares of its stock without the prior written approval of
the Reserve Bank.

 

Cash Flow

 

16.                                 Within 60 days of this Agreement, the
Bancorp 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 2010. Bancorp shall submit to the Reserve
Bank a Cash Flow Projection for each calendar year subsequent to 2010 at least
one month prior to the beginning of that calendar year.

 

Compliance with Laws and Regulations

 

17.                                 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, Bancorp and the Bank 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

 

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Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. §§
225.71 et seq.).

 

18.                                 Bancorp and the Bank 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).

 

Compliance with the Agreement

 

19.                                 Within 30 days after the end of each
calendar quarter following the date of this Agreement, Bancorp and the Bank
shall submit to the Reserve Bank and the Division written progress reports
detailing the form and manner of all actions taken to secure compliance with
this Agreement and the results thereof.

 

Approval and Implementation of Plans and Programs

 

20.                                 (a)                                  The
written plans and a program required by paragraphs 2, 3, 5(a), 5(b), 6(c), 7, 8,
9, 10, and 11(b) of this Agreement shall be submitted to the Reserve Bank and
the Division for review and approval. Acceptable plans and program shall be
submitted within the time periods set forth in the Agreement.

 

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

 

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

 

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Communications

 

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

 

(a)                                  Ms. Susan E. Zubradt

Vice President

Federal Reserve Bank of Kansas City

1 Memorial Drive

Kansas City, Missouri 64198

 

(b)                                 Mr. Fred J. Joseph

Acting Bank Commissioner

State of Colorado

Division of Banking

1560 Broadway, Suite 975

Denver, Colorado 80202

 

(c)                                  Mr. Daniel M. Quinn

Chief Executive Officer

Guaranty Bancorp and Guaranty Bank & Trust

1331 Seventeenth Street, Suite 300

Denver, Colorado 80202

 

Miscellaneous

 

22.                                 Notwithstanding any provision of this
Agreement, the Reserve Bank and the Division may, in their sole discretion,
grant written extensions of time to Bancorp and the Bank to comply with any
provision of this Agreement.

 

23.                                 The provisions of this Agreement shall be
binding upon Bancorp, the Bank, and their institution-affiliated parties, in
their capacities as such, and their successors and assigns.

 

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

 

25.                                 The provisions of this Agreement shall not
bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, the
Division or any other federal or state agency from

 

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taking any other action affecting Bancorp, the Bank, or any of their current or
former institution-affiliated parties and their successors and assigns.

 

26.                                 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 22nd of January, 2010.

 

 

GUARANTY BANCORP

FEDERAL RESERVE BANK

GUARANTY BANK & TRUST COMPANY

OF KANSAS CITY

 

 

 

 

By:

/s/ Daniel M. Quinn

 

By:

/s/ Susan E. Zubradt

 

Daniel M. Quinn

 

 

Susan E. Zubradt

 

Chief Executive Officer

 

Vice President

 

 

 

 

 

 

 

 

STATE OF COLORADO

 

 

DIVISION OF BANKING

 

 

 

 

 

By:

/s/ Fred J. Joseph

 

 

Fred J. Joseph

 

 

Acting Bank Commissioner

 

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