EXHIBIT
10.19


 


June 3, 2003


 


 


Mr. Darrel L. Posegate

EVP/CFO

HF Financial Corp.

P.O. Box 5000

Sioux Falls, South Dakota 57117-5000


 


Dear Darrel:


 


First Tennessee Bank
National Association, hereinafter called (“FTB” and/or “Lender”) has approved a
Revolving Line of Credit in an
amount of Three Million Dollars
($3,000,000.00) to HF Financial
Corp., hereinafter called (“HFC”
and/or “Borrower”).  HFC may use advances under this line of
credit for: i) capital infusion to its subsidiaries to support growth and/or
bank or branch acquisitions, ii) acquisition of bank holding companies, and
iii) other liquidity needs.  Prior to
the first year anniversary of this line of credit and on an annual basis
thereafter, FTB will review the line of credit for possibly another one year
extension.


 


The interest on the
outstanding balance will be payable quarterly at a variable rate per annum on
the outstanding balance.  The variable
rate of interest shall be 1⁄4% discount to
First Tennessee’s Base Rate, which is currently 4.25%.  Thus, your
borrowing rate today would equal 4.00%.


 


This indebtedness shall
be governed by the following covenants and conditions:


 


1)              HFC shall obtain all the necessary
regulatory approvals, if any, from any  and
all federal, state or other regulatory agency from which approval is necessary
for the completion of this transaction.


 


2)              HFC shall execute all of the following
in form and substance satisfactory to FTB:


 


a)              The
Note;


 


b)             This
Letter Agreement;


 


c)              HFC covenants and
agrees with FTB that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender sell, transfer or otherwise dispose
of any of its common capital stock in its subsidiaries now owned including Home
Federal Bank and the subsidiaries of Home Federal Bank including Hometown
Insurors, Inc., Mid-America Service Corporation, and PMD, Inc.,
(“Subsidiaries”) or hereafter acquired or create or grant a security interest,
encumbrance, pledge or grant similar interest in the common stock of any of its
“Subsidiaries”.


 

















 


HF Financial Corp.

June 3, 2003


 


 


d)             Certified corporate
resolutions of HFC authorizing the
execution, delivery and performance of this Letter Agreement and of the other
instruments and documents to be executed and delivered in connection herewith.


 


e)              HFC shall provide true and exact copies
of the current financial statements of the HFC
and along with the audit report and opinion of the HFC’s Certified Public Accountants.


 


3)              HFC agrees to the following covenants and
conditions:


 


a)              Capital – Home Federal Bank (“Bank”) shall maintain
at all times maintain a “Well Capitalized” rating as required by any applicable
regulatory authority as such requirement may be revised from time to time;
provided, however, Bank shall maintain a consolidated leverage ratio (Tier 1
Capital to tangible assets) of not less than 6.00% as calculated from their
respective 3/31/03 Thrift Financial Report and subsequent quarterly Reports
thereafter;


 


b)             Borrower on a
consolidated basis to have an annualized return on average assets (“ROA”) as of
the date of all financial reports required by regulatory authorities of not
less than 60/100th’s of one percent (.60%);


 


c)              Borrower’ on a
consolidated basis and Bank’s non-performing loans (those 90 days or more past
due plus those on non-accrual plus those which have been renegotiated as
defined by regulatory authorities) shall not exceed two and one-half percent
(2.50%) of total loans as of the date of all financial reports as required by
regulatory authorities;


 


d)             Bank shall maintain
at all times loan loss reserves in amounts deemed adequate by all regulatory
authorities with FTB to allow a cure period of 30 days to remedy any
deficiencies of an inadvertent and immaterial nature;


 


e)              Borrower nor its
subsidiaries shall create, incur or assume, contingent or otherwise, any
additional indebtedness, except for the following indebtedness: (i) the
indebtedness of HFC under this
contemplated loan and (ii) operating expenses and trade payables incurred in
the ordinary course of business and (iii) federal funds purchased and
borrowings from the Federal Home Loan Bank in the ordinary course of
business.  However, HFC may issue additional Trust Preferred
Securities as needed so long as the issuance thereof will not materially affect
the financial condition of HFC
and/or the ability to service the debt of Lender.


 


f)                HFC may pay cash dividends without
restriction provided an event of default has not occurred and default is not
continuing or if the payment of such dividends would result in an event of
default.


 


g)             HFC shall within (10) days after the
transmission or receipt thereof, forward copies of all correspondence,
memoranda or other written communication between any Regulatory Agency and
Borrower, Bank or any subsidiary of HFC relating
to any material safety and soundness issues provided such disclosure does not
violate HFC compliance with applicable law or regulation..


 


h)             The issuance by or at
the request of any bank regulatory authority of any Supervisory Action or the
taking by Borrower or Bank of any action of the sort described herein to
prevent or forestall the imposition by such bank regulatory authority of any
such Supervisory Action, which may prohibit the payment of dividends to HFC from its subsidiaries an amount
sufficient to service debt or could reasonably believed to cause such action in
the future shall constitute an Event of Default with actual Declaration of
Default being at the discretion of FTB.  “Supervisory Action” shall mean and include
the issuance by any bank regulatory


 


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authority of a
letter agreement or memorandum of understanding, cease and desist order,
injunction, directive, restraining order, notice of charges, or civil money
penalties (regardless of whether consented or agreed by to by the party to whom
it is addressed), against HFC, Bank
or any subsidiary or the directors or officers of any of them, whether
temporary or permanent.  However, if
such Supervisory Action is issued and HFC has
no outstanding balance owed to Lender and HFC
agrees that Lender is not required to advance any funds under this or any other
facility going forth, the issuance of such Supervisory Action shall not be
deemed an event of default.


 


i)                 Furnish to FTB as
soon as available and in any event within 120 days after the end of each
calendar year: (i) a copy of HFC’s 10K as filed with the Security Exchange
Commission and (ii) a copy of HFC’s Annual Report.  Borrower shall provide quarterly Thrift Financial Reports and 10Q
filings promptly as allowed by law or regulation upon the filing with the
appropriate regulatory agency.


 


j)                 At the time of
Borrower or Bank’s first knowledge or notice, furnish written notice or the
occurrence of any event or the existence of any condition, which upon written
notice or lapse of time or both would constitute an Event of Default under the
terms of this Loan Agreement to FTB within Ten (10) days of HFC’s knowledge or notice.


 


 


If you are in agreement
with the terms and conditions contained herein, please indicate your acceptance
by signing in the space provided below.


 


	
  Sincerely,

  
	
   

  
	
   

  
	
  /s/ Marquis Sledge

  	
   

  
	
  Marquis Sledge

  
	
  Vice President

  



 


 


	
   

  	
  Accepted this the 4th day of June, 2003

  
	
   

  
	
   

  	
  HF Financial Corp.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/
  Darrel L. Posegate

  	
   

  
	
   

  	
  Title: EVP/CFO

  	
   

  



 


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