Exhibit 10.1


 


	
  

  	
   

  	
  CAPITAL MARKETS

  EQUITY RESEARCH

  INVESTMENT BANKING

  CORRESPONDENT SERVICES

  STRATEGIC ALLIANCES

  



 


April 28,
2009


 


Curtis
L. Hage, Chairman, President and CEO


Darrel
L. Posegate, EVP, CFO & Treasurer


HF
Financial Corp.


225
South Main Avenue


Sioux
Falls, SD 57104


 


RE:
COMMITMENT LETTER/LETTER AGREEMENT


 


TERMS AND CONDITIONS OF RENEWAL


 


This information represents the terms and conditions for a
credit facility to HF Financial Corporation, A U.S. Corporate Entity. These
terms and conditions are related to the renewal of HF Financial’s $6,000,000.00
credit facility referenced by a Change In Terms Agreement dated and signed June 1,
2005.


 


	
  Borrower:

  	
   

  	
  HF
  Financial Corp. (hereinafter “Borrower”)

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  Home
  Federal Bank (hereinafter “Bank”)

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  General
  liquidity needs, capital injection to subsidiary savings bank, and/or repurchase
  Bank stock as comes available.

  
	
   

  	
   

  	
   

  
	
  Amount:

  	
   

  	
  $6,000,000.00
  (hereinafter “Note”)

  
	
   

  	
   

  	
   

  
	
  Collateral: 

  	
   

  	
  25%
  of stock in Home Federal Bank. This will only be required if credit facility
  is drawn upon.

  
	
   

  	
   

  	
   

  
	
  Terms:

  	
   

  	
  Interest
  quarterly with principal due at maturity.

  
	
   

  	
   

  	
   

  
	
  Rate:

  	
   

  	
  FTB
  Base Rate minus 1/4%, with a floor of 4.00%

  
	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  September 30,
  2009

  
	
   

  	
   

  	
   

  
	
  Affirmative
  Covenants:

  	
   

  	
  Borrower
  hereby covenants and agrees that, until the Note, together with interest
  thereon, is paid in full, unless specifically waived by the Lender in
  writing, Borrower will, or will cause Borrower and Bank to;

  
	
   

  	
   

  	
   

  
	
  Financial Reports

  	
   

  	
  Furnish
  to Lender (a) as soon as available and in any event within ninety (90)
  days after the end of each calendar year, consolidated and consolidating
  balance sheets of Borrower and Bank, as at the end of such year and
  consolidated and consolidating statements of income of Borrower and Bank for
  the year then ended, together with the audit report and opinion of
  independent Certified Public Accountants acceptable to the Lender with
  respect thereto, which audit report and opinion shall contain no exceptions
  or qualifications unacceptable to Lender; (b) promptly upon receipt, copies of all management letters
  and other assessments and recommendations, formal or informal, submitted by
  the Certified Public Accountants to Borrower or

  



 


FTN
FINANCIAL GROUP


845
Crossover Lane, Suite 150


Memphis,
Tennessee 38117


901.435.8080
/ 800.456.5460


www.ftnfinancial.com


 


Although
this information has been obtained from sources which we believe to be
reliable, we do not guarantee its accuracy, and it  may be
incomplete or condensed. This is for informational purposes only and is not
intended as an offer or solicitation with respect to the purchase or sale of
any security. All herein listed securities are subject to availability and
change in price. Past performance is not indicative of future results. Changes
in any assumptions may have a material effect on projected results.


 


FTN  Financial Group and FTN Financial Capital
Markets are divisions of First Tennessee Bank National Association (FTB). FTN
Financial Securities Corp (FFSC), FTN Financial Capital Assets Corporation, and
FTN Midwest Securities Corp (MWRE) are wholly owned subsidiaries of FTB. FFSC
and MWRE are members of the NASD and SIPC (http://www.sipc.org/). Equity
research is provided by MWRE. FTN Financial Group, through FTB or its
affiliates, offers investment products and services.


 

















 


	
   

  	
   

  	
  Bank;
  (c) a copy of Borrower’s FR Y-9 Parent Company Only Financial Statement
  and (d) a copy of Borrower’s F.R. Y-6 Annual Report promptly upon the
  filing of the same with the Federal Reserve Board; and (e) a copy of
  Bank’s Quarterly Report of Condition and Income promptly upon the filing with
  the appropriate regulatory agency.

  
	
   

  	
   

  	
   

  
	
  Capital Ratios

  	
   

  	
  With
  respect to the financial statements of the Borrower and Bank, maintain at all
  times until payment in full of the Loan “well-capitalized” levels of both
  Borrower and Bank in full compliance with all state and federal regulatory
  authorities and without limiting the generality of the foregoing, a ratio of
  Qualifying Total Capital to Weighted Risk Assets as required by all state and
  federal regulatory authorities; provided further, however, with respect to
  the financial statement of the Bank, in no event shall the ratio of Tier 1
  Capital to the difference between Total Assets less Goodwill be less than six
  percent (6.00%) at the end of each calendar quarter. For purposes hereof,
  “Qualifying Total Capital” and “Weighted Risk Assets” are defined in Appendix
  A to Title 12, Code of Federal Regulations, Part 325, Capital
  Maintenance.

  
	
   

  	
   

  	
   

  
	
  Loan Loss Reserves

  	
   

  	
  With
  respect to Bank, maintain at all times loan loss reserves in amounts deemed
  adequate by all federal and state regulatory authorities.

  
	
   

  	
   

  	
   

  
	
  Notice of Litigation

  	
   

  	
  Borrower
  shall notify Lender of any actions, suits or proceedings instituted by any
  person against the Borrower, the Bank or other Subsidiary claiming money
  damages or other monetary liability. Said notice to be given within ten days
  of the first notice to Borrower or other party of the institution of such
  action, suit or proceeding and to specify the amount of damages being claimed
  or other relief being sought, the nature of the claim, the person instituting
  the action, suit or proceeding, and any other significant features of the
  claim.

  
	
   

  	
   

  	
   

  
	
  Events
  of Default

  	
   

  	
  Any
  one or more of the following events shall constitute a default (“Event of
  Default”) under the terms of this Agreement:

  
	
   

  	
   

  	
   

  
	
  Payment

  	
   

  	
  Default
  in the payment when due of the principal or interest on the Note;

  
	
   

  	
   

  	
   

  
	
  Performance

  	
   

  	
  Default
  in the performance of any provisions or breach of any covenant of this Letter
  Agreement or any other Loan Document;

  
	
   

  	
   

  	
   

  
	
  Misrepresentation

  	
   

  	
  If
  any representation, warranty or any other statement made or deemed to be made
  by the Borrower herein, in any other Loan Document, or in any writing,
  certificate, or report or statement at any time furnished to Lender pursuant
  to or in connection with this Agreement shall to be false or misleading in
  any material respect, either now or at the time made or furnished or becomes
  false or misleading at any time thereafter.

  
	
   

  	
   

  	
   

  
	
  Bankruptcy

  	
   

  	
  If
  Borrower or Bank files a petition in bankruptcy or seeks reorganization or
  arrangements under the Bankruptcy Code (as it now exists or as amended); is
  unable or admits in writing its inability to pay its debts as they become due
  or is not generally paying its debts as they come due; makes an assignment
  for the benefit of creditors; has a receiver, custodian or trustee appointed
  voluntarily or involuntarily, for its property; or is adjudicated bankrupt;
  or if an involuntary petition is filed in bankruptcy, for reorganization or arrangements,
  or for the appointment of a receiver, custodian or trustee of Borrower or
  Bank on their respective properties and if Borrower or Bank either acquiesce
  therein or fails to have such petition dismissed within sixty (60) days of
  the filing thereof.

  
	
   

  	
   

  	
   

  
	
  Return on Assets

  	
   

  	
  If
  Borrower, on a consolidated basis, shall fail to maintain an annualized
  return on total average assets of at least sixt one hundredths of one percent
  (0.60%) as

  



 

















 


	
   

  	
   

  	
  reported
  on a quarterly basis. For purposes of this covenant “total average assets”
  shall be deemed to mean the year-to-date consolidated average of total assets
  of Borrower.

  
	
   

  	
   

  	
   

  
	
  Non-Performing Loans

  	
   

  	
  If
  the Borrower’s non-performing loans, on a consolidated basis, exceed two and
  one-half percent (2.50%) of the Bank’s gross loans. For purposes hereof, “non-performing
  loans” shall be defined as the sum of all loans any installment or
  prepayments on which are 90 days or more past due plus all loans that are on
  non-accrual plus those loans which have been renegotiated (as defined by the
  regulatory agencies) or restructured to provide a reduction in either
  interest or principal because of a deterioration in the financial position of
  the borrower.

  
	
   

  	
   

  	
   

  
	
  Change in Control

  	
   

  	
  If
  there shall at any time occur without the prior written approval of Lender a
  change in control (including any change in control under the Change in Bank
  Control Act of 1978, as amended, and any transaction or restructuring which
  requires approval under the Bank Holding Company Act of 1956, as amended) of
  Bank or Borrower.

  
	
   

  	
   

  	
   

  
	
  Supervisory Action

  	
   

  	
  The
  issuance, after the date hereof, by or at the request of any bank regulatory
  authority of any Supervisory Action. As used herein, “Supervisory Action”
  shall mean and include the issuance by any bank regulatory authority of a
  letter agreement or memorandum of understanding (regardless of whether
  consented or agreed to by the party to whom it is addressed); or the issuance
  by or at the behest of any bank regulatory authority of a cease and desist
  order, injunction, directive, restraining order, notice of charges, or civil
  money penalties, against Borrower, Bank or the directors or officers of
  either of them, whether temporary or permanent.

  
	
   

  	
   

  	
   

  
	
  Remedies

  	
   

  	
  If
  an Event of Default shall occur, at any time thereafter, Lender may, at its
  option without demand or notice (except as otherwise provided herein), the
  same being expressly waived, declare the Loan, with interest thereon, to be
  immediately due and payable, and may proceed to exercise all rights and
  remedies available under the Pledge Agreement, under any other Loan Document,
  at law or in equity, concurrently or sequentially, in such order as Lender
  may elect, all such rights and remedies being cumulative.

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Binding Effect

  	
   

  	
  This
  Letter Agreement shall be binding upon, and inure to the benefit of the
  parties hereto and their respective heirs, successors, and assigns, except
  that Borrower shall not have the right to assign its rights hereunder or any
  interest therein without the prior written consent of Lender.

  
	
   

  	
   

  	
   

  
	
  Governing Law

  	
   

  	
  This
  Letter Agreement shall be governed and construed in accordance with the laws
  of the State of Tennessee; except that the provisions hereof which relate to
  the payment of interest shall be governed by (i) the laws of the United
  States or, (ii) the laws of the State of Tennessee, whichever permits
  the Lender to charge the higher rate, as more particularly set out in the
  Note.

  
	
   

  	
   

  	
   

  
	
  Survival

  	
   

  	
  The
  terms and provisions of this commitment shall survive the closing of the Loan
  made hereunder, the delivery of all documents necessary to carry out the
  provisions of this commitment, and the funding and making of loans and
  disbursements hereunder. Unless superseded or supplemented by a separate loan
  agreement, this Letter Agreement shall constitute the Loan Agreement between
  the parties.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dividends

  	
   

  	
  Borrower
  may pay cash dividends without restriction provided Borrower and Bank are in
  compliance with the terms and conditions of said Letter Agreement and an
  Event of Default has not occurred.

  



 

















 


	
  Closing Cost

  	
   

  	
  All
  legal expenses, if any, associated with the closing of the subject credit
  facility will be the responsibility of the Borrower. However, in order to
  eliminate any significant legal costs associated with Loan, and to expedite
  the loan closing process, it is anticipated that, when applicable, standard
  First Tennessee Bank documents, to include but not limited to, the note,
  commercial pledge agreement, standard letter agreement, etc., will be used.

  
	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
  A
  review of the Bank’s quarterly performance will be conducted prior to funding.
  It is expressly understood that Lender reserves the right to decline this
  commitment if a material adverse change has occurred at the Bank or Holding
  Company Level.

  



 


I
certainly appreciate the opportunity to provide this commitment to your
financial institution and look forward to working with your institution in the
future. Please give me a call if you have any questions or if I can assist in
any other way.


 


Sincerely,


 





 


David
House


Vice
President


Correspondent
Services


 


Accepted
this 15 day of May, 2009


 


	
  HF FINANCIAL CORP.

  	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Curtis L. Hage

  	
   

  	
  By:

  	
  /s/ Darrel L. Posegate

  	 

	
   

  	
  Curtis L. Hage

  	
   

  	
   

  	
  Darrel L. Posegate

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  Title:

  	
  Chairman/Pres./CEO

  	
   

  	
  Title:

  	
  EVP/CFO

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  Date:

  	
  5/15/09

  	
   

  	
  Date:

  	
  5/15/09