Bank-Thrift Summary of Terms

Community Development
Capital Initiative
CDFI Bank/Thrift
Senior Preferred Stock
Summary of CDCI Senior Preferred Terms
Issuer:

A qualifying financial institution (“QFI”) that is (i) any U.S. bank or
U.S. savings association not controlled by a Bank Holding Company
(“BHC”) or Savings and Loan Holding Company (“SLHC”); (ii) any
top-tier U.S. BHC, (iii) any top-tier U.S. SLHC which engages
solely or predominately in activities that are permitted for financial
holding companies under relevant law; or (iv) any U.S. bank or U.S.
savings association controlled by a U.S. SLHC that does not engage
solely or predominately in activities that are permitted for financial
holding companies under relevant law, excluding Subchapter S
corporations and mutual organizations; provided, that, in each case,
(i) the QFI collectively with all of its affiliates satisfies the
requirements of 12 C.F.R. 1805.200(b); (ii) the QFI or an affiliate
thereof is a regulated community development financial institution
(“CDFI”) currently certified by the Community Development
Financial Institution Fund (the “Fund”) of the United States
Department of the Treasury (“UST”) pursuant to 12 C.F.R.
1805.201(a) as having met the eligibility requirements of the Fund’s
Community Development Financial Institutions Program (the QFI
or, if the QFI itself is not currently certified by the Fund as a CDFI,
any affiliate that is currently certified by the Fund as a CDFI, each, a
“Certified Entity”); and (iii) the QFI shall not be any BHC, SLHC,
bank or savings association controlled (within the meaning of 12
U.S.C. 1841(a)(2) and 12 C.F.R. 225(a)(i) in the case of BHCs and
banks; and 12 U.S.C. 1467a (a)(2) and 12 C.F.R. 583.7 in the case of
SLHCs and savings associations) by a foreign bank or company.
For purposes of this program, “U.S. bank”, “U.S. savings
association,” “U.S. BHC” and “U.S. SLHC” means a bank, savings
association, BHC or SLHC organized under the laws of the United
States or any State of the United States, the District of Columbia,
any territory or possession of the United States, Puerto Rico,
Northern Mariana Islands, Guam, American Samoa, or the Virgin
Islands. UST will determine the eligibility and allocation of
funds for each QFI after consultation with the appropriate
federal banking agency.

Initial Holder:

UST.

Security:

Senior preferred stock (the “CDCI Senior Preferred”), liquidation
preference $1,000 per share. Depending upon each QFI’s available
authorized preferred shares, UST may agree to purchase CDCI

Senior Preferred with a higher liquidation preference per share, in
which case UST may require the QFI to appoint a depositary to hold
the CDCI Senior Preferred and issue depositary receipts.
Size:

Each QFI may issue CDCI Senior Preferred having an aggregate
capital amount (the “Maximum Investment Amount”) equal to not
more than five percent (5%) of (i), if the QFI is a Certified Entity the
risk-weighted assets (“RWA”) of the QFI, or (ii), if the QFI is not a
Certified Entity, the sum of the RWAs of each of the Certified
Entities, in each case less the aggregate capital or, as the case may
be, principal amount of any outstanding TARP assistance of the QFI.
Any QFI that, in applying to qualify for this program, is determined
by its primary regulators to require additional capital in order to be a
“viable” financial institution, shall be required to receive capital
(“Private Capital”) from one or more private, non-government
investors prior to or concurrently with any purchase of CDCI Senior
Preferred by UST, such that the sum of the Private Capital and the
amount of CDCI Senior Preferred issued to such QFI under this
program shall be sufficient to establish the QFI’s “viability” on a
pro-forma basis. Such QFI receiving Private Capital shall only be
eligible to issue CDCI Senior Preferred in an aggregate amount
equal to, on a dollar-for-dollar basis, the amount of Private Capital it
received; provided that the amount of CDCI Senior Preferred issued
shall not be greater than the Maximum Investment Amount;
provided further that any Private Capital shall be subordinate to the
CDCI Senior Preferred, on terms satisfactory to UST.
QFIs currently participating in the UST Capital Purchase Program
(“CPP”) that issued preferred stock to UST may apply to exchange
the entirety of their existing CPP preferred stock for CDCI Senior
Preferred as set forth herein.1 Additionally, such QFIs may, but
shall not be required to, apply to issue CDCI Senior Preferred to
UST in an aggregate capital amount up to the positive difference, if
any, between (i) (x), if the QFI is a Certified Entity, five percent
(5%) of the RWA of the QFI or (y), if the QFI is not a Certified
Entity, five percent (5%) of the sum of the RWAs of each of the
Certified Entities and (ii) the aggregate liquidation preference of any
outstanding (x) preferred stock issued under CPP and (y) CDCI
Senior Preferred; provided, however, with respect to either an

1

Applications for exchanges of CPP preferred stock for CDCI Senior Preferred shall be made on a different
application form than applications for new issuances of CDCI Senior Preferred. Applications solely to exchange
CPP preferred stock for CDCI Senior Preferred shall not be required to be reviewed by the primary regulators of the
applying QFI.

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exchange or new issuance, (i) the QFI has not breached any
representation, warranty or covenant set forth in the documents
governing the CPP preferred stock or its sale to UST; and (ii)(x)
with respect to cumulative CPP preferred stock, the QFI has paid, as
of the closing date of this investment, all accrued and unpaid
dividends or interest and (y) with respect to non-cumulative CPP
preferred stock, the QFI has paid, as of the closing date of this
investment, the amount of any unpaid dividends or interest for the
fiscal quarter prior to the closing date plus the accrued and unpaid
dividends or interest as of the closing date for the fiscal quarter in
which the closing shall occur.
RWA, for purposes hereunder, shall be as of the most recent fiscal
quarter ended.
Ranking:

Senior to common stock and pari passu with existing or future
authorized or issued preferred shares but senior to preferred shares
which by their terms rank junior to any existing or future authorized
or issued preferred shares.

Regulatory Capital
Status:

Tier 1.

Term:

Perpetual.

Dividend Rate:

Two percent (2%) per annum until the eighth (8th) anniversary of the
closing date of this investment and thereafter at a rate of nine percent
(9%) per annum.
Dividends shall be payable quarterly in arrears on February 15, May
15, August 15 and November 15 of each year. Dividends shall be
computed on the basis of a 360-day year consisting of twelve 30-day
months.

Dividend Form:

For each QFI that is a BHC or SLHC, the CDCI Senior Preferred
shall pay cumulative dividends. For each QFI that is not a BHC or
SLHC, the CDCI Senior Preferred shall pay non-cumulative
dividends.

Redemption:

The CDCI Senior Preferred may be redeemed, in whole or in part, at
any time and from time to time, at the option of the QFI, subject to
the approval of the QFI’s primary federal bank regulator. All
redemptions of the CDCI Senior Preferred shall be at 100% of its
liquidation preference, plus (i) in the case of cumulative CDCI
Senior Preferred, any accrued and unpaid dividends and (ii) in the
case of non-cumulative CDCI Senior Preferred, accrued and unpaid
dividends for the then current dividend period (regardless of whether
any dividends are actually declared for such dividend period).
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Restrictions on
Dividends and
Repurchases:

Further Restrictions on
Dividend Increases:

Additional Restrictions
on Dividends and
Repurchases:

Voting rights:

For as long as any CDCI Senior Preferred is outstanding, no
dividends may be declared or paid on junior preferred shares,
preferred shares ranking pari passu with the CDCI Senior Preferred
(other than in the case of pari passu preferred shares, dividends
payable on a pro rata basis with the CDCI Senior Preferred), or
common shares, nor may the QFI repurchase or redeem any junior
preferred shares, preferred shares ranking pari passu with the CDCI
Senior Preferred or common shares (other than (i) repurchases of the
CDCI Senior Preferred and (ii) repurchases of junior preferred
shares or common shares in connection with any benefit plan in the
ordinary course of business consistent with past practice), unless (i)
in the case of cumulative CDCI Senior Preferred, all accrued and
unpaid dividends on the CDCI Senior Preferred are paid in full or
(ii) in the case of non-cumulative CDCI Senior Preferred, the full
dividend for the latest completed dividend period shall have been
declared and paid in full.
For so long as any CDCI Senior Preferred is outstanding, no increase
in dividends per share or distributions on common stock, preferred
stock ranking junior or pari passu to the CDCI Senior Preferred or
other equity securities of the QFI or its subsidiaries shall be
permitted; provided that no increase in dividends may be made as a
result of any dividend paid in common shares, any stock split or
similar transaction.
From and after the eighth (8th) anniversary of the closing date of this
investment, the QFI shall be prohibited from paying dividends or
making distributions on or repurchasing any equity securities or trust
preferred securities issued by the QFI or any affiliate (other than (i)
redemptions or repurchases of the CDCI Preferred Shares, (ii)
regular dividends on shares of preferred stock in accordance with the
terms thereof and which are permitted under the terms of the CDCI
Senior Preferred or (iii) dividends or distributions by any whollyowned subsidiary of the QFI) without UST’s consent, unless the
CDCI Senior Preferred are (x) redeemed in whole or (y) no longer
held by UST or any of its affiliates. These restrictions are in
addition to the restrictions on share repurchases of junior preferred
shares, preferred shares ranking pari passu with the CDCI Senior
Preferred, or common shares set forth above under “Restrictions on
Dividends and Repurchases.”
The CDCI Senior Preferred shall be non-voting, other than class
voting rights on (i) any authorization or issuance of capital shares
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ranking senior to the CDCI Senior Preferred, (ii) any amendment to
the rights of CDCI Senior Preferred, or (iii) any merger, exchange,
dissolution or similar transaction which would adversely affect the
rights of the CDCI Senior Preferred. If dividends payable on the
CDCI Senior Preferred are not paid in full for eight (8) dividend
periods, whether or not consecutive, the holders of the CDCI Senior
Preferred will have the right to elect two (2) directors. The right to
elect directors will end when dividends have been paid in full for
four (4) consecutive dividend periods.
Transferability:

The CDCI Senior Preferred shall not be subject to any contractual
restrictions on transfer.

Closing Conditions:

The obligation of UST to purchase or otherwise acquire any CDCI
Senior Preferred shall be subject to the satisfaction of customary
closing conditions, including, among other things, (i) the QFI having
not breached any representation, warranty or covenant set forth in
the documents governing any obligations of such QFI then
outstanding under the Troubled Asset Relief Program (“TARP
Obligations”), including any CPP preferred stock, as determined by
UST; (ii) all amounts then due and payable under any of the QFI’s
TARP Obligations have been paid in full; and (iii), with respect to
any CDCI Senior Preferred not acquired through the exchange of
outstanding CPP preferred stock, (x) receipt of approval from the
QFI’s appropriate federal banking agency for the issuance of the
CDCI Senior Preferred and (y) the satisfaction of any conditions for
such issuance imposed by such appropriate federal banking agency
in connection with granting such approval.

Transfer of Proceeds to
Certified Entities:

CDFI Covenants:

Each QFI that is not a Certified Entity shall be required to
immediately transfer any proceeds it receives in connection with the
sale of the CDCI Senior Preferred to its related Certified Entities as
capital contributions.2
Each QFI shall covenant that (i) the Fund has not withdrawn or
qualified its certification that the Certified Entities meet the
requirements of 12 C.F.R. 1805.200(b) and 1805.201(b)(1)-(6), (ii) it
and all of its affiliates collectively meet the eligibility requirements
of 12 C.F.R. 1805, (iii) each Certified Entity’s primary mission is

2

QFIs shall not be required to transfer any funds to any Certified Entity in connection with an exchange
of CPP preferred stock for CDCI Senior Preferred.

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promoting community development, as may be determined by UST
from time to time based on the criteria set forth in 12 C.F.R.
1805.201(b)(1), (iv) each Certified Entity’s predominant business
activity is the provision, in arms-length transactions, of “Financial
Products”, “Development Services” and/or other similar financing,
(v) each Certified Entity serves a “Target Market” by serving one or
more “Investment Areas” and/or “Targeted Populations” as may be
determined by UST from time to time substantially in the manner set
forth in 12 C.F.R. 1805.201(b)(3), (vi) each Certified Entity directly,
through an affiliate, or through a contract with another provider,
provides “Development Services” in conjunction with its “Financial
Products”, (vii) each Certified Entity maintains accountability to
residents of its “Investment Area(s)” or “Targeted Population(s)”
through representation on its governing board or directors or
otherwise and (viii) each Certified Entity is not an agency or
instrumentality of the United States, or any State or political
subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6). The
terms “Financial Products”, “Development Services”, “Target
Market”, “Investment Areas” and “Targeted Populations” are used
herein in the same manner as such terms are used in 12 C.F.R.
105.201(b).
Each QFI shall also deliver to UST (x) on the date that is 180 days
after the closing date of this investment, and (y) annually at the end
of each fiscal year of such QFI (i) reports and other documents
sufficient to evidence each Certified Entity’s status as a CDFI
including documentation evidencing its ongoing compliance with
the Fund’s requirements for CDFIs and (ii) a certification that such
QFI and each Certified Entity remains in compliance with the
foregoing covenants. Additionally, each QFI shall be required to
notify UST immediately of any breach of the foregoing covenants.
Remedies for breaches of the foregoing covenants shall be set forth
in the definitive documentation for the CDCI Senior Preferred.
Access and
Information:

So long as UST or any of its affiliates holds CDCI Senior Preferred
having a liquidation preference of at least ten percent (10%) of its
initial investment, each QFI shall permit UST and its agents,
consultants, contractors and advisors (x), acting through the QFI’s
appropriate federal banking agency, or otherwise to the extent
necessary to manage, evaluate or transfer UST’s investment, to
examine its corporate books and make copies thereof and to discuss
the affairs, finances and accounts of such QFI with the principal
officers of such QFI upon reasonable notice and at such reasonable
times and as often as UST may reasonably request and (y) to review
any information material to UST’s investment provided by such QFI
to its appropriate federal banking agency.
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At any time that any CDCI Senior Preferred is outstanding, each QFI
shall deliver to UST (i) annually at the end of each fiscal year of
such QFI, an audited (to the extent available) consolidated balance
sheet of such QFI as of such fiscal year, and audited consolidated
statements of income, retained earnings and cash flows of such QFI
for such year, prepared in accordance with GAAP and setting forth
in each case in comparative form the figures for the previous fiscal
year; and (ii) copies of any quarterly reports provided to other equity
holders of such QFI or the QFI’s management. Additionally, to the
extent a QFI receives an assessment on its internal controls from its
auditors at any time during any period in which UST or any of its
affiliates holds CDCI Senior Preferred, a copy of such assessment
shall also be delivered to UST.
On an annual basis during any period in which UST or any of its
affiliates holds CDCI Senior Preferred, each QFI shall be required to
complete and deliver to UST a survey, in a form specified by UST,
describing, among other things, how it has utilized the capital it
received in connection with the issuance of the CDCI Senior
Preferred and the effects of such capital on the operations and status
of the QFI.
Transparency,
Executive
Compensation and
Employ American
Workers Act:

Affiliate Transactions:

Each QFI and its subsidiaries shall take all necessary action to
ensure that it and its executive officers, respectively, are in
compliance with (i) all UST guidelines regarding transparency,
reporting and monitoring; (ii) Section 111 of the EESA, as
implemented by the TARP Standards for Compensation and
Corporate Governance set forth in 31 C.F.R. Part 30; (iii) the
provisions of the Employ American Workers Act (Section 1611 of
Division A, Title XVI of the American Recovery and Reinvestment
Act of 2009), Public Law No. 111-5, effective as of February 17,
2009; and (iv), in the case of (ii) and (iii), all rules, regulations and
guidance issued thereunder.
For as long as UST or any of its affiliates holds any debt or equity
securities (including the CDCI Senior Preferred) of the QFI, the QFI
and its subsidiaries will not enter into a transaction with related
persons (within the meaning of Item 404 under the SEC’s
Regulation S-K) unless such transaction is (i) on terms no less
favorable to the QFI and its subsidiaries than could be obtained from
an unaffiliated third party, and (ii) has been approved by the audit
committee or a comparable body of independent directors of the
QFI, or if there are no “independent directors,” the board of directors
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of the QFI but only if the board of directors maintains written
documentation supporting its determination that the transaction
meets the requirements of (i) of this paragraph.
Warrant:

Subject to the requirements of Section 113(d)(3)(A) of the
Emergency Economic Stabilization Act, QFIs participating in this
program shall not be required to issue warrants to UST.

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