Exhibit 10.1
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
AND
STATE OF MICHIGAN
OFFICE OF FINANCIAL AND INSURANCE REGULATION

             
 
    )      
In the Matter of
    )     CONSENT ORDER
 
    )      
CF BANCORP
    )     FDIC-09-676b
PORT HURON, MICHIGAN
    )      
 
    )      
(STATE CHARTERED
    )      
          INSURED NONMEMBER BANK)
    )      
 
    )      

     CF Bancorp, Port Huron, Michigan (“Bank”), having been advised of its right
to a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking
practices and violations of law or regulation alleged to have been committed by
the Bank, and of its right to a hearing on the charges under section 8(b) of the
Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1818(b), under section 2304
of the Banking Code of 1999, Mich. Comp. Laws § 487.12304, regarding hearings
before the Office of Financial and Insurance Regulation for the State of
Michigan (“OFIR”) and having waived those rights, entered into a STIPULATION TO
THE ISSUANCE OF A CONSENT ORDER(“STIPULATION”) with

 

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representatives of the Federal Deposit Insurance Corporation (“FDIC”) and the
OFIR, dated                     ,                     , whereby, solely for the
purpose of this proceeding and without admitting or denying any charges of
unsafe or unsound banking practices relating to asset quality, management or
earnings, or violations of law or regulation, the Bank consented to the issuance
of a CONSENT ORDER (“ORDER”) by the FDIC and the OFIR.
     The FDIC and the OFIR considered the matter and determined to accept the
STIPULATION.
     Having also determined that the requirements for issuance of an order under
12 U.S.C. § 1818(b) and section 2304 of the Banking Code of 1999, Mich. Comp.
Laws § 487.12304, have been met, the FDIC and the OFIR HEREBY ORDER that the
Bank, its institution-affiliated parties, as that term is defined in section
3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns, take
affirmative action as follows:
MANAGEMENT
     1. (a) During the life of this ORDER, the Bank shall have and retain
qualified management. Management shall be provided the necessary written
authority to implement the provisions of this ORDER. The qualifications of
management shall be assessed on its ability to:

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  (i)   Comply with the requirements of this ORDER;     (ii)   Operate the Bank
in a safe and sound manner;     (iii)   Comply with applicable laws, rules, and
regulations; and     (iv)   Restore all aspects of the Bank to a safe and sound
condition, including capital adequacy, asset quality, management effectiveness,
earnings, liquidity, and sensitivity to interest rate risk.

          (b) During the life of this ORDER, prior to the addition of any
individual to the board of directors or the employment of any individual as a
senior executive officer, the Bank shall request and obtain the written approval
of the Chief Deputy Commissioner of the OFIR (“Chief Deputy Commissioner”). For
purposes of this ORDER, “senior executive officer” is defined as in section 32
of the Act (“section 32”), 12 U.S.C. § 1831i, and section 303.101(b) of the FDIC
Rules and Regulations, 12 C.F.R. § 303.101(b).
BOARD PARTICIPATION
     2. (a) As of the effective date of this ORDER, the board of directors shall
increase its participation in the

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affairs of the Bank, assuming full responsibility for the approval of sound
policies and objectives and for the supervision of all of the Bank’s activities,
consistent with the role and expertise commonly expected for directors of banks
of comparable size. This participation shall include meetings to be held no less
frequently than monthly at which, at a minimum, the following areas shall be
reviewed and approved: reports of income and expenses; new, overdue, renewal,
insider, charged off, and recovered loans; investment activity; adoption or
modification of operating policies; individual committee reports; audit reports;
internal control reviews including management’s responses; and compliance with
this ORDER. Board minutes shall document these reviews and approvals, including
the names of any dissenting directors.
          (b) Within 30 days from the effective date of this ORDER, the Bank’s
board of directors shall have in place a program that will provide for
monitoring of the Bank’s compliance with this ORDER.
CAPITAL
     3. (a) Within 90 days from the effective date of this ORDER, the Bank shall
have and maintain its level of Tier 1 capital as a percentage of its total
assets (“capital ratio”) at a minimum of 9 percent and its level

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of qualifying total capital as a percentage of risk-weighted assets (“total risk
based capital ratio”) at a minimum of 12 percent. For purposes of this ORDER,
Tier 1 capital, qualifying total capital, total assets, and risk-weighted assets
shall be calculated in accordance with Part 325 of the FDIC Rules and
Regulations (“Part 325”), 12 C.F.R. Part 325.
          (b) If, while this ORDER is in effect, the Bank increases capital by
the sale of new securities, the board of directors of the Bank shall adopt and
implement a plan for the sale of such additional securities, including the
voting of any shares owned or proxies held by or controlled by them in favor of
said plan. Should the implementation of the plan involve public distribution of
Bank securities, including a distribution limited only to the Bank’s existing
shareholders, the Bank shall prepare detailed offering materials fully
describing the securities being offered, including an accurate description of
the financial condition of the Bank and the circumstances giving rise to the
offering, and other material disclosures necessary to comply with Federal
securities laws. Prior to the implementation of the plan and, in any event, not
less than 20 days prior to the dissemination of such materials, the materials
used in the sale of the securities shall be

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submitted to the FDIC Registration and Disclosure Section, 550 17th Street,
N.W., Washington, D.C. 20429 and to the Office of Financial and Insurance
Regulation, 611 West Ottawa Street, Lansing, Michigan, 48933, for their review.
Any changes requested to be made in the materials by the FDIC or the OFIR shall
be made prior to their dissemination.
          (c) In complying with the provisions of this paragraph, the Bank shall
provide to any subscriber and/or purchaser of Bank securities written notice of
any planned or existing development or other changes which are materially
different from the information reflected in any offering materials used in
connection with the sale of Bank securities. The written notice required by this
paragraph shall be furnished within 10 calendar days of the date any material
development or change was planned or occurred, whichever is earlier, and shall
be furnished to every purchaser and/or subscriber of the Bank’s original
offering materials.
SALE OR MERGE PLAN
     4. (a) Within 30 days from the effective date of this ORDER, the Bank shall
develop, adopt and implement a plan to sell itself or to merge itself into a
federally insured financial institution.

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          (b) The plan required by this paragraph shall be acceptable to the
Regional Director of the Chicago Regional Office of the FDIC (“Regional
Director”) and the Chief Deputy Commissioner.
LOSS CHARGE-OFF
     5. As of the effective date of this Order the Bank shall charge off from
its books and records any asset classified “Loss” in the July 13, 2009 Joint
Report of Examination (“ROE”).
PROHIBITION OF ADDITIONAL LOANS TO CLASSIFIED BORROWERS
     6. (a) As of the effective date of this ORDER, the Bank shall not extend,
directly or indirectly, any additional credit to, or for the benefit of, any
borrower who is already obligated in any manner to the Bank on any extension of
credit (including any portion thereof) that has been charged off the books of
the Bank or classified “Loss” in the ROE, so long as such credit remains
uncollected.
          (b) As of the effective date of this ORDER, the Bank shall not extend,
directly or indirectly, any additional credit to, or for the benefit of, any
borrower who is already obligated in any manner to the Bank on any extension of
credit (including any portion thereof) that has been classified “Substandard”,
“Doubtful”, or is listed

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for Special Mention in the ROE, and is uncollected unless the Bank’s board of
directors has adopted, prior to such extension of credit, a detailed written
statement giving the reason why such extension of credit is in the best interest
of the Bank. A copy of the statement shall be signed by each Director, and
incorporated in the minutes of the applicable board of directors’ meeting. A
copy of the statement shall be placed in the appropriate loan file.
REDUCTION OF DELINQUENCIES AND CLASSIFIED ASSETS
     7. (a) Within 60 days from the effective date of this ORDER, the Bank shall
adopt, implement, and adhere to, a written plan to reduce the Bank’s risk
position in each asset in excess of $1,000,000 which is more than 90 days
delinquent or classified “Substandard” or “Doubtful” in the ROE. The plan shall
include, but not be limited to, provisions which:

  (i)   Prohibit an extension of credit for the payment of interest, unless the
Board provides, in writing, a detailed explanation of why the extension is in
the best interest of the Bank;     (ii)   Provide for review of the current
financial condition of each delinquent or classified borrower, including a
review of borrower cash flow and collateral value;

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  (iii)   Delineate areas of responsibility for loan officers;     (iv)   Ensure
all commercial purpose credits are managed by the commercial loan department and
included, as appropriate, on the Bank’s watch list;     (v)   Establish dollar
levels to which the Bank shall reduce delinquencies and classified assets within
6 and 12 months from the effective date of this ORDER; and     (vi)   Provide
for the submission of monthly written progress reports to the Bank’s board of
directors for review and notation in minutes of the meetings of the board of
directors.

          (b) As used in this paragraph, “reduce” means to: (1) collect;
(2) charge off; (3) sell; or (4) improve the quality of such assets so as to
warrant removal of any adverse classification by the FDIC and OFIR.

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          (c) A copy of the plan required by this paragraph shall be submitted
to the Regional Director and the Chief Deputy Commissioner.
          (d) While this ORDER remains in effect, the plan shall be revised to
include assets which become more than 90 days delinquent after the effective
date of this ORDER or are adversely classified at any subsequent examinations.
LIQUIDITY
     8. On each Friday the Bank is open for business during the life of this
ORDER, the Bank shall submit to the Regional Director and the Chief Deputy
Commissioner a liquidity analysis report, in a format that is acceptable to the
Regional Director and the Chief Deputy Commissioner.
DIVIDEND RESTRICTION
     9. As of the effective date of this ORDER, the Bank shall not declare or
pay any cash dividend without the prior written consent of the Regional Director
and the Chief Deputy Commissioner.
ALLOWANCE FOR LOAN AND LEASE LOSSES
     10. (a) Within 30 days of the effective date of this ORDER the Bank shall
increase its Allowance for Loan and Lease Losses (“ALLL”) with an additional
provision of $48,300,000.

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          (b) Prior to submission or publication of all Reports of Condition and
Income required by the FDIC after the effective date of this ORDER, the board of
directors of the Bank shall review the adequacy of the Bank’s ALLL, provide for
an adequate ALLL, and accurately report the same. The minutes of the board
meeting at which such review is undertaken shall indicate the findings of the
review, the amount of increase in the ALLL recommended, if any, and the basis
for determination of the amount of ALLL provided. In making these
determinations, the board of directors shall consider the FFIEC Instructions for
the Reports of Condition and Income and any analysis of the Bank’s ALLL provided
by the FDIC or OFIR.
          (b) ALLL entries required by this paragraph shall be made prior to any
capital determinations required by this ORDER.
PROFIT PLAN AND BUDGET
     11. (a) Within 30 days from the effective date of this ORDER, the Bank
shall adopt, implement, and adhere to a written profit plan and a realistic,
comprehensive budget for all categories of income and expense for calendar year
2010. The plan required by this paragraph shall contain formal goals and
strategies, consistent with sound banking practices, to reduce discretionary
expenses and to improve

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the Bank’s overall earnings, and shall contain a description of the operating
assumptions that form the basis for major projected income and expense
components. In addition, the written profit plan shall identify the major areas
in, and means by which, earnings will be improved.
          (b) Within 30 days from the end of each calendar quarter following
completion of the profit plans and budgets required by this paragraph, the
Bank’s board of directors shall evaluate the Bank’s actual performance in
relation to the plan and budget, record the results of the evaluation, and note
any actions taken by the Bank in the minutes of the board of directors’ meeting
at which such evaluation is undertaken.
          (c) A written profit plan and budget shall be prepared for each
calendar year for which this ORDER is in effect.
          (d) Copies of the plans and budgets required by this paragraph shall
be submitted to the Regional Director and the Chief Deputy Commissioner.
STRATEGIC PLAN
     12. (a) Within 90 days from the effective date of this ORDER, the Bank
shall formulate adopt, and implement a realistic, comprehensive strategic plan.
The plan required

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by this paragraph shall contain an assessment of the Bank’s current financial
condition and market area, and a description of the operating assumptions that
form the basis for major projected income and expense components. The written
strategic plan shall address, at a minimum:

  (i)   Strategies for pricing policies and asset/liability management; and    
(ii)   Financial goals, including pro forma statements for asset growth, capital
adequacy, and earnings.

          (b) Within 30 days from the end of each calendar quarter following the
effective date of this ORDER, the Bank’s board of directors shall evaluate the
Bank’s actual performance in relation to the strategic plan required by this
paragraph and record the results of the evaluation, and any actions taken by the
Bank, in the minutes of the board of directors’ meeting at which such evaluation
is undertaken.
          (c) The strategic plan required by this ORDER shall be revised 30 days
prior to the end of each calendar year during which this ORDER is in effect.
Thereafter the Bank shall approve the revised plan, which approval shall be
recorded in the minutes of a board of directors’

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meeting, and the Bank shall implement and adhere to the revised plan.
          (d) Copies of the plan and revisions thereto required by this
paragraph shall be submitted to the Regional Director and the Chief Deputy
Commissioner.
CONCENTRATIONS OF CREDIT
     13. (a) Within 30 days from the effective date of this Order, the Bank
shall formulate, adopt and implement a written plan to manage each of the
concentrations of credit identified on pages 86 through 87 of the ROE in a safe
and sound manner. At a minimum, the plan must provide for written procedures for
the ongoing measurement and monitoring of the concentrations of credit, and a
limit on concentrations commensurate with the Bank’s capital position, safe and
sound banking practices, and the overall risk profile of the Bank.
          (b) A copy of the plan required by this paragraph shall be submitted
to the Regional Director and the Chief Deputy Commissioner.
INTERNAL ROUTINE AND CONTROLS
     14. (a) Within 60 days from the effective date of this ORDER, the Bank
shall adopt, implement, and adhere to a policy for the operation of the Bank in
such a manner as

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to provide adequate internal routine and controls consistent with safe and sound
banking practices.
          (b) A copy of the policy required by this paragraph shall be submitted
to the Regional Director and the Chief Deputy Commissioner.
CORRECTION OF VIOLATIONS
     15. Within 60 days from the effective date of this ORDER, the Bank shall
eliminate and/or correct all violations of law, rule, and regulations listed on
pages 41 through 45 of the ROE.
INTERNAL AUDIT
     16. Within 60 days from the effective date of this ORDER, the Bank’s board
of directors shall comply with the Interagency Policy Statement on Internal
Audit Function and its Outsourcing. Changes made by the Bank in its audit
program as a result of complying with this paragraph shall be recorded in the
applicable board of directors’ minutes and forwarded to the Regional Director
and the Chief Deputy Commissioner.
INTEREST RATE RISK
     17. (a) Within 60 days of the effective date of this Order the Bank shall
have procedures for managing the Bank’s sensitivity to interest rate risk. The
procedures shall comply with the Joint Agency Statement of Policy on

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Interest Rate Risk (June 26, 1996), and the Joint Supervisory Statement on
Investment Securities and End-user Derivative Activities (April 23, 1998) and
address the exceptions noted on pages 33, 39 and 46 of the ROE.
          (b) A copy of the policy revisions and procedures required by this
paragraph shall be submitted to the Regional Director and the Chief Deputy
Commissioner.
NOTIFICATION TO SHAREHOLDER
     18. Following the effective date of this ORDER, the Bank shall send to its
shareholder a copy of this ORDER: (1) in conjunction with the Bank’s next
shareholder communication; or (2) in conjunction with its notice or proxy
statement preceding the Bank’s next shareholder meeting.
PROGRESS REPORTS
     19. Within 30 days from the end of each calendar quarter following the
effective date of this ORDER, the Bank shall furnish to the Regional Director
and the Chief Deputy Commissioner written progress reports signed by each member
of the Bank’s board of directors, detailing the actions taken to secure
compliance with the ORDER and the results thereof.
     The effective date of this ORDER shall be the date of its issuance by the
FDIC and OFIR.

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     The provisions of this ORDER shall be binding upon the Bank, its
institution-affiliated parties, and any successors and assigns thereof.
     The provisions of this ORDER shall remain effective and enforceable except
to the extent that, and until such time as, any provision has been modified,
terminated, suspended, or set aside by the FDIC and OFIR.
     Pursuant to delegated authority.
               Dated:                                         ,
                    .

             
 
     
 
   
M. Anthony Lowe
      Stephen R. Hilker    
Regional Director
      Chief Deputy Commissioner    
Chicago Regional Office
      Office of Financial and    
Federal Deposit Insurance
           Insurance Regulation    
     Corporation
      State of Michigan    

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