BANCORP 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).
Debt and Stock Redemption
2.
(A)
BANCORP AND ANY NONBANK
SUBSIDIARY SHALL NOT, DIRECTLY OR INDIRECTLY, INCUR, INCREASE, OR GUARANTEE ANY
DEBT WITHOUT THE PRIOR WRITTEN APPROVAL OF THE RESERVE BANK AND THE DFCS.
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)
BANCORP SHALL NOT, DIRECTLY OR INDIRECTLY, PURCHASE OR REDEEM ANY
SHARES OF ITS STOCK WITHOUT THE PRIOR WRITTEN APPROVAL OF THE RESERVE BANK AND
THE DFCS.
Capital Plan
3.
WITHIN 60 DAYS OF THIS AGREEMENT, BANCORP
SHALL SUBMIT TO THE RESERVE BANK AN ACCEPTABLE UPDATED WRITTEN PLAN TO MAINTAIN
SUFFICIENT CAPITAL AT BANCORP, ON A CONSOLIDATED BASIS, AND AT THE BANK, AS A
SEPARATE LEGAL ENTITY ON A STAND-ALONE BASIS.
THE PLAN SHALL, AT A MINIMUM,
ADDRESS, CONSIDER, AND INCLUDE:
(A)
THE CONSOLIDATED ORGANIZATION'S AND THE BANK'S CURRENT AND FUTURE
CAPITAL REQUIREMENTS, INCLUDING COMPLIANCE WITH THE CAPITAL ADEQUACY GUIDELINES
FOR BANK HOLDING COMPANIES:
RISK-BASED MEASURE AND TIER 1 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 BANK
ISSUED BY THE BANK'S FEDERAL REGULATOR;
3
(B)
THE ADEQUACY OF THE BANK'S CAPITAL, TAKING INTO ACCOUNT THE VOLUME
OF CLASSIFIED CREDITS, CONCENTRATIONS OF CREDIT, ALLOWANCE FOR LOAN AND LEASE
LOSSES ("ALLL"), CURRENT AND PROJECTED ASSET GROWTH, AND PROJECTED RETAINED
EARNINGS;
(C)
THE SOURCE AND TIMING OF ADDITIONAL NECESSARY FUNDS TO FULFILL THE
CONSOLIDATED ORGANIZATION'S AND THE BANK'S FUTURE CAPITAL REQUIREMENTS, TAKING
INTO ACCOUNT THE $134.2 MILLION IN CAPITAL THAT WAS INJECTED INTO THE BANK BY
BANCORP ON OCTOBER 26, 2009;
(D)
SUPERVISORY REQUESTS FOR ADDITIONAL CAPITAL AT THE BANK OR THE
REQUIREMENTS OF ANY SUPERVISORY ACTION IMPOSED ON THE BANK BY ITS FEDERAL OR
STATE REGULATOR; AND
(E)
THE REQUIREMENTS OF SECTION 225.4(A) OF REGULATION Y OF THE BOARD
OF GOVERNORS (12 C.F.R § 225.4(A)) THAT BANCORP SERVE AS A SOURCE OF STRENGTH TO
THE BANK.
4.
BANCORP SHALL NOTIFY THE RESERVE BANK, IN
WRITING, NO MORE THAN 30 DAYS AFTER THE END OF ANY QUARTER IN WHICH ANY OF THE
CONSOLIDATED ORGANIZATION'S OR THE BANK'S CAPITAL RATIOS (TOTAL RISK-BASED, TIER
I, OR LEVERAGE) FALL BELOW THE APPROVED PLAN'S MINIMUM RATIOS.
TOGETHER WITH
THE NOTIFICATION, BANCORP SHALL SUBMIT AN ACCEPTABLE CAPITAL PLAN THAT DETAILS
THE STEPS BANCORP WILL TAKE TO INCREASE THE CONSOLIDATED ORGANIZATION'S OR THE
BANK'S CAPITAL RATIOS TO OR ABOVE THE APPROVED PLAN'S MINIMUMS.
Cash Flow Projections
5.
WITHIN 90 DAYS OF THIS AGREEMENT, BANCORP
SHALL SUBMIT TO