Credit Agreement

3 Months Ended

Jun. 30, 2011

Credit Agreement [Abstract]

Credit Agreement

Note 13 – Credit Agreement

The Corporation owes $116.3 million on a short-term line of credit to various lenders led by U.S. Bank. The Corporation is currently in default on the Credit Agreement as a result of failure to make a principal payment on March 2, 2009. On May 31, 2011, the Corporation entered into Amendment No. 7 dated May 25, 2011 (the “Amendment”) to the Amended and Restated Credit Agreement, dated as of June 9, 2008 (the “Credit Agreement”), among the Corporation, the lenders from time to time a party thereto, and U.S. Bank National Association, as administrative agent for such lenders, or the “Agent.”

Under the Amendment, the Agent and the Lenders agree to forbear from exercising their rights and remedies against the Corporation until the earliest to occur of the following: (i) the occurrence of any Event of Default (other than a failure to make principal payments on the outstanding balance under the Credit Agreement or other Existing Defaults); or (ii) November 30, 2011. Notwithstanding the agreement to forbear, the Agent may at any time, in its sole discretion, take any action reasonably necessary to preserve or protect its interest in the stock of the Bank, IDI or any other collateral securing any of the obligations against the actions of the Corporation or any third party without notice to or the consent of any party.

The Amendment also provides that the outstanding balance under the Credit Agreement shall bear interest at a rate equal to 15% per annum. Interest accruing under the Credit Agreement is due on the earlier of (i) the date the loans are paid in full or (ii) November 30, 2011. At June 30, 2011, the Corporation had accrued interest payable related to the Credit Agreement of $22.7 million and an accrued amendment fee of $4.7 million.

Within two business days after the Corporation obtains knowledge of an “event,” as defined in the Credit Agreement, the Chief Financial Officer of the Bank shall submit a statement of the event together with a statement of the actions which the Corporation proposes to take to the Agent as a result of the occurrence of such event. An event may include: (i) any event which, either of itself or with the lapse of time or the giving of notice or both, would constitute a Default under the Credit Agreement; (ii) a default or an event of default under any other material agreement to which the Corporation or Bank is a party; or (iii) any pending or threatened litigation or certain administrative proceedings.

The Amendment requires the Bank to maintain the following financial covenants:

• a Tier 1 Leverage Ratio of not less than 3.95% at all times.

• a Total Risk Based Capital ratio of not less than 7.65% at all times.

• the ratio of Non-Performing Loans to Gross Loans shall not exceed 12.00% at any time.

The Credit Agreement and the Amendment also contain customary representations, warranties, conditions and events of default for agreements of such type. At June 30, 2011, the Corporation was in compliance with all covenants contained in the Credit Agreement and the Amendment. Under the terms of the amended Credit Agreement and the Amendment, the Agent and the lenders have certain rights, including the right to accelerate the maturity of the borrowings if all covenants are not complied with. Currently, no such action has been taken by the Agent or the Lenders. However, the default creates significant uncertainty related to the Corporation’s operations.