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Exhibit 10.1
 
 
AGREEMENT BY AND BETWEEN
MetroBank, National Association
Houston, TX
And
The Comptroller of the Currency
 
 
MetroBank, National Association, Houston, TX (“Bank”) and the Comptroller of the
Currency of the United States of America (“Comptroller”)wish to protect the
interests of the depositors, other customers, and shareholders of the Bank, and,
toward that end, wish the Bank to operate safely and soundly and in accordance
with all applicable laws, rules and regulations.

The Comptroller has found unsafe and unsound banking practices including
practices relating to asset quality and earnings.

In consideration of the above premises, it is agreed, between the Bank, by and
through its duly elected and acting Board of Directors (“Board”), and the
Comptroller, through his authorized representative, that the Bank shall operate
at all times in compliance with the articles of this Agreement.

ARTICLE I

JURISDICTION

(1)           This Agreement shall be construed to be a “written agreement
entered into with the agency” within the meaning of 12 U.S.C. § 1818(b)(1).

(2)           This Agreement shall be construed to be a “written agreement
between such depository institution and such agency” within the meaning of 12
U.S.C. § 1818(e)(1) and 12 U.S.C. § 1818(i)(2).

(3)           This Agreement shall be construed to be a “formal written
agreement” within the meaning of 12 C.F.R. § 5.51(c)(6)(ii). See 12 U.S.C. §
1831i.

 
 

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(4)           This Agreement shall be construed to be a “written agreement”
within the meaning of 12 U.S.C. § 1818(u)(1)(A).

(5)           All reports or plans which the Bank or Board has agreed to submit
to the Assistant Deputy Comptroller pursuant to this Agreement shall be
forwarded to the:

Assistant Deputy Comptroller
Houston Field Office
1301 McKinney Street, Suite 1410
Houston, TX 77010

ARTICLE II

COMPLIANCE COMMITTEE

(1)           Within thirty (30) days of the date of this Agreement, the Board
shall appoint a Compliance Committee of at least five (5) directors, of which no
more than one (1) shall be an employee or controlling shareholder of the Bank or
any of its affiliates (as the term “affiliate” is defined in 12 U.S.C. §
371c(b)(1)), or a family member of any such person. Upon appointment, the names
of the members of the Compliance Committee and, in the event of a change of the
membership, the name of any new member shall be submitted in writing to the
Assistant Deputy Comptroller. The Compliance Committee shall be responsible for
monitoring and coordinating the Bank's adherence to the provisions of this
Agreement.

(2)           The Compliance Committee shall meet at least monthly.

(3)           Within thirty (30) days of the date of this Agreement and
quarterly thereafter, the Compliance Committee shall submit a written progress
report to the Board setting forth in detail:

 
(a)
a description of the action needed to achieve full compliance with each Article
of this Agreement;

 
(b)
actions taken to comply with each Article of this Agreement; and

 
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(c)
the results and status of those actions.

(4)           The Board shall forward a copy of the Compliance Committee's
report, with any additional comments by the Board, to the Assistant Deputy
Comptroller within ten (10) days of receiving such report.

ARTICLE III

LOAN PORTFOLIO MANAGEMENT

(1)           Within sixty (60) days, the Board shall review, revise, and
thereafter ensure Bank adherence to its written program to improve the Bank's
loan portfolio management. An acceptable program shall include, but not be
limited to:

 
(a)
procedures to ensure satisfactory and perfected collateral documentation;

 
(b)
procedures to ensure that extensions of credit are granted, by renewal or
otherwise, to any borrower only after obtaining and analyzing current and
satisfactory credit information;

 
(c)
procedures to ensure conformance with loan approval requirements;

 
(d)
a system to track and analyze exceptions;

 
(e)
procedures to ensure conformance with Call Report instructions;

 
(f)
procedures to ensure the accuracy of internal management information systems;

 
(g)
a performance appraisal process, including performance appraisals, job
descriptions, and incentive programs for loan officers, which adequately
consider their performance relative to policy compliance, documentation
standards, timeliness and accuracy in credit grading and recognition of
nonaccrual loans, and other loan administration matters; and

 
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(h)
procedures to track and analyze concentrations of credit, significant economic
factors, and general conditions and their impact on the credit quality of the
Bank’s loan and lease portfolios.

(2)           Upon revision, a copy of the program shall be forwarded to the
Assistant Deputy Comptroller.

(3)           Within sixty (60) days, the Board shall review, revise, and
thereafter ensure Bank adherence to effective monitoring systems. Acceptable
effective monitoring systems shall include:

 
(a)
early problem loan identification to assure the timely and accurate
identification and rating of problem loans and leases, including nonaccrual
loans;

 
(b)
statistical records that will serve as a basis for identifying sources of
problem loans and leases by industry, size, collateral, division, group,
indirect dealer, and individual lending officer;

 
(c)
previously charged-off assets and their recovery potential;

 
(d)
compliance with the Bank's lending policies and laws, rules, and regulations
pertaining to the Bank's lending function;

 
(e)
adequacy of credit and collateral documentation; and

 
(f)
concentrations of credit.

(4)           On a quarterly basis, management shall provide the Board with
written reports. Acceptable written reports shall include, at a minimum, the
following information:

 
(a)
the identification, type, rating, and amount of problem loans and leases;

 
(b)
the identification and amount of delinquent loans and leases;

 
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(c)
credit and collateral documentation exceptions;

 
(d)
the identification and status of credit related violations of law, rule or
regulation;

 
(e)
the identity of the loan officer who originated each loan reported in accordance
with subparagraphs (a) through (d) of this Article and Paragraph;

 
(f)
an analysis of concentrations of credit, significant economic factors, and
general conditions and their impact on the credit quality of the Bank’s loan and
lease portfolios;

 
(g)
the identification and amount of loans and leases to executive officers,
directors, principal shareholders (and their related interests) of the Bank; and

 
(h)
the identification of loans and leases not in conformance with the Bank's
lending and leasing policies, and exceptions to the Bank’s lending and leasing
policies.

(5)           The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program and
systems developed pursuant to this Article.

ARTICLE IV

CONSTRUCTION LOAN UNDERWRITING STANDARDS

(1)           Within ninety (90) days, the Board shall review, revise, and
thereafter ensure Bank adherence to its written program to improve its
construction loan underwriting standards. An acceptable program shall include,
but not be limited to, procedures for ensuring that:

 
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(a)
market feasibility analyses are performed on construction projects;

 
(b)
construction budgets are analyzed internally for adequacy and reviewed by third
parties for large loans and/or specialized industries (e.g. health care);

 
(c)
contractor due diligence is performed;

 
(d)
cash flow analyses are performed on construction loan borrowers;

 
(e)
current rental and sales information is maintained on all construction projects;

 
(f)
periodic inspections are performed on all construction projects; and

 
(g)
all construction loans are either in conformity with the Bank's construction
loan policies and procedures or in compliance with the Bank's written provisions
for exceptions to loan policies and procedures.

(2)        Upon revision, the Board shall submit a copy of the program to the
Assistant Deputy Comptroller for review.

(3)        The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

ARTICLE V

COMMERCIAL REAL ESTATE CONCENTRATION RISK MANAGEMENT

(1)           Within ninety (90) days, the Board shall review, revise, and
thereafter ensure Bank adherence to a written commercial real estate (CRE)
concentration risk management program consistent with OCC Bulletin 2006-46. An
acceptable program shall include, but not necessarily be limited to, the
following:

 
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(a)
Ongoing risk assessments to identify potential CRE concentrations in the
portfolio, including exposures to similar or interrelated groups or borrowers;

 
(b)
Board and management oversight of CRE concentrations, to include:

 
(i)
policy guidelines and an overall CRE lending strategy, including actions
required when the Bank approaches the limits of its CRE guidelines;

 
(ii)
procedures and controls to effectively adhere to and monitor compliance with the
Bank's lending policies and strategies;

 
(iii)
regular review of information and reports that identify, analyze, and quantify
the nature and level of risk presented by CRE concentrations; and

 
(iv)
periodic review and approval of CRE risk exposure limits;

 
(c)
Portfolio management, to include internal lending guidelines and concentration
limits that control the Bank's overall risk exposure to CRE, and a contingency
plan to reduce or mitigate concentrations in the event of adverse market
conditions;

 
(d)
Management information systems, to provide sufficient timely information to
management to identify, measure, monitor, and manage CRE concentration risk;

 
(e)
Periodic market analysis, to provide management and the Board with information
to assess whether the CRE lending strategy and policies continue to be
appropriate in light of changes in CRE market conditions;

 
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(f)
Credit underwriting standards for CRE, to include:

 
(i)
maximum loan amount by type of property;

 
(ii)
loan terms;

 
(iii)
pricing structures;

 
(iv)
collateral valuation;

 
(v)
loan-to-value limits by property type;

 
(vi)
requirements for feasibility studies and sensitivity analysis or stress testing;

 
(g)
minimum requirements for initial investment and maintenance of hard equity by
the borrower; and

 
(h)
minimum standards for borrower net worth, property cash flow, and debt service
coverage for the property;

 
(i)
Portfolio stress testing and sensitivity analysis of CRE concentrations;

 
(j)
Credit risk review of CRE, to include an effective, accurate, and timely
risk-rating system; and

 
(k)
an action plan approved by the Board to reduce the risk of any concentration
deemed imprudent in the above analysis.

(2)           Upon revision, a copy of the program shall be forwarded to the
Assistant Deputy Comptroller. The Board shall also forward a copy of any
analysis performed on existing or potential CRE concentrations to the Assistant
Deputy Comptroller.

(3)           The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

 
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ARTICLE VI

PROBLEM LOAN IDENTIFICATION

(1)           Within ninety (90) days, the Board shall review, revise, and
thereafter ensure Bank adherence to a program to ensure lending officers
identify in a timely and accurate manner nonaccrual loans and loans rated
"Special Mention", "Substandard", "Doubtful", and "Loss." An acceptable program
shall include:

 
(a)
Providing training to lending staff on recognition of nonaccrual loans and loan
grading within ninety (90) days, with subsequent refresher training as needed;
and

 
(b)
Ensuring officer accountability by including accuracy and timeliness of
recognition of nonaccrual loans and loan grading in the annual performance
evaluation of each loan officer and each member of lending area management.

(2)           In order to ensure the accuracy and timeliness of recognition of
nonaccural loans and the loan ratings assigned, the Board shall increase the
frequency of internal loan review from annual to a risk-based approach.

(3)           The Board shall ensure the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

ARTICLE VII

CRITICIZED ASSETS

(1)           The Bank shall take continuing action to protect its interest in
those assets criticized in the ROE, in any subsequent Report of Examination, by
internal or external loan review, or in any list provided to management by the
National Bank Examiners during any examination.

 
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(2)           Within thirty (30) days, the Board shall review, revise, and
thereafter ensure Bank adherence to its written program designed to eliminate
the basis of criticism of criticized assets. The program shall address assets
criticized in the ROE, in any subsequent Report of Examination, by any internal
or external loan review, or in any list provided to management by the National
Bank Examiners during any examination as "doubtful," "substandard," or "special
mention." An acceptable program shall require the Bank to consider for each
criticized asset, at a minimum:

 
(a)
an identification of the expected sources of repayment;

 
(b)
the appraised value of supporting collateral and the position of the Bank's lien
on such collateral where applicable;

 
(c)
an analysis of current and satisfactory credit information, including cash flow
analysis where loans are to be repaid from operations; and

 
(d)
the proposed action to eliminate the basis of criticism and the time frame for
its accomplishment.

(3)           Upon revision, a copy of the program shall promptly be submitted
to the Assistant Deputy Comptroller. Any subsequent modifications or additions
to the program shall be forwarded to the Assistant Deputy Comptroller within ten
(10) days of such modification or addition.

(4)           The Board, or a designated committee, shall conduct a review, on
at least a quarterly basis, to determine:

 
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(a)
the status of each criticized asset or criticized portion thereof that equals or
exceeds one million dollars ($1,000,000);

 
(b)
management's adherence to the program adopted pursuant to this Article;

 
(c)
the status and effectiveness of the written program; and

 
(d)
the need to revise the program or take alternative action.

(5)           A copy of each review, including status updates for each
criticized asset or criticized portion thereof that equals or exceeds one
million dollars ($1,000,000), shall be forwarded to the Assistant Deputy
Comptroller quarterly. The status updates shall follow a format similar to
Appendix A, attached hereto.

(6)           The Bank may extend credit, directly or indirectly, including
renewals, extensions or capitalization of accrued interest, to a borrower whose
loans or other extensions of credit are criticized in the ROE, in any subsequent
Report of Examination, in any internal or external loan review, or in any list
provided to management by the National Bank Examiners during any examination and
whose aggregate loans or other extensions exceed one million dollars
($1,000,000) only if each of the following conditions is met:

 
(a)
the Board or designated committee finds that the extension of additional credit
is necessary to promote the best interests of the Bank and that prior to
renewing, extending or capitalizing any additional credit, a majority of the
full Board or designated committee approves the credit extension and records, in
writing, why such extension is necessary to promote the best interests of the
Bank; and

 
(b)
a comparison to the documentation produced in accordance with the written
program adopted pursuant to this Article shows that the Board's formal plan to
collect or strengthen the criticized asset will not be compromised.

 
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(7)           A copy of the approval of the Board or of the designated committee
shall be maintained in the file of the affected borrower.

(8)           The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

ARTICLE VIII

ALLOWANCE FOR LOAN AND LEASE LOSSES

(1)           Within sixty (60) days, the Board shall review, revise, and
thereafter ensure Bank adherence to its written program designed to ensure the
maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”). An
acceptable program shall be designed in light of the comments on maintaining a
proper Allowance found in the “Allowance for Loan and Lease Losses” booklet of
the Comptroller’s Handbook and shall focus particular attention on the following
factors:

 
(a)
results of the Bank's internal loan review;

 
(b)
results of the Bank's external loan review;

 
(c)
an estimate of inherent loss exposure on each credit in excess of one million
dollars ($1,000,000);

 
(d)
loan loss experience;

 
(e)
trends of delinquent and nonaccrual loans;

 
(f)
concentrations of credit in the Bank;

 
(g)
present and prospective economic conditions; and

 
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(h)
appropriate treatment of classified loans pursuant to OCC Bulletin 2006-47 –
Allowance Guidance and Frequently Asked Questions on the ALLL, Financial
Accounting Standard (FAS) 5 – Accounting for Contingencies, and FAS 114 –
Accounting by Creditors for Impairment of a Loan.

(2)           The program shall provide for a review of the Allowance by the
Board at least once each calendar quarter. Any deficiency in the Allowance shall
be remedied in the quarter it is discovered, prior to the filing of the
Consolidated Reports of Condition and Income, by additional provisions from
earnings. Written documentation shall be maintained indicating the factors
considered and conclusions reached by the Board in determining the adequacy of
the Allowance.

(3)           Upon revision, a copy of the program shall promptly be submitted
to the Assistant Deputy Comptroller.

(4)           The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

ARTICLE IX

BROKERED DEPOSITS

(1)           The Bank may accept, renew, or roll over Brokered Deposits (as
defined by 12 C.F.R. § 337.6(a)(2)) for deposit at the Bank only after obtaining
a prior written determination of no supervisory objection from the Assistant
Deputy Comptroller.

(2)           The limitation of paragraph (1) shall include the acquisition of
Brokered Deposits through any transfer, purchase, or sale of assets, including
Federal funds transactions.

 
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(3)           If the Bank seeks to acquire Brokered Deposits, the Board shall
apply to the Assistant Deputy Comptroller for written permission. Such
application shall contain, at a minimum, the following:

 
(a)
the dollar volume, maturities, and cost of the Brokered Deposits to be acquired;

 
(b)
the proposed use of the Brokered Deposits, i.e., short-term liquidity or
restructuring of liabilities to reduce cost;

 
(c)
alternative funding sources available to the Bank; and

 
(d)
the reasons why the Bank believes that the acceptance of the Brokered Deposits
does not constitute an unsafe and unsound practice in its particular
circumstances.

(4)           The Assistant Deputy Comptroller may require the submission of
such additional information as necessary to make an informed decision. Upon
consideration of the Bank's application, the Assistant Deputy Comptroller will
determine whether the proposed acquisition of Brokered Deposits may be
accomplished in a safe and sound manner and may condition, or prohibit, the
Bank's acquisition as the Assistant Deputy Comptroller shall deem appropriate.

(5)           The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to this Article.

ARTICLE X

PROFIT PLAN

(1)           Within ninety (90) days, the Board shall develop, implement, and
thereafter ensure Bank adherence to a written profit plan to improve and sustain
the earnings of the Bank. This plan shall include, at minimum, the following
elements:

 
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(i)
identification of the major areas in and means by which the Board will seek to
improve the Bank's operating performance;

 
(ii)
realistic and comprehensive budgets, including projected balance sheets and
year-end income statements;

 
(iii)
a budget review process to monitor both the Bank's income and expenses, and to
compare actual figures with budgetary projections; and

 
(iv)
a description of the operating assumptions that form the basis for major
projected income and expense components.

(2)           The budgets and related documents required in paragraph (1) above
for 2010 shall be submitted to the Assistant Deputy Comptroller within ninety
(90) days. The Board shall submit to the Assistant Deputy Comptroller annual
budgets as described in paragraph (1) above for each year this agreement remains
in effect. The budget for each year shall be submitted on or before November 30,
of the preceding year.

(3)           The Board shall forward comparisons of its balance sheet and
profit and loss statement to the profit plan projections to the Assistant Deputy
Comptroller on a quarterly basis.

(4)           The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to this Article.

ARTICLE XI

CLOSING

(1)           Although the Board has agreed to submit certain programs and
reports to the Assistant Deputy Comptroller for review or prior written
determination of no supervisory objection, the Board has the ultimate
responsibility for proper and sound management of the Bank.

 
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(2)           It is expressly and clearly understood that if, at any time, the
Comptroller deems it appropriate in fulfilling the responsibilities placed upon
him/her by the several laws of the United States of America to undertake any
action affecting the Bank, nothing in this Agreement shall in any way inhibit,
estop, bar, or otherwise prevent the Comptroller from so doing.

(3)           Any time limitations imposed by this Agreement shall begin to run
from the effective date of this Agreement. Such time requirements may be
extended in writing by the Assistant Deputy Comptroller for good cause upon
written application by the Board.

(4)           The provisions of this Agreement shall be effective upon execution
by the parties hereto and its provisions shall continue in full force and effect
unless or until such provisions are amended in writing by mutual consent of the
parties to the Agreement or excepted, waived, or terminated in writing by the
Comptroller.

(5)           In each instance in this Agreement in which the Board is required
to ensure adherence to, and undertake to perform certain obligations of the
Bank, it is intended to mean that the Board shall:

 
(a)
authorize and adopt such actions on behalf of the Bank as may be necessary for
the Bank to perform its obligations and undertakings under the terms of this
Agreement;

 
(b)
require the timely reporting by Bank management of such actions directed by the
Board to be taken under the terms of this Agreement;

 
(c)
follow-up on any non-compliance with such actions in a timely and appropriate
manner; and

 
(d)
require corrective action be taken in a timely manner of any non-compliance with
such actions.

 
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(6)           This Agreement is intended to be, and shall be construed to be, a
supervisory “written agreement entered into with the agency” as contemplated by
12 U.S.C. § 1818(b)(1), and expressly does not form, and may not be construed to
form, a contract binding on the Comptroller or the United States.
Notwithstanding the absence of mutuality of obligation, or of consideration, or
of a contract, the Comptroller may enforce any of the commitments or obligations
herein undertaken by the Bank under his supervisory powers, including 12 U.S.C.
§ 1818(b)(1), and not as a matter of contract law. The Bank expressly
acknowledges that neither the Bank nor the Comptroller has any intention to
enter into a contract. The Bank also expressly acknowledges that no officer or
employee of the Office of the Comptroller of the Currency has statutory or other
authority to bind the United States, the U.S. Treasury Department, the
Comptroller, or any other federal bank regulatory agency or entity, or any
officer or employee of any of those entities to a contract affecting the
Comptroller’s exercise of his supervisory responsibilities. The terms of this
Agreement, including this paragraph, are not subject to amendment or
modification by any extraneous expression, prior agreements or prior
arrangements between the parties, whether oral or written.

IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller, has
hereunto set his hand on behalf of the Comptroller.

/s/ Francis Alleman, Jr.   August 10, 2009
Francis Alleman, Jr.
 
Date
Assistant Deputy Comptroller
   
Houston Field Office
   

 
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IN TESTIMONY WHEREOF, the undersigned, as the duly elected and acting Board of
Directors of the Bank, have hereunto set their hands on behalf of the Bank.

/s/ Krishnan Balasubramanian   August 10, 2009
Krishnan Balasubramanian
 
Date
      /s/ Helen F. Chen   August 10, 2009
Helen F. Chen
 
Date
      /s/ May P. Chu   August 10, 2009
May P. Chu
 
Date
      /s/ Shirley L. Clayton   August 10, 2009
Shirley L. Clayton
 
Date
      /s/ Robert W. Hsueh   August 10, 2009
Robert W. Hsueh
 
Date
      /s/ George M. Lee   August 10, 2009
George M. Lee
 
Date
      /s/ Frank Li   August 10, 2009
Frank Li
 
Date
      /s/ Charles L. Roff   August 10, 2009
Charles L. Roff
 
Date
      /s/ David Tai   August 10, 2009
David Tai
 
Date
      /s/ Joe Ting   August 10, 2009
Joe Ting
 
Date
      /s/ Don J. Wang   August 10, 2009
Don J. Wang
 
Date

 
 
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