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
                        Docket No. 10-209-WA/RB-FIC
 
     
FENTURA FINANCIAL, INC.
     
Fenton, Michigan
     
 
     
and
     
 
     
FEDERAL RESERVE BANK OF CHICAGO
     
Chicago, Illinois
             

     WHEREAS, Fentura Financial, Inc., Fenton, Michigan (“Fentura”), a
registered bank holding company, owns and controls The State Bank, Fenton,
Michigan, and West Michigan Community Bank, Hudsonville, Michigan (collectively,
the “Banks”), both state nonmember banks, and two nonbank subsidiaries;
     WHEREAS, it is the common goal of Fentura and the Federal Reserve Bank of
Chicago (the “Reserve Bank”) to maintain the financial soundness of Fentura so
that Fentura may serve as a source of strength to the Banks;
     WHEREAS, Fentura and the Reserve Bank have initially agreed to enter into
this Written Agreement (the “Agreement”); and
     WHEREAS, on October 28, 2010, the board of directors of Fentura, at a duly
constituted meeting, adopted a resolution authorizing and directing Donald L.
Grill to enter into this Agreement on behalf of Fentura, and consenting to
compliance with each and every provision of this Agreement by Fentura and its
institution-affiliated parties, as defined in sections 3(u) and

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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, Fentura and the Reserve Bank agree as follows:
Source of Strength
     1. The board of directors of Fentura shall take appropriate steps to fully
utilize Fentura’s financial and managerial resources, pursuant to section 225.4
(a) of Regulation Y of the Board of Governors of the Federal Reserve System (the
“Board of Governors”) (12 C.F.R. § 225.4(a)), to serve as a source of strength
to the Banks, including, but not limited to, taking steps to ensure that The
State Bank complies with the Consent Order entered into with the Federal Deposit
Insurance Corporation (“FDIC”) and the State of Michigan Office of Financial and
Insurance Regulation (“OFIR”) on December 29, 2009, and further, by taking steps
to ensure that West Michigan Community Bank complies with the Order to Cease and
Desist issued jointly by the FDIC and the OFIR on February 19, 2009, and any
other supervisory action taken by the Banks’ federal or state regulator.
Dividends and Distributions
     2. (a) Fentura 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) Fentura shall not directly or indirectly take dividends or any
other form of payment representing a reduction in capital from the Banks without
the prior written approval of the Reserve Bank.

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          (c) Fentura 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. All
requests shall contain, at a minimum, current and projected information on
Fentura’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, Fentura 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).
Capital Plan
     3. Within 60 days of this Agreement, Fentura shall submit to the Reserve
Bank an acceptable written plan to maintain sufficient capital at Fentura on a
consolidated basis. The plan shall, at a minimum, address, consider, and
include:
          (a) The consolidated organization’s and the Banks’ current and future
capital requirements, including compliance with the Capital Adequacy Guidelines
for Bank Holding Companies: Risk-Based Measure and Tier I Leverage Measure,
Appendices A and D of 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
Banks issued by the Banks’ federal regulator;

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          (b) the adequacy of the Banks’ 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 Banks’ future capital requirements;
          (d) supervisory requests for additional capital at the Banks or the
requirements of any supervisory action imposed on the Banks by their federal or
state regulator; and
          (e) the requirements of section 225.4(a) of Regulation Y of the Board
of Governors that Fentura serve as a source of strength to the Bank.
          4. Fentura shall notify the Reserve Bank, in writing, no more than
45 days after the end of any quarter in which any of Fentura’s capital ratios
fall below the approved plan’s minimum ratios. Together with the notification,
Fentura shall submit an acceptable written plan that details the steps that
Fentura will take to increase Fentura’s capital ratios to or above the approved
plan’s minimums.
Debt and Stock Redemption
     5. (a) Fentura 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) Fentura shall not, directly or indirectly, purchase or redeem any
shares of its stock without the prior written approval of the Reserve Bank.

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Cash Flow Projections
     6. Within 30 days of this Agreement, Fentura shall submit to the Reserve
Bank a written statement of its planned sources and uses of cash for debt
service, operating expenses, and other purposes (“Cash Flow Projection”) for the
first full calendar quarter following the date of this Agreement. For each
subsequent calendar quarter, Fentura shall submit to the Reserve Bank a Cash
Flow Projection for that calendar quarter at least thirty days prior to the
beginning of that quarter.
Regulatory Reports
     7. Fentura shall immediately take steps to ensure that all required
regulatory reports and notices filed with the Federal Reserve and the FFIEC
accurately reflect Fentura’s financial condition, and are filed in accordance
with the applicable instructions for preparation.
Compliance with Laws and Regulations
     8. (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, Fentura
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 Governors (12 C.F.R. §§
225.71 et seq.).
          (b) Fentura shall comply with the restrictions on indemnification and
severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and
Part 359 of the FDIC’s regulations (12 C.F.R. Part 359).
Progress Reports
     9. Within 30 days after the end of each calendar quarter following the date
of this Agreement, the board of directors shall submit to the Reserve Bank
written progress reports

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detailing the form and manner of all actions taken to secure compliance with the
provisions of this Agreement and the results thereof, and a parent company only
balance sheet, income statement, and, as applicable, report of changes in
stockholders’ equity.
Communications
     10. All communications regarding this Agreement shall be sent to:

  (a)   Mr. Joseph J. Turk
Assistant Vice President
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, Illinois 60606
    (b)   Mr. Donald L. Grill
President & CEO
Fentura Financial, Inc.
175 North Leroy Street
Fenton, Michigan 48430-0725

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

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     15. 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 4th day of November, 2010.

                  FENTURA FINANCIAL, INC.       FEDERAL RESERVE BANK OF CHICAGO
 
               
 
               
By:
  /s/ Donald L. Grill       By:   /s/ Mark H. Kawa
 
               
 
  Donald L. Grill President & CEO           Mark H. Kawa Vice President

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