BOAR D OF GOVERNOR S 

of the 

FEDERA L RESERVE SYSTEM 

WASHINGTON, D. C. 20551 

ADDRES S OFFICIA L CORRESPONDENC E 

TO THE BOAR D 

November 6 , 2012 

Richard K. Kim, Esq. 

Wachtell, Lipton, Rosen & Katz 

51 West 52nd Street 

New York, New York 10019 

Dear Mr. Kim: 

This is in response to your letter dated March 5, 2012, on behalf of 

Castle Creek Advisors LLC and related entities (collectively, "Castle Creek") 

[footnote] 1

 Castle Creek Capital IV LLC; Castle Creek Capital Partners IV LP ("Fund IV"); 

and Castle Creek Advisors IV LLC. [end of footnote.] 

for 

relief from one of the commitments it provided to the Board in connection with 

certain purchases of shares of the following bank holding companies from Castle 

Creek Capital Partners III, LP ("Fund III"): Atlanta Bancorporation, Inc. ("Atlanta 

Bancorporation"), Atlanta, Georgia; Guaranty Bancorp ("Guaranty"), Denver, 

Colorado; and The BANKshares, Inc. ("BANKshares"), Winter Park, Florida 

(collectively, the "Portfolio Companies"). The share purchases were part of an 

effort by Castle Creek to divest control of the Portfolio Companies. The requested 

relief would permit Castle Creek to continue to have one representative serve on 

the board of directors of each of the Portfolio Companies beyond July 30, 2012. 

[footnote] 2 The Director of the Division of Banking Supervision and Regulation, after 

consulting with the General Counsel, has delegated authority to approve requests 

for modification of commitments under the Board's Rules Regarding Delegation of 

Authority. 12 CFR 265.7(a)(2). [end of footnote.] 

In connection with the sale of Castle Creek's interests in Guaranty and 

BANKshares from Fund III to Fund IV and the transfer of shares of Atlanta 

Bancorporation to Fund Ill's shareholders, Castle Creek and Fund IV entered into 

commitments with the Board that provided, among other matters, that a Castle 

Creek representative could serve as a director on the board of each Portfolio 
Company until July 30, 2012. 

[footnote]3

 The General Counsel permitted Castle Creek to have its director representatives 

continue to serve on the boards of directors of the Portfolio Companies for an 

additional 90 days, until October 28, 2012. [end of footnote.] 

Castle Creek requests that the commitments be 

modified to permit Castle Creek to continue to have one representative serve on the 

board of directors of each Portfolio Company by removing the commitment's 

termination date for representation on their boards. 

For purposes of the Bank Holding Company Act ("BHC Act"), a 

company has control over another company if the first company (i) directly or 

indirectly or acting through one or more other persons owns, controls, or has power 

to vote 25 percent or more of any class of voting securities of the other company; 

(ii) controls in any manner the election of a majority of the directors of the other 

company; or (iii) directly or indirectly exercises a controlling influence over the 

management or policies of the other company. 

[footnote] 4

 12 U.S.C. § 1841(a)(2); 12 CFR 225.2(e). [end of footnote.] 

The Board's Regulation Y also 

sets forth certain rebuttable presumptions of control. 

[footnote] 5

 See 12 CFR 225.31(d). [end of footnote.] 

The BHC Act and 

Regulation Y presume that any company that directly or indirectly owns, controls, 

or has the power to vote less than 5 percent of any class of voting securities of a 

bank or other company does not control the bank or other company. 

[footnote] 6

 See 12 U.S.C. § 1841(a)(3); 12 CFR 225.31(e). [end of footnote.] 

Fund III previously controlled more than of 25 percent of the voting 

shares of each of the Portfolio Companies. The shares of Atlanta Bancorporation 

were distributed to Fund Ill's limited partners. The limited partners, whose 

ownership interests are attributed to Fund IV, currently control 1.4 percent of the 

voting shares of Atlanta Bancorporation. Fund III transferred shares of Guaranty 

and BANKshares to Fund IV, and Fund IV currently owns 9.9 percent of the 

voting shares of each company. 

Additional structural changes were made to ensure that Castle Creek 

would not control the Portfolio Companies. The changes included terminating 

business relationships with, and having Castle Creek's representative resign as 

chairman of the board of directors of, each Portfolio Company. Castle Creek was 

permitted to have a representative serve on the board of each Portfolio Company, 

although service by the representative was limited to two years. 
In its 2008 policy statement on equity investments in banks and bank 

holding companies ("Policy Statement"), 

[footnote] 7

 12 CFR 225.144 at 

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20080922bl ,pdf. [end of footnote.] 

the Board stated that a minority investor 

generally should be able to have a single representative on the board of directors of 

a banking organization without acquiring a controlling influence over the 

management or policies of the banking organization. 

[footnote] 8

 12 CFR 225.144(c)(1). [end of footnote.] 

However, the Board 

previously has also expressed concern that a company that controlled another 

company for a significant period may be able to exert a controlling influence over 

the company even after a substantial divestiture. 

[footnote] 9

 See e.g. "Statement of policy concerning divestitures by bank holding 

companies," 12 CFR 225.138. [end of footnote.] 

In such a circumstance, the 

Board generally has required that a minority investor have fewer ties with the 

banking organization than otherwise might be permissible under the Policy 

Statement in order to ensure that it cannot continue to exercise a controlling 

influence over the organization after divestiture. Termination of representation on 

each of the boards of directors in this case after two years (in combination with the 

other measures, noted above, that were intended to reduce the ties between Castle 

Creek and the Portfolio Companies) was intended to ensure that Castle Creek 

would no longer be able to exert a controlling influence over the Portfolio 

Companies while providing the Portfolio Companies' boards of directors with a 

transition period to use the assistance of the Castle Creek representative on each 

board. 

Circumstances surrounding Castle Creek's relationship with Atlanta 

Bancorporation suggest that Castle Creek is unlikely to have a continuing influence 

over the company even with a director interlock. As noted above, Castle Creek 

distributed all the shares of Atlanta Bancorporation that were held by Fund Ill's 

limited partners, and the Castle Creek principals hold in the aggregate only 

1.4 percent of the common stock (and total equity) of Atlanta Bancorporation, 

Regulation Y sets forth a presumption that any company that controls less than 

5 percent of the outstanding shares of the voting securities of a company does not 

have control over that company. 

[footnote] 10

 See 12 CFR 225.31. [end of footnote.] 

Castle Creek owns no shares of Atlanta 

Bancorporation, and the amount of shares owned by the principals of Castle Creek 
is within the presumption of noncontrol. Castle Creek does not have any business 

relationships with Atlanta Bancorporation, and there are no other facts suggesting a 

controlling influence by Castle Creek over the company. 

The facts and circumstances of Castle Creek's investment in, and 

relationships with. Guaranty and BANKshares since Fund IV was established 

similarly indicate that Castle Creek would not have the ability to exercise a 

controlling influence over these companies even with a director interlock. Fund IV 

holds 9.9 percent of the common stock of Guaranty and 11.37 percent of 

Guaranty's total equity. Other than Fund IV's small percentage of equity 

ownership, there are no relationships between Castle Creek and Guaranty. In 

addition, since Fund IV acquired shares of Guaranty, Guaranty has replaced 

management so that its management is not the same as when Castle Creek 

controlled the banking organization. 

In the case of BANKshares, a bank holding company owns more 

shares of BANKshares than Castle Creek. Fund IV holds 9.9 percent of the 

common stock of BANKshares and 16.98 percent of BANKshares' total equity. 

Other than Fund IV's small percentage of equity ownership, there are no 

relationships between Castle Creek and BANKshares. CAPGen Capital Group has 

become a bank holding company with respect to BANKshares and controls more 

than 40 percent of its voting shares. The Policy Statement recognizes that control 

of a banking organization by a larger shareholder that is a bank holding company 

lessens the influence that an investor's equity ownership and director 

representation provides. 

[footnote] 11

 The Policy Statement generally permits an investor to appoint a second director 

representative if there exists a larger shareholder that is a bank holding company 

with respect to that banking organization. [end of footnote.] 

Based on the foregoing and all the facts of record, the Director of the 

Division of Banking Supervision and Regulation, in consultation with the General 

Counsel and acting pursuant to authority delegated by the Board, 

[footnote] 12

 See 12 CFR 265.7(a)(2). [end of footnote.] 

has granted 

relief from the commitments to permit Castle Creek to have a director on the 

boards of the Portfolio Companies by removing the commitment's termination date 

for representation on their boards. All other commitments entered into by Castle 

Creek and Fund IV will remain in place. 
This action is based on the representations and commitments set forth 

in your correspondence. Any change in the facts presented could result in a 

different conclusion and should be reported to Board staff immediately. This 

action should not be construed as granting relief from any other conditions or 

commitments to which Castle Creek and Fund IV may be subject. 

Very truly yours, 

[signed] Robert deV. Frierson 

Secretary of the Board 

cc: Cynthia Goodwin, Vice President 

Federal Reserve Bank of Atlanta 

Dennis Denny, Assistant Vice President 

Federal Reserve Bank of Kansas City 

Kenneth Binning, Vice President 

Federal Reserve Bank of San Francisco