SUPERVISORY AGREEMENT

This Supervisory Agreement (Agreement) is made and is effective this 4th day of
April, 2008 (the Effective Date), by and between MainStreet Savings Bank, FSB,
Hastings, Michigan (MainStreet or the Association) OTS Docket No. 00966, a
federal stock savings bank, and the Office of Thrift Supervision (OTS), a bureau
of the United States Department of the Treasury, acting through its Central
Regional Director or his designee (Regional Director).
 
WHEREAS, the OTS is the primary Federal regulator of MainStreet pursuant to the
Home Owners' Loan Act (HOLA), 12 U.S.C. §§ 1461 et seq., and is MainStreet's
appropriate Federal banking agency for purposes of the Federal Deposit Insurance
Act (FDIA), 12 U.S.C. §§ 1811 et seq.;1
 
WHEREAS, based upon the findings contained within the Association's October 22,
2007 Report of Examination (ROE), the OTS is of the opinion that MainStreet has
engaged in acts and practices that: (i) have resulted in violations of certain
laws or regulations to which MainStreet is subject; and (ii) are considered to
be unsafe and unsound;
 
WHEREAS, the OTS is of the opinion that grounds exist for the initiation of an
administrative proceeding against MainStreet pursuant to 12 U.S.C. §§ 1464(d)
and 1818(b);
 
WHEREAS, OTS is of the view that it is appropriate to take measures intended to
ensure that MainStreet will: (i) comply with all applicable laws and
regulations; and (ii) engage in safe and sound practices;
 
WHEREAS, MainStreet wishes to cooperate with the OTS and to evidence its intent
to: (i) comply with all applicable laws and regulations; and (ii) engage in safe
and sound practices; and
 
WHEREAS, MainStreet, acting through its Board of Directors (Board), without
admitting or denying that such grounds exist except those as to jurisdiction,
which are admitted, 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 and the mutual
undertakings set forth herein, the parties hereto agree as follows:
 

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1 All references to the United States Code (U.S.C.) and the Code of Federal
Regulations (C.F.R) are as amended, unless otherwise indicated.
 

 
 
 
 

Compliance with Laws and Regulations
 
 
1.
MainStreet and its directors, officers, employees, and agents shall take all
necessary and appropriate actions to comply with the following laws and
regulations:

 
 
(a)
12 C.F.R. § 203.4(a)(12) (Home Mortgage Disclosure Act - Compilation of Loan
Data); and
  (b) 12 C.F.R. §§ 229.12(b)(1) and 229.13(h) (Expedited Funds Availability
Act).

             
Business Plan
 
2.
(a)
By May 30, 2008, the Board shall revise MainStreet's current business plan
(Business Plan), and take into consideration the requirements contained within
this Agreement and the comments contained within the ROE (including the
requirement that the revised Business Plan cover a three year period), as well
as ensuring, at a minimum, inclusion of the following:

 

  i) Defined strategies for capital preservation and enhancementcommensurate to
the risk profile of the Association;   ii) Detailed strategies designed to
improve and sustain earnings;
 
iii)
Inclusion of detailed pro fonna balance sheets and income statements for a three
year period; and
  iv) The Business Plan continuously covers a three year period.

 

 

  (b) By June 9, 2008, the Board shall forward a copy of the revised Business
Plan to the Regional Director for review and comment. The Board shall revise the
Business Plan within 10 days of receiving the Regional Director's comments, if
any, and implement the revised Business Plan within 30 days thereafter;        
(c) On a quarterly basis, beginning with the first quarter following the receipt
of the Regional Directors comments on the Business Plan, the Board shall compare
projected operating results contained within the Business P1an to actual
results.  Additionally, as part of the variance analysis required pursuant to
this subparagraph, the Board shall determine any material deviations between the
projections contained in the Business Plan and actual results.  The Board shall
prepare a written report describing any material deviations between the
projections contained in the Business Plan and actual results; and         (d)
Within 30 days of the close of each quarter, the Board shall provide the
Regional Director with a copy of the variance analysis report required by this
paragraph.

 
Liquidity
 
3.         By May 30, 2008, the Board shall revise the Bank's existing liquidity
management policy to specifically incorporate the requirements set forth within
OTS Thrift Bulletin 77, the requirements set forth within this Agreement and the
commentscontained within the ROE.
 

 
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Compliance Area
 

  4. Within 60 days of the Effective Date of this Agreement, the Board shall
develop, adopt and implement an employee training program designed to educate
and train appropriate Association personnel in the requirements of the consumer
protection laws, rules and regulation.  Such compliance training, as required
pursuant to thisparagraph, shall specifically include, but not be limited to,
the areas of the Home Mortgage Disclosure Act (12 U.S.C. 2801 et seq.) the
Expedited Funds and Availability Act (12 U.S.C. §§ 4001-4010).      
 
5.
By April 30, 2008, the Board shall take all steps necessary to ensure that the
management of the Association has taken all of the corrective actions outlined
within the Compliance section of the ROE, and provide the Regional Director with
a written report, which details the corrective actions taken by MainStreet.

 
Asset Quality
 
 
 
6.
(a)   On a quarterly basis, beginning with the quarter ending March 31, 2008,
and for each quarter thereafter, the Board shall produce a classified asset
report.  The classified asset report required pursuant to this paragraph shall
include, at a minimum, the following:

 
 
i)
Identification of each asset classified under MainStreet's asset classification
policy;

 
ii)
A brief narrative summary outlining the current status of each classified asset,
along with the specific identification of any change in the status of a
classified asset from the prior reporting period; and

 
iii)
Copies of Loan Review Committee minutes for each such meeting held during the
quarter being reported.
 
 
 

 
 
(b)   Within 30 days of the close of each quarter, beginning with the quarter
ending March 31, 2008, the Board shall provide the Regional Director with a copy
of the classified asset report required by this paragraph.

 
Operations
 
 
 
7.
Without the prior written approval of the Regional Director and consistent with
the requirements and provisions of OTS Regulatory 3b, MainStreet may not
increase its total assets during any quarter in  excess of an amount equal to
net interest credited on deposit liabilities during the quarter.

 
 
8.
MainStreet shall file prior written notice with the Regional Director at least
30 days before adding or replacing a director or hiring a senior executive
officer, or changing the responsibilities of any senior executive officer so
that the person would assume a different senior executive position.

 

 
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9.
MainStreet shall not make any golden parachute payments (including severance
payments and agreements relating thereto) to any institution-affiliated party,
unless the payment is otherwise permitted under 12 C.F.R. Part 359.
       
10.
MainStreet shall not enter into, renew or revise any contractual arrangement
related to compensation or benefits with any director or officer of the
Association, unless it first (a) provides a minimum of 30 days advance written
notice of the proposed transaction to the Regional Director; and (b) receives a
written notice of non-objection from the Regional Director.
        11.
MainStreet shall not enter into any third-party contracts outside of the normal
course of business without receiving the prior written approval of the Regional
Director. At a minimum, such a written request to the Regional Director, which
must be provided at least 30 days in advance. must set forth the Association's
reasons for seeking the contract and shall transmit a copy of the proposed
contract for OTS review.
        12.
MainStreet must provide 30 days prior written notice to the Regional Director of
any and all proposed transactions with affiliates.
     

 
Compliance with Agreement
 

  13.
(a)   All policies, procedures, corrective actions, plans, programs, agreements,
reviews and systems required by this Agreement (collectively referred to as
Plans and Policies) shall conform to all applicable statutes, and regulations,
as well as OTS policy and guidance. The Board shall revise Plans and Policies as
required by the OTS within 30 calendar days of written direction from the OTS,
unless otherwise provided for within this Agreement. The Plans and Policies
shall be incorporated into this Agreement, and any deviation from such Plans and
Policies shall be a violation of this Agreement.
          (b)   The Board and officers of the Association shall take immediate
action to cause MainStreet to comply with the terms of this Agreement and shall
take all actions necessary or appropriate thereafter to cause the Association to
carry out the provisions of this Agreement.           (c)   The Board shall have
the ultimate responsibility for overseeing the safe and sound operation of
MainStreet at all times, including compliance with the OTS's determinations as
required by this Agreement.           (d)   By the last day of the succeeding
month, beginning with the month ending April 30, 2008, the Board shall adopt and
submit to the OTS certified copies of a Board resolution (Compliance Resolution)
formally resolving that, following a      

 

 
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    diligent inquiry of relevant information (including a report from the
Association's management regarding MainStreet's compliance with each provision
of this Agreement), to the best of its knowledge and belief., during the
immediately preceding month, the Association has complied with each provision of
this Agreement currently in effect, except as othenvise stated. The Compliance
Resolution shall: (1) specify in detail how, if at all, full compliance was
found not to exist; and (2) identify all notices of exemption or non-objection
issued by OTS that were outstanding as of the date of its adoption. In the event
that one or more directors do not agree with the representations set forth in a
Compliance Resolution, such a disagreement shall be noted in the Compliance
Resolution.      

 
Definitions
 

 
14.
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 Relations, the HOLA, the FDIA, or published OTS guidance. Any
such technical words or terms used in this Agreement and undefined in said Code
of Federal Regulations, HOLA, FDIA, or OTS Publications shall having meanings
that are in accordance with the best custom and usage in the savings and loan
industry.
     

 
Successor Statutes, Regulations, Guidance, Amendments
 

 
15.
Reference in this Agreement to provisions of federal statutes, regulations, and
OTS Publications 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.
     

 
Notices
 

 
16.
(a)   Except as otherwise provided herein, any request, demand, authorization,
directions, notice, consent, waiver, or other document provided or permitted by
this Agreement to be made upon, given or furnished to, delivered to, or filed
with:
     

 
 
(i)
The OTS, by MainStreet, shall be sufficient for every purpose hereunder if in
writing and mailed, first class, postage prepaid or sent via overnight delivery
service or physically delivered, in each case addressed to the Regional
Director, Office of Thrift Supervision, Department of the Treasury, One South
Wacker Drive, Suite 2000, Chicago, Illinois 60606 or telecopied to (312)
917-5002, and confirmed by first class mail, postage prepaid, overnight delivery
service or physically delivered, in each case to the above address: and

 
 
(ii)
MainStreet, by the OTS, shall be sufficient for every purpose hereunder if in
writing and mailed, first class, postage prepaid, or sent via overnight delivery
service or physically delivered in each case addressed to the Board of Directors
of MainStreet Savings Bank, FSB, 629 West State Street, Hastings, Michigan
49058-1954 or telecopied to (269) 945-2389, and confirmed by first class mail,
postage prepaid, overnight delivery service or physically delivered, in each
case to the above address.

 

 
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(b)   Notices hereunder shall be effective upon receipt, if by mail, overnight
delivery service or telecopy, and upon delivery, if by physical delivery. If
there is a dispute about the date on which a written notice has been received by
a party to this Agreement, then, in the event such notice was sent by the United
States mail, there shall be a presumption that the notice was received two
business days after the date of the postmark on the envelope in which the notice
was enclosed.

 
Effect of Headings
 
17.
The Section and paragraph headings herein are for convenience only and shall not
affect the construction hereof.

 
Separability Clause
 
18.
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 remaining provisions hereof shall
not in any way be affected or impaired thereby, unless the Regional Director, in
his sole discretion, determines otherwise.

 
No Violations of Law, Rule, Regulation or Policy Statement Authorized; OTS Not
Restricted
 
19.
Nothing in this Agreement shall be construed as: (i) allowing MainStreet to
violate any law, rule, regulation, or policy statement to which it is subject,
or (ii) restricting or estopping the OTS from taking any action(s), including
without limitation, any type of supervisory, enforcement or resolution action
that the OTS determines to be appropriate in fulfilling the responsibilities
placed upon it by law.

 
Time Limits
 
20.
Time limits for compliance with the terms of this Agreement run from the
Effective Date, unless otherwise noted. The Regional Director may, in his sole
discretion, extend any of such time limitations.

 

 
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Duration, Termination or Suspension of Agreement
 
21.
(a) This Agreement shall become effective upon its execution by the OTS through
its authorized representative whose signature appears below. The Agreement shall
remain in effect until terminated, modified, or suspended, in writing, by the
OTS, acting through its Director, Regional Director, or other authorized
representative.

 
(b) The Regional Director, in his sole discretion, may, by written notice,
suspend any or all of the provisions of this Agreement.
 
Successors in Interest/Benefit
 
22.
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, expressed or implied, shall give to any person or entity, other
than the parties hereto and the Federal Deposit Insurance Corporation and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.

 
Integration Clause
 
23.
This Agreement represents 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 of this Agreement, with respect to the subject
matter.

 
Enforceability of Agreement
 
24.
The Association represents and warrants that this Agreement has been duly
authorized, executed, and delivered, and constitutes, in accordance with its
terms, a valid and binding obligation of MainStreet. The Association
acknowledges that this Agreement is a "written agreement" entered into with the
OTS within the meaning of Section 8 of the FDIA, 12 U.S.C. § 1818.

 
Counterparts
 
25.
This Agreement may be executed in two or more counterparts, all of which shall
be considered one and the same agreement and each of which shall be deemed an
original.

 
Effective Date
 
26.
This Agreement is and will become effective on the Effective Date as defined
herein.

 

 
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Signature of Directors
 
27.
Each Director signing the Agreement attests, by such act, that she or he voted
in favor of a Board Resolution authorizing the execution of this Agreement by
the Association. A copy of the Resolution of MainStreet's Board of Directors
authorizing the execution of the Agreement shall be delivered to the OTS along
with the executed original of the Agreement,

 
IN WITNESS WHEREOF, the OTS, acting by and through the Regional Director, and
the Association hereby execute this Agreement as of the Effective Date of this
Agreement.
 
 
OFFICE OF THRIFT SUPERVISION
 

By:
/s/ Thomas A. Barnes                       
Thomas A. Barnes,
Regional Director, Central Region

 
 
 
MAINSTREET SAVINGS BANK, FSB
 
 

By:  /s/ Gordon F. Fuhr                                By:   /s/ Eric T.
Dreisbach                                 
Gordon F. Fuhr,
Chairman of the Board & Director
   
Eric T. Dreisbach,
Director
                    By:  /s/ Mary Lou
Hart                                          By:   /s/ David L.
Hatfield                                 
Mary Lou Hart,
Director
   
David L. Hatfield,
Director
                    By:   /s/ David L. Jasperse                                
  By:   /s/ Carl A. Schoessel                               
David L. Jasperse,
Director
   
Carl A. Schoessel,
Director
                    By:   /s/ James R. Toburen                                  
     
James R. Toburen,
Director
     

 
 

 
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