Centennial SB, A FSB
Supervisory Agreement
Page 1
SUPERVISORY AGREEMENT
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This Supervisory Agreement ("Agreement") is made and is
effective this ____ day of ________________, 1997 (the "Effective
Date"), by and between Centennial Savings Bank, F.S.B. (the
"Association"), a federally chartered stock association, having
its main office located at Durango, Colorado, and the Office of
Thrift Supervision ("OTS"), an office within the United States
Department of the Treasury, having its principal executive
offices located at 1700 G Street, N.W., Washington, D.C., acting
through its Midwest Regional Director or his/her designee
("Regional Director").
WHEREAS, the OTS is the primary federal regulatory of the
Association; and
WHEREAS, based on the OTS Report of Examination for the
examination of the Association, which commenced on September 30,
1996 ("ROE"), the OTS is of the opinion that the Association has
engaged in acts and practices that: (i) have resulted in
violations of certain of the laws or regulations to which the
Association is subject and/or (ii) are considered to be unsafe
and unsound; and
WHEREAS, the OTS is of the opinion that grounds exist for
the initiation of administrative proceedings against the
Association; and
WHEREAS, the OTS is of the view that it is appropriate to
take measures intended to ensure that the Association will: (i)
comply with all applicable laws and regulations and (ii) engage
in safe and sound practices; and
WHEREAS, the Association, acting through its Board of
Directors (the "Board"), without admitting or denying any
violations of laws or regulations and/or unsafe and unsound
practices, wishes to cooperate with the OTS and to evidence the
intent to: (i) comply with all applicable laws and regulations
and (ii) engage in safe and sound practices.
NOW, THEREFORE, in consideration of the above premises, the
mutual undertakings set forth herein, the parties hereto agree as
follows:
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Supervisory Agreement
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COMPLIANCE WITH LAWS, REGULATIONS AND SAFE AND SOUND PRACTICES
1. Compliance With Laws, Regulations and Safe and Sound
Practices
The Association and its Board and Officers shall take all
necessary and appropriate actions to achieve compliance with the
following laws, regulations, and safe and sound business
practices:
(A) Section 5(v) of the Home Owners' Loan Act, 12 U.S.C.
S 1464(v) (regarding reports of condition);
(A) Part 562.2(b) of the OTS Regulations, 12 C.F.R.
Part 562.2(b) (regulatory reporting standards);
(A) Section 560.160 of the OTS Regulations, 12 C.F.R.
S 560.160 (regarding classification of assets);
(A) Section 563.161 of the OTS Regulations, 12 C.F.R.
S 563.161 (regarding management and financial
policies/compensation);
(A) Section 563.170(c) of the OTS Regulations, 12 C.F.R.
S 563.170(c) (regarding establishment and maintenance
of records);
(A) Section 563.176 of the OTS Regulations, 12 C.F.R.
S 563.176 (regarding interest-rate risk management
policies and procedures);
(A) Section 563.50 of the OTS Regulations, 12 C.F.R.
S 563.50 (regarding Qualified Thrift Lender Status);
(A) Section 567.12(e) of the OTS Regulations, 12 C.F.R.
S 567.12(e) (regarding qualifying intangible amounts
and mortgage servicing rights);
(i) Part 566 of the OTS Regulations, 12 C.F.R. S 566.1
et seq. (regarding liquidity requirements);
(J) Operating with appropriate internal controls; and
(K) Operating with adequate oversight and direction
over the affairs of the Association.
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Supervisory Agreement
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CORRECTIVE PROVISIONS
1. Management Plan
By June 30, 1997, the Association and its Board shall submit
to the OTS Midwest Regional Office in Dallas, Texas, a management
plan that provides for a permanent President, Chief Executive
Officer, and Chief Financial Officer.
1. Transactions With Affiliates
(a) The Association and its Board shall comply with the
provisions of 12 C.F.R. SS 563.41 and 563.42 of the OTS
Regulations, and shall:
(i) Cause service agreements to be executed
to ensure that services performed by its holding
company, Aspen Bancshares, Incorporated ("Aspen"),
and its subsidiaries, for or on behalf of the
Association are performed in a manner that
maintain the separate corporate existence of the
Association and Aspen or any of its affiliates;
(ii) Identify all consultants being utilized
by the Association and ensure that agreements have
been executed with such consultants including
confidentiality provisions and that consulting
agreements with individuals serving on an acting
basis as officers of the Association are approved
by the Board.
(iii)Determine and document in the minutes of
the board's meetings, the total amount owed by the
Association to Aspen for the services being
provided by Dirk Broekema, Jr. as Acting President
of the Association and evaluate the cost
effectiveness of the use of consultants as opposed
to hiring full time staff to perform such
functions.
(b) The Association and the Board shall by May 31, 1997,
submit to the OTS Midwest Regional Office in Dallas,
Texas, a certified true copy of a resolution of the
Board that the above provisions of Paragraph 5(a)(i),
(ii), and (iii) were undertaken and completed by the
Association and its Board.
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Supervisory Agreement
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1. Bylaw Amendment
By April 30, 1997, the Association and its Board shall
submit notice of a bylaw amendment as required by 12 C.F.R.
S 552.5(b) together with a certification that the proposed
amendment is permissible under all applicable laws, rules or
regulations.
1. Thrift Financial Reports
By April 30, 1997, the Association and its Board shall
submit to the OTS Midwest Regional Office in Dallas, Texas, a
certified true copy of a resolution of the Board that the
December 31, 1996 Thrift Financial Report is accurate.
1. Internal Controls
By May 31, 1997, the Association and its Board shall submit
to the OTS Midwest Regional Office in Dallas, Texas, a certified
true copy of a resolution of the Board that the internal control
weaknesses identified by the internal auditor and independent
auditors during the OTS September 30, 1996 examination of the
Association, have been corrected.
MISCELLANEOUS
1. Compliance With Agreement
The Board and officers of the Association shall take
immediate action to cause the Association to comply with the
terms of this Agreement and shall take all actions necessary or
appropriate thereafter to cause the Association to continue to
carry out the provisions of this Agreement.
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Supervisory Agreement
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1. Definitions
All technical words or terms used in this Agreement for
which meanings are not specified or otherwise provided by the
provisions of this Agreement shall, insofar as applicable, have
meanings as defined in Chapter V of Title 12 of the Code of
Federal Regulations, Home Owners' Loan Act ("HOLA"), Federal Deposit
Insurance Act ("FDIA"), or OTS Memoranda. Any such
technical words or terms used in this Agreement and undefined in
said Code of Federal Regulations, HOLA, FDIA, or OTS Memoranda
shall have meanings that are in accordance with the best custom
and usage in the savings and loan industry.
1. Successor Statutes, Regulations, Guidance, Amendments
Reference in this Agreement to provisions of statutes,
regulations, and OTS Memoranda shall be deemed to include
references to all amendments to such provisions as have been made
as of the Effective Date and references to successor provisions
as they become applicable.
1. Duration, Termination or Suspension of Agreement
(a) This Agreement shall: (i) become effective upon
its execution by the OTS, through its authorized
representative, whose signature appears below, and (ii)
remain in effect until terminated, modified or
suspended in writing by the OTS, acting through its
Director or the Regional Director (including any
authorized designee thereof).
(b) The Regional Director, in his or her sole
discretion, may, by written notice, suspend any or all
provisions of this Agreement.
1. Time Limits
Time limitations for compliance with the terms of this
Agreement run from the Effective Date, unless otherwise noted.
1. Effect of Headings
The Section headings herein are for convenience only and
shall not affect the construction hereof.
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Supervisory Agreement
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1. Separability Clause
In case any provision in this Agreement is ruled to be
invalid, illegal or unenforceable by the decision of any Court of
competent jurisdiction, the validity, legality and enforceability
of the remain provisions hereof shall not in any way be affected
or impaired thereby, unless the Regional Director in his/her sole
discretion determines otherwise.
1. No Violations of Law, Rule, Regulation or Policy Statement
Authorized; OTS Not Restricted
Nothing in this Agreement shall be construed as:
(a) allowing the Association to violate any law, rule,
regulation, or policy statement to which it is subject;
or
(b) restricting the OTS from taking such action(s)
that are appropriate in fulfilling the responsibilities
placed upon it by law, including, without limitation,
any type of supervisory, enforcement or resolution
action that the OTS determines to be appropriate.
1. Successors in Interest/Benefit
The terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their
successors in interest. Nothing in this Agreement, express or
implied, shall give to any person or entity, other than the
parties hereto, the Federal Deposit Insurance Corporation, and
their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
1. Signature of Directors
Each director of the Association signing the Agreement
attests, by such act, that she or he, as the case may be, voted
in favor of the resolution, in the form attached to this
Agreement, authorizing the execution of this Agreement by the
Association.
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Supervisory Agreement
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1. Integration Clause and Reservation of Enforcement Powers
(a) This Agreement represents, as of the Effective
Date, the final written agreement of the parties with
respect to the subject matter hereof and constitutes
the sole agreement of the parties, as of the Effective
Date, with respect to such subject matter.