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STATE OF FLORIDA
 
OFFICE OF FINANCIAL REGULATION

 
IN THE MATTER
OF:                                                                            )           ADMINISTRATIVE
 
PROCEEDING
 
FLORIDA COMMUNITY
BANK,                                                                           )           NO.
0554-FI-9/08
 
IMMOKALEE,
FLORIDA                                                                           )
 
}

 
STIPULATION AND CONSENT TO
 
ENTRY OF ORDER TO CEASE. AND DESIST

 
The State of Florida, Office of Financial Regulation ("OFFICE"), and Florida
 
Community Bank ("BANK"), Immokalee, Florida, hereby enter into this STIPULATION
AND
 
CONSENT TO ENTRY OF ORDER TO CEASE AND DESIST (hereinafter "STIPULATION")

 
and agree as follows:
 
1.            Consideration. The OFFICE, based on its examination of the BANK
and other
 
information reported to it, believes that necessary grounds exist to initiate an
administrative
 
cease and desist proceeding pursuant to Section 655.033, Florida Statutes
(2008), against the
 
BANK. The OFFICE also acknowledges the BANK's significant progress in correcting
 
numerous areas of concern identified in the May 25, 2007, Stipulation and
Consent Agreement,
 
as adopted in the OFFICE's Final Order of May 31, 2007, in Administrative
Proceeding Number
 
0342-B-9/06 ("2007 ORDER"). The BANK desires to cooperate with the OFFICE and to
avoid
 
the time and expense of administrative litigation and, without admitting or
denying that such
 
grounds exist, hereby stipulates and agrees to the following terms in
consideration of the
 
OFFICE's forbearance from initiating such administrative litigation through the
attached
 
ORDER TO CEASE AND DESIST ("ORDER"), which upon issuance by the OFFICE shall

 
terminate and supersede the 2007 ORDER.

 
 

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2. Jurisdiction.
 
(a) Florida Community Bank is a Florida state-chartered bank, charter number
306, with
 
its principal place of business at 1400 North 15th Street, Immokalee, Florida
34142, and is thus a
 
state financial institution, as that term is defined in Section 655.005(1)(p),
Florida Statutes, and
 
an insured depository institution, State nonmember bank, as those terms are
defined in 12 U.S.C.
 
Sec. 1813 of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. Sec. 1811 et
seq.
 
(b) As a state-chartered financial institution, the BANK and each of its
directors, officers,
 
and employees are. subject in all respects to Chapters 655 and 658, Florida
Statutes, and the rules
 
and regulations promulgated thereunder as contained in Chapter 69U, Florida
Administrative
 
Code.
(c) As an insured depository institution, the BANK and each of its directors,
officers, and
employees are subject in all respects to the Act and the Federal Deposit
Insurance Corporation's
("FDIC") Rules and Regulations promulgated thereunder as set forth in 12 C.F.R.
Parts 300-399.
(d) As a state-chartered financial institution, the BANK acknowledges that the
OFFICE
has jurisdiction and authority to issue the ORDER pursuant to Section 655.033,
Florida Statutes, for violations of laws and rules relating to the operation of
a financial institution and unsafe and
unsound practices.
(e) As an insured depository institution, the BANK acknowledges that the FDIC
has
jurisdiction and authority to issue a separate cease and desist order pursuant
to Section 8(b) of
 
the Act, 12 U.S.C. Sec. 1818(b) and 12 C.F.R. Part 303.

 
3. Consent. The BANK, without admitting or denying any violations of laws,
 
regulations, or rules, and without admitting or denying having engaged in any
unsafe or unsound
 
practices, hereby consents and agrees to the entry by the OFFICE of the attached
ORDER and

 
Page 2 of 6

 
 

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the termination of the 2007 ORDER. The BANK further consents and agrees to
comply with the
 
provisions of the ORDER upon its entry. The terms of this STIPULATION are
incorporated by reference into said ORDER.

 
4. Finality and Enforceability. The BANK stipulates and agrees that the attached
 
ORDER shall, upon its issuance, become effective and enforceable as an "order"
defined in Section 655.033, Florida Statutes, and "cease and desist order" as
defined in Section 655.041, Florida Statutes, and that the ORDER is otherwise
legally sufficient.
 
Further, the BANK stipulates and agrees that the ORDER shall constitute final
agency
 
action by the OFFICE, for which the OFFICE has the power to enforce the terms of
the ORDER pursuant to Chapters 120, 655, and 658, Florida Statutes.
 
5. Waiver of the Notice of Charges, Hearing, and Judicial Review. The BANK

 
acknowledges that it has been advised to seek independent legal counsel, that it
had an
 
opportunity to consult with an attorney as to the BANK's rights and obligations
prior to signing this STIPULATION, and that the BANK is acting freely and
voluntarily, intending to be bound by the STIPULATION and ORDER.
The BANK knowingly and voluntarily waives its rights to separately stated
Findings of
Fact, Conclusions of Law, Notice of Rights, and any other notice contained in
any administrative
complaint, cease and desist order, and this STIPULATION, its rights to any
administrative
hearing provided in Section 120.57, Florida Statutes, and further waives any
right to seek judicial
review of the ORDER or of the' STIPULATION as otherwise provided by Section
120.68,
Florida Statutes. Such waivers of rights by the BANK, include, but are not
limited to:
 
a. Any right to receipt of Notice of Rights or any other notice required
pursuant to Chapter 120, Florida Statutes;

 
Page 3 of 6

 
 

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b. Any notice required pursuant to Chapters 655 or 658, Florida Statutes,
including but not limited to any additional notice required under section
655.041, Florida Statutes, for the OFFICE to seek administrative fines for any
violation of the ORDER;
 
c. Any right to an administrative hearing or issuance of a recommended order
provided

 
by Chapters 120, 655, or 658, Florida Statutes, or Chapters 28 or 69 of the
Florida

 
Administrative Code;
 
d. Any requirement that the ORDER contain stated Findings of Fact and
Conclusions of Law or a Notice of Rights;
 
e. Any right to contest the validity of any term, condition, obligation, or duty
created hereby in any judicial or administrative forum; and
 
f. Any and all objections to, or challenges in any judicial proceeding or forum,
including
 
but not limited to, appeal pursuant to section 120.68, Florida Statutes, any
aspect, provision, or
 
requirement concerning the content, issuance, procedure, or timeliness of this
STIPULATION or
 
the ORDER adopting this STIPULATION.
 
6. Effectiveness. The BANK stipulates and agrees that this STIPULATION, the
 
ORDER attached hereto, and the termination of the 2007 ORDER shall be effective
on the date of issuance of the ORDER by the OFFICE.

 
7. Future Action. This STIPULATION is being entered into without prejudice to
the
 
rights of the OFFICE to take any future action against the BANK and each of the
directors as the
 
OFFICE deems necessary and appropriate to insure compliance with the terms of
this
 
STIPULATION and the attached ORDER, any other order entered against the BANK, or
to
 
prevent any violation of laws, regulations, or rules relating to financial
institutions.

 
Page 4 of 6

 
 

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8. Controlling Law. The invalidity of any clause contained herein shall not
affect the
 
enforceability of the remainder of this STIPULATION. This STIPULATION shall be
 
interpreted and governed by the laws of the State of Florida and, if applicable,
the United States of America.
WHEREFORE, and it is resolved that, in consideration of the foregoing, the
OFFICE, the
BANK, and each of the directors on behalf of the BANK, hereby execute this
STIPULATION
AND CONSENT TO ENTRY OF ORDER TO CEASE AND DESIST and consent to its terms,
 
this                 day
of                                       ,            2008.

 
STATE OF FLORIDA, OFFICE OF
 
FINANCIAL REGULATION

 
BY:
 
Linda B. Charity, Director
 
Division of Financial Institutions

 
FLORIDA COMMUNITY BANK,
 
IMMOKALEE, FLORIDA
 
BY:

 
Beauford E. Davidson, as a Director

 
Patrick B. Langford, as a Director

 
James W. O' Quinn, as a Director

 
Bernard T. Rasmussen, as a Director

 
Page 5 of 6

 
Charles B. Edwards, as a Director

 
Jon R. Olliff, as a Director

 
Stephen L. Price, as a Director

 
Daniel G. Rosbough, as a Director

 
 

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I,                                                                  , Corporate
Secretary of Florida
 
Community Bank, Immokalee, Florida, hereby certify that the foregoing
STIPULATION AND
 
CONSENT TO ENTRY OF ORDER TO CEASE AND DESIST and Resolution agreeing to the
 
terms of the aforesaid ORDER TO CEASE AND DESIST was duly enacted by the Board
of
 
Directors of Florida Community Bank,
this                                                                                                                       day
of                      ,           2008.

 
BY:
 
Corporate Secretary

 
The undersigned, as Regional Director for the Federal Deposit Insurance
Corporation,

 
acknowledges this STIPULATION AND CONSENT TO ENTRY OF ORDER TO CEASE

 
AND DESIST executed by the State of Florida, Office of Financial Regulation, and
Florida

 
Community Bank, Immokalee, Florida, and considers its execution as representing
a

 
commitment to the Federal Deposit Insurance Corporation from the Board of
Directors of
 
Florida Community Bank, Immokalee, Florida, to comply with the terms of the
STIPULATION and the attached ORDER TO CEASE AND DESIST.

 
Date:
 
BY:
 
Mark S. Schmidt
 
Regional Director
 
Federal Deposit Insurance Corporation

 
Page 6 of 6

 
 

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STATE.OF FLORIDA
 
OFFICE OF FINANCIAL REGULATION

 
IN THE MATTER
OF:                                                                           )           ADMINISTRATIVE
 
PROCEEDING
 
FLORIDA COMMUNITY
BANK                                                                           )           NO.
0554-FI-9/08
 
IMMOKALEE,
FLORIDA                                                                           )

 
ORDER TO CEASE AND DESIST
 
The State of Florida, Office of Financial Regulation ("Office") has concluded,
based upon
 
the Office's Report of Examination ("Report"), for the examination that
commenced on April 28,
 
2008, and other available information, that unsafe and unsound practices exist
at Florida
 
Community Bank ("Bank"), Immokalee, Florida. The Office recognizes that the Bank
has made
 
significant progress in correcting numerous areas of concern identified in the
May 25, 2007,
 
Stipulation and Consent Agreement, as adopted in the Office's Final Order of May
31, 2007, in
 
Administrative Proceeding Number 0342-B-9/06 ("2007 ORDER"). However, the Office
has
 
determined that the continued deterioration of the national and state economic
conditions,
 
especially in residential and commercial real estate, have adversely impacted
the Bank and
 
therefore superseding action in the form of an Order to Cease and Desist
("ORDER") is

 
necessary.
 
The Bank, by executing the attached STIPULATION AND CONSENT TO ENTRY OF ORDER TO
CEASE AND DESIST, which is hereby incorporated by reference in this ORDER, has
agreed to the entry of such an ORDER and the termination of the 2007 ORDER.
Accordingly, it is hereby ORDERED that the Bank, and each of its directors,
officers,
employees, and financial institution-affiliated parties, as such terms are
defined in Section
655.005, Florida Statutes, and in the Federal Deposit Insurance Act ("FDI Act")
(12 U.S.C. Sec.

 
 

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1811             et seq.) at 12 U.S.C. Sec. 1813(u), successors, assigns, and
other persons participating in the
 
conduct and affairs of the Bank, shall CEASE AND DESIST from the following
unsafe and
 
unsound practices and violations of applicable regulatory guidance relating to
financial
 
institutions:
 
A. Operating the Bank in a manner that fails to prevent unsafe and unsound
practices and
 
violations of regulatory guidance;
 
B.         Operating the Bank without adequate loan underwriting standards or a
loan review
 
program that would insure sound loan underwriting, risk assessment, and risk
management;

 
C.         Operating the Bank with an excessive level of adversely classified
assets;

 
D. Operating the Bank with an excessive level of brokered deposits;

 
E.         Operating the Bank with an excessive level of concentrations in
commercial real

 
estate loans; and,

 
F.         Operating the Bank with inadequate earnings.

 
In addition to the foregoing, IT IS HEREBY ORDERED that the Bank and its
directors,
 
officers, employees, financial institution-affiliated parties, successors,
assigns, and other persons
 
participating in the conduct and affairs of the Bank take the following
affirmative corrective
 
actions:
 
MANAGEMENT

 
1.        Within 30 days of the effective date of this ORDER, the Bank's Board
of Directors

 
("Board") shall establish a Committee ("Compliance Committee") consisting of at
least five
 
members, responsible for ensuring compliance by the Bank with this ORDER. The
majority of
 
members of the Compliance Committee shall be independent directors as defined
herein. The
 
Compliance Committee shall monitor compliance with this ORDER, and within 60
days from

 
2

 
 

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the effective date of this ORDER, and every 30 days thereafter, shall submit a
written report
 
detailing the Bank's compliance with this ORDER to the Board, for review and
consideration
 
during its regularly scheduled meeting. The compliance report and any discussion
related to the
 
report or ORDER shall be incorporated into the minutes of the meeting of the
Board. Nothing
 
contained herein shall diminish the responsibility of the entire Board to ensure
compliance with
 
the provisions of this ORDER. For the purposes of this.ORDER, an "independent
director" shall
 
be an individual who is a member of the Bank's Board and is not employed in any
capacity by
 
the Bank, any of its subsidiaries, or affiliated organizations, other than as a
director, or is
 
otherwise deemed to be an independent director for purposes of this ORDER by the
Office and
 
the Federal Deposit Insurance Corporation ("FDIC") (collectively, the
"Supervisory
 
Authorities").
2.         Within 30 days of the effective date of this ORDER, the Board of
Directors shall establish
a search committee, comprised entirely of outside directors, to identify and
recruit new Board
members with sufficient expertise to return the bank to a safe and sound
condition. Within 90
days the Board shall have identified three additional qualified members and
submitted them to
the Supervisory Authorities for their review in accordance with paragraph 6.
3. Within 60 days of the effective date of this ORDER, the Bank's Compliance
Committee
shall engage a qualified outside firm, acceptable to the Supervisory
Authorities, to perform a
review of the Bank's management ("Management Review"). The Management Review
shall
make an assessment of the Bank's staffing needs and determine whether the Bank
is adequately staffed by qualified personnel possessing the ability, experience,
training, and other necessary
qualifications required to perform present and anticipated duties. The
qualifications of
management shall also be assessed in light of the current condition of the Bank
and
management's contribution thereto, and on its ability to:

 
3

 
 

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a.         Comply with the requirements of this ORDER;

 
b.         Operate the Bank in a safe and sound manner;

 
c.         Comply with applicable laws, regulations, and published regulatory
guidance; and

 
d.         Restore all aspects of the Bank to a safe and sound condition,
including: asset
 
quality, capital adequacy, earnings, liquidity, interest rate risk, and
management

 
effectiveness.
 
In the next progress report due, in accordance with paragraph 31 of this ORDER,
following the completion of the Management Review, the Bank shall submit a copy
of the Management Review for the Supervisory Authorities' review and comment.
The Compliance Committee,
 
following receipt of the Supervisory Authorities' comments about the Management
Review, if any, shall act upon those comments within 30 days.

 
4.         Within 60 days of the effective date of this ORDER, the Compliance
Committee shall

 
review, update, and expand the Management Succession Plan, last approved by the
Board of
 
Directors on May 15, 2008, to identify successors for all key officers. The
updated plan shall be submitted to the Supervisory Authorities for review and
comment.
5.         During the life of this ORDER, the Board shall maintain its
participation in the affairs of
the Bank, with full responsibility for the approval of sound policies and
objectives and for the
supervision of all the Bank's activities including compliance with this ORDER,
consistent with
the role and expertise commonly expected for directors of banks of comparable
size. Detailed
written minutes of all Board and Board Committee meetings shall be maintained
and recorded on
a timely basis fully documenting the review, discussion, and approval or
disapproval of all
agenda items and any other matters discussed at the meetings and shall include
the names of any
 
dissenting directors on any matter.

 
4

 
 

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6.         During the life of this ORDER, the Bank shall notify the Supervisory
Authorities in writing

 
when it proposes to add any individual to the Board or employ any individual as
an executive
 
officer, as that term is defined in Section 655.005(1)(f), Florida Statutes, or
as a senior executive
 
officer as that term is defined in Part 303 of the FDIC Rules and Regulations,
12 C.F.R. Sec.
 
303.101, including, but not limited to, the president, chief executive officer,
Bank Secrecy Act
 
officer, chief lending officer, chief financial officer, chief credit officer,
and chief operations
 
officer. Such notification must be received at least 60 days before such
addition or employment
 
is intended to be effective and shall be in addition to any application or prior
approval
 
requirements established by Section 655.0385, Florida Statutes, or Section 32 of
the FDI Act, 12
U.S.C. Sec. 1831i, and implementing regulations. All notifications to the
Supervisory Authorities
shall, at a minimum, comply with the requirements set forth in Rule
69U-100.03852, Florida
Administrative Code, and Section 32 of the FDI Act, 12 U.S.C. Sec. 1831i, and
Subpart F of Part 303 of the FDIC Rules and Regulations, 12 C.F.R. Sec.Sec.
303.100 through 303.103. The
 
Supervisory Authorities may specify, at their sole discretion, such additional
information or
 
notice requirements for the Bank to submit as may be deemed necessary to
properly evaluate the proposed individual(s). The Bank shall not add or employ
any proposed individual(s) if either of the Supervisory Authorities issues a
written notice of disapproval.

 
CAPITAL
 
7.         Within 30 days, the Bank shall submit to the Supervisory Authorities
a Capital Plan
 
satisfactory to the Supervisory Authorities for maintaining the following
capital ratios, as defined
 
in Part 325 of the FDIC Rules and Regulations, 12 C.F.R. Sec. 325.103:
 
a.         Tier 1 Leverage Capital Ratio of at least 8.0 percent,
 
b.         Tier 1 Risk Based Capital Ratio of at least 10.0 percent, and
 
c.         Total Risk Based Capital Ratio of at least 12.0 percent.
 
The Capital Plan, at a minimum, shall address and consider the Bank's current
and future
 
capital requirements, the volume of the Bank's adversely classified assets,
anticipated growth in
 
5

 
 

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the Bank's assets, the Bank's anticipated level of earnings, funding of the
Allowance for Loan
 
and Lease Losses ("ALLL"), and available sources of capital. Within 30 days from
receipt of
 
any comment from the Supervisory Authorities, and after due consideration of any
recommended
 
changes, the Board shall approve the Capital Plan, which shall be recorded in
the minutes of the
 
Board meeting. Thereafter, the Bank shall implement and fully comply with the
Capital Plan.
 
8. During the life of this ORDER, the Bank's Tier 1 Leverage Capital Ratio shall
be
 
maintained at no less than 8.0 percent, the Tier I Risk Based Capital Ratio at
no less than 10.0
 
percent and Total Risk Based Capital Ratio at no less than 12.0 percent. In the
event these
 
capital ratios fall below the required percentages at the end of any calendar
quarter, the Bank
 
shall notify the Supervisory Authorities of the capital deficiency within ten
days and shall
 
increase capital by an amount sufficient to raise the ratio to the required
percentages prior to the
 
next quarter end. Any capital infusion or restoration plan that would tesult in
the direct or
 
indirect acquisition of control of the Bank, as set forth in Sections 658.27 and
658.28, Florida
 
Statutes, or Section 7{j) of the FDI Act, 12 U.S.C. Sec. 1817(j), and the
implementing FDIC rules as set forth in 12 C.F.R. Part 303, Subpart E, shall
require the prior notice to, and approval of, the Supervisory Authorities before
the execution of such plan.
9.         During the life of this ORDER, the Bank shall not declare or pay any
dividends or make
any other capital distributions without the prior written approval of the
Supervisory Authorities.
All requests for prior approval shall be received by the Supervisory Authorities
at least 30 days prior to the proposed dividend or distribution declaration date
and shall contain, but not be
limited to, current and projected information on earnings, cash flow, capital,
asset quality, and
ALLL needs of the Bank.

 
ASSET QUALITY
 
10.         Within 30 days, the Bank shall eliminate from its books, by
collection, charge-off, or other
 
proper entries, all assets or portions of assets classified "Loss" in the
Report, which have not
 
been previously collected or charged off, unless approved in writing by the
Supervisory
 
Authorities. As long as this ORDER remains in effect, the Bank shall, within 30
days of receipt of any official Report of Examination of the Bank from the
Supervisory Authorities, eliminate from its books by collection, charge-off, or
other proper entries, all assets or portions of assets
 
classified "Loss" which have not been previously collected or charged off,
unless approved in
 
writing by the Supervisory Authorities.

 
6

 
 

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11.        Within 30 days of the effective date of this ORDER, the Board shall
establish a Special
 
Assets Committee, the majority of which shall be comprised of outside directors.
Active officers participating in the Special Assets Committee shall not have had
any role in the underwriting or approval of assets subject to this committee.
The Special Assets Committee shall oversee loan and Other Real Estate Owned
(OREO) workout efforts and approve all major aspects of loan and OREO
improvement plans, including the Classified Assets Plan developed pursuant to
paragraph 12 of this ORDER. The committee shall meet no less often than monthly.
 
12.        Within 60 days from the effective date of this ORDER, under
supervision of the Special
 
Assets Committee established pursuant to paragraph 11 of this ORDER, the Bank
shall formulate
 
a written plan to reduce the Bank's risk exposure in each asset, or
relationship, in excess of
 
$500,000 and classified "Substandard" or "Doubtful" in the Report, or classified
"Loss" but
 
permitted to remain on the books pursuant to written approval of the Supervisory
Authorities
 
("Classified Assets Plan"). For purposes of this provision, "reduce" means to
collect, charge off,
 
or improve the quality of an asset so as to warrant its removal from adverse
classification by the
 
Supervisory Authorities. In developing the Classified Assets Plan mandated by
this paragraph,
 
the Bank shall, at a minimum, and with respect to each adversely classified loan
or lease, review,
 
analyze, and document the financial position of the borrower, including source
of repayment,
 
repayment ability, and alternative repayment sources, as well as the value and
accessibility of
 
any pledged or assigned collateral, and any possible actions to improve the
Bank's collateral
 
position.
 
a.         In addition, the Classified Assets Plan mandated by this provision
shall also include,
 
but not be limited to, the following:
 
i.         A schedule for reducing the outstanding dollar amount of each of
these
 
adversely classified assets;
 
ii.         Specific action plans intended to reduce the Bank's risk exposure in
each
 
classified asset;
 
iii.         A schedule showing, on a quarterly basis, the expected consolidated
balance of
 
all adversely classified assets, and the ratio of the consolidated balance to
the Bank's projected Tier 1 capital plus the ALLL;
 
iv.         A provision for the Bank's submission of monthly written progress
reports to
 
the Board; and

 
7

 
 

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v.         A provision mandating Board review of the progress reports, with a
notation of
 
the review recorded in the minutes of the meeting of the Board.
 
b.         The Classified Assets Plan mandated by this provision shall further
require a
 
reduction in the aggregate balance of assets classified "Substandard" and
"Doubtful" in the Report, or classified "Loss" but permitted to remain on the
books pursuant to paragraph 10, in accordance with the following schedule:
 
i.         Within 120 days of the effective date of this ORDER, to not more than
130
 
percent of Tier I capital plus the ALLL as determined at the end of the four
month period;
 
ii.         Within 210 days of the effective date of this ORDER, to not more
than 100
 
percent of Tier 1 capital plus the ALLL as determined at the end of the seven
month period; and
 
iii.         Within 360 days of the effective date of this ORDER, to not more
than 60
 
percent of Tier l capital plus the ALLL as determined at the end of the one year
 
period.
 
The requirements of this paragraph do not represent standards for future
operations of the Bank. Following compliance with the above reduction schedule,
the Bank shall continue to
 
reduce the total volume of adversely classified assets. The Classified Assets
Plan may include a provision for increasing Tier 1 capital when necessary to
achieve the prescribed ratio.
13.         Within 60 days of the effective date of this ORDER, the Bank shall
submit the Classified
Assets Plan to the Supervisory Authorities for review and comment. Within 30
days from
receipt of any comment from the Supervisory Authorities, and after due
consideration of any
recommended changes, the Bank shall approve the Classified Assets Plan, which
approval shall
be recorded in the minutes: of the Board meeting. Thereafter, under supervision
of the Special
Assets Committee, the Bank shall implement and fully comply with the Classified
Assets Plan.
The Special Assets managing officer, as required by paragraph 17, shall oversee
efforts made to
reduce adversely classified assets. Progress reports required by paragraph 31
shall include
copies of the Classified Assets Plan's monthly progress reports provided to the
Board.
14.         While this ORDER is in effect, the Bank shall not extend, directly
or indirectly, any
additional credit to, or for the benefit of, any borrower who has a loan or
other extension of
credit or obligation with the Bank that has been, in whole or in part, charged
off or classified
"Loss" or "Doubtful" by either of the Supervisory Authorities or any internal or
external

 
8

 
 

--------------------------------------------------------------------------------

 

 
reviewer of asset quality and is uncollected. The requirements of this paragraph
shall not
 
prohibit the Bank from renewing any credit already extended to the borrower
after collecting in cash all interest and fees due from the borrower. This
paragraph shall not apply if the Bank's failure to extend further credit to a
particular borrower would be detrimental to the best interests of the Bank.
Prior to extending additional credit pursuant to this paragraph, whether in the
form of a renewal, extension, or further advance of funds, such additional
credit shall be approved by the Board, or a designated committee thereof, who
shall certify, in writing:
 
a.         Why failure of the Bank to extend such credit would be detrimental to
the best
 
interests of the Bank;
 
b.         That the extension of such credit would improve the Bank's position,
is necessary to
 
protect the Bank's interests, and is adequately secured, including an
explanatory
 
statement of how the Bank's position would improve;
 
c.         That an appropriate workout plan has been developed and will be
implemented in
 
conjunction with the additional credit to be extended;
 
d.         All necessary loan documentation is on file, including, at a minimum,
current
 
financial and cash flow information, and satisfactory appraisal, title and lien
documents; and
 
C.         The signed certification shall be made a part of the minutes of the
Board or
 
designated committee meeting with a copy retained in the borrower's credit file.
 
15.         While this ORDER is in effect, the Bank shall not extend, directly
or indirectly, any
 
additional credit to, or for the benefit of, any borrower whose loans are
adversely classified
 
"Substandard" by either of the Supervisory Authorities or any internal or
external reviewer of
 
asset quality, without prior approval by the Board, or a designated committee
thereof. The Board or committee shall not approve the proposed extension without
first making affirmative
 
determinations that:
 
a.         The extension of credit is in full compliance with the Bank's loan
policy;
 
b.         The extension of credit is necessary to protect the Bank's interests,
or is adequately
 
secured;
 
c.         The Bank found the primary and secondary obligors to be creditworthy
based on a
 
credit analysis;

 
9

 
 

--------------------------------------------------------------------------------

 

 
d.         All necessary loan documentation is on file, including, at a minimum,
current
 
financial and cash flow information, and satisfactory appraisal, title and lien
documents; and
 
e.         The Board's affirmative determination is recorded in the minutes of
the Board or
 
designated committee meeting with a copy retained in the borrower's credit file.
 
16.         Within 45 days of the effective date of this ORDER, the Special
Assets Committee shall
 
perform an evaluation of the Special Assets Department to identify any
management or staffing
 
needs necessary to properly manage the deteriorating asset quality. The
evaluation shall be
 
reduced to writing and submitted to the Supervisory Authorities for review and
comment.
 
17.         Within 60 days of the effective date of this ORDER, the Special
Assets Department shall
 
be reorganized so that:
 
a.         It is managed by a qualified executive officer with adequate
training, proven workout
 
experience, and who has been delegated full authority and resources to implement
the Classified Assets Plan developed pursuant to paragraph 12 of this ORDER, and
who has not had any role in underwriting or approval of assets subject to
Special Assets Committee oversight; and
 
b.         The Special Assets Department managing officer shall report to the
Special Assets
 
Committee which shall oversee efforts made to reduce adversely classified
assets.
 
18.         Within 60 days of the effective date of this ORDER, written policies
and procedures
 
supporting the Special Assets Department shall be revised and updated to:
 
a.         Give necessary authority to the Special Assets Department and
managing officer to
 
take measures necessary to resolve asset problems;
 
b.         Clearly identify the workout function of the department;
 
c.         Clearly establish accountability of department personnel;
 
d.         Address the timing of placing an asset into the department;
 
e.         Address collection procedures fully, including but not limited to the
steps, timing and
 
sequence of collection measures;
 
f.         Establish reduction schedules or goals for the level of adversely
classified assets; and
 
g.         Establish the proper accounting treatment for carrying foreclosed
real estate and
 
repossessed personal property in accordance with Section 658.67(9), Florida
Statutes.
 
In the next progress report required by paragraph 31 following their
preparation, copies of
 
the revisions shall be submitted to the Supervisory Authorities for review and'
comment. Within

 
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30 days of receipt of such comments from the Supervisory Authorities, and after
consideration of such comments, the Board shall approve the revised policies and
procedures, which approval shall be recorded in the minutes of the Board
meeting. Thereafter, the revised policies and
 
procedures shall be fully enforced by the Board and the Bank's management.
 
19.         Within 30 days of the effective date of this ORDER, the Bank shall
develop a plan to
 
address loan administration and underwriting deficiencies noted in the Report
("Underwriting
 
Plan"), including:
 
a.         Consistency in complying with Loan Policy requirements to evaluate
global cash
 
flows. An evaluation of global cash flows includes, but is not necessarily
limited to,
 
consideration of all cash flows of borrowers and guarantors that are potentially
 
available to meet all debt servicing requirements and, as compared to those debt
 
servicing requirements, consider how they are scheduled to change over time;
 
b.         Appropriate appraisal review practices and the inclusion of appraisal
review reports
 
in the loan files; and,
 
c.         Ceasing to make any extension or renewal of loans for more than 12.
months without
 
principal reductions as currently required by the Bank's policy.
 
In the next progress report required by paragraph 31 following its preparation,
a copy of the Underwriting Plan shall be submitted to the Supervisory
Authorities for review and comment.
 
Within 30 days of receipt and after consideration of all such comments from the
Supervisory
 
Authorities, the Board shall approve the Underwriting Plan, which approval shall
be recorded in
 
the minutes of the Board meeting. Thereafter, the Bank shall implement and fully
comply with
 
the Underwriting Plan.
20.         Within 60 days of the effective date of this ORDER, the Bank shall
enhance its internal
loan review function so that review ratings accurately reflect credit quality.
 
21.         Within 60 days from the effective date of this ORDER, the Bank's
Loan Policy shall be
 
revised to address the deficiencies noted in the Report. The revisions shall
include, in addition to
 
those prescribed elsewhere in this ORDER, the following:
 
a.         Clear identification of the Bank's trade area;
 
b.         Requirement that loan offerings accurately identify the loan purpose
and the sources
 
of repayment other than sale of the collateral;
 
c.         Debt-service coverage limits;

 
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d.         Guidance of the December 13, 2006, Interagency Policy Statement on
the Allowance
 
for Loan and Lease Losses;
 
C.         Requirement for the approval of the Board or Committee for advancing
new funds to
 
any adversely classified borrower; and,
 
f.         Guidelines for obtaining new appraisals.
 
In the next progress report required by paragraph 31 following their
preparation, a copy of the Loan Policy revisions shall be submitted to the
Supervisory Authorities for review and
 
comment. Within 30 days of receipt and after consideration of all such comments
from the
 
Supervisory Authorities, the Board shall approve the revised policies and
procedures, which approval shall be recorded in the minutes of the Board
meeting.

 
CONCENTRATIONS
 
22.         Within 30 days from the effective date of this ORDER, the Bank shall
review its
 
concentrations of credit as listed on page 76 of the Report to identify the
level of risk and
 
develop a written plan, approved by its Board and acceptable to the Supervisory
Authorities, to systematically reduce the Bank's level of concentration risk
("Concentration Plan"), which, at a minimum, shall include:
 
a.         Percent of capital to which the Bank shall reduce each concentration;
 
b.         Timeframes for achieving the reduction in dollar levels identified in
response to
 
subparagraph a;
 
c.         Provisions for the submission of monthly written progress reports to
the Board for
 
review and notation in the minutes of its meetings; and,
 
d.         Procedures for monitoring the Bank's compliance with the
Concentration Plan.
 
In conjunction with preparing the' Concentration Plan, the Bank's management and
the
 
Board shall review and incorporate as appropriate in the Bank's policies and
procedures, the
 
final joint agency guidance Concentrations in Commercial Real Estate Lending,
Sound Risk
 
Management Practices as set forth in the FDIC's Financial Institution Letter,
FIL-104-2006,
 
dated December 12, 2006, and any subsequent amendments or guidance that may be
issued.
 
In the next progress report required by paragraph 31 following its preparation,
copies of the
 
Concentration Plan and the revised policies and procedures shall be submitted to
the Supervisory
 
Authorities for review and comment. Within 30 days of receipt and after
consideration of all
 
such comments from the Supervisory Authorities, the Board shall approve the
Concentration

 
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Plan and revised policies and procedures, which approval shall be recorded in
the minutes of the Board meeting. Thereafter, the Bank shall implement and fully
comply with the Compliance Plan and the revised policies and procedures.
 
23.         Within 60 days from the effective date of this ORDER, the Board
shall develop a written
 
plan acceptable to the Supervisory Authorities which will enable the Board and
management to
 
monitor concentrations of risk in relation to Tier 1 capital and Total Risk
Based Capital as those
 
are defined at Part 325 of the FDIC's Rules and Regulations, 12 C.F.R. Part 325
("Monitoring
 
Plan"). At a minimum, the Monitoring Plan shall include appropriate limits for
concentrations of
 
credit by industry, product line, type of collateral, geographic location,
repayment source, and
 
borrower. The Monitoring Plan shall specifically establish limits and identify
the risks
 
associated with the concentration of commercial real estate ("CRE") loans noted
in the Report,
 
and address deficiencies in monitoring of concentrations noted in the
"Examination Conclusions
 
and Comments" and "Risk Management Assessment" schedules of the Report. Further,
the
 
Board shall identify procedures for ascertaining compliance with the Monitoring
Plan, and Bank
 
management shall be required to provide monthly reports to the Board regarding
the level and
 
composition of concentrations. Any discussions by the Board, or its designated
committees,
 
which are related to concentrations of risk shall be recorded in the minutes of
the Board's regular
 
monthly meetings.
 
In the next progress report required by paragraph 31 following its preparation,
a copy of the
 
Monitoring Plan shall be submitted to the Supervisory Authorities for review and
comment.
 
Within 30 days of receipt and after consideration of all such comments from the
Supervisory
 
Authorities, the Board shall approve the plan, which approval shall be recorded
in the minutes of
 
the Board meeting. Thereafter, the Bank shall implement and fully comply with
the Monitoring
 
Plan.

 
ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)
 
24.         Within 30 days from the effective date of this ORDER, the Board
shall review the
 
adequacy of the ALLL. For the purpose of this provision of the ORDER, the
adequacy of the
 
ALLL shall be determined after the charge off of all loans or other items
classified "Loss" in any
 
Report of Examination from either of the Supervisory Authorities. The policies
of the Bank shall
 
provide for a review of the ALLL at least once each calendar quarter. Such
reviews shall be
 
completed within at least ten (10) days of the end of each quarter, in order
that the findings of the

 
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Board with respect to the ALLL may be properly reported in the quarterly Reports
of Condition and Income. Such reviews shall, at a minimum:
 
a.         Include the results of the Bank's internal loan review, loan and
lease loss experience,
 
trends of delinquent and nonaccrual loans, estimates of potential loss exposure
of
 
significant credits, concentrations of credit, present and prospective economic
 
conditions, and extensions of credit identified as "Special Mention" or
adversely
 
classified in the latest Report of Examination by either of the Supervisory
Authorities or in any other report or document from an internal or external
reviewer of asset
 
quality; and,
 
b.         Incorporate the standards- of the Federal Financial Institutions
Examination Council's
 
Instructions for Preparation of Consolidated Reports of Condition and Income,
the
 
Interagency Policy Statement on the Allowance for Loan and Lease Losses, and
other
 
applicable regulatory guidance that addresses the adequacy of the Bank's ALLL.
 
Any deficiency in the ALLL shall be remedied by a charge to current operating
earnings
 
 and reflected in the Reports of Condition and Income for the calendar quarter
to which it applies.
 
The minutes of the Board meeting at which such review is undertaken shall
indicate the results of
 
the review. The Bank's policy for determining the adequacy of the ALLL and its
implementation
 
shall be satisfactory to the Supervisory Authorities at subsequent examinations
and/or visitations.

 
EARNINGS
 
25.         Within 60 days from the effective date of this ORDER, the Bank shall
formulate and
 
implement a written plan to improve earnings ("Earnings Plan"). During the life
of this ORDER,
 
the Earnings Plan and any subsequent modifications thereto shall be promptly
submitted to the
 
Supervisory Authorities for review and comment within ten days after approval
and adoption by the Board. Each Earnings Plan shall, at a minimum, describe the
goals, strategies, and actions
 
necessary for improving and maintaining profitability, and shall include
realistic and
 
comprehensive budgets with revenue and expense projections, the operating
assumptions that
 
form the basis for major projected income and expense components, a budget
review process to compare actual performance with the projections, and an
Earnings Plan review process by the
 
Board not less than quarterly.

 
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In the next progress report required by paragraph 31 following its preparation,
the Earnings
 
Plan shall be forwarded to the Supervisory Authorities. Within 30 days of
receipt of comments
 
from the Supervisory Authorities, and after consideration of such comments, the
Board shall
 
approve the Earnings Plan, which approval shall be recorded in the minutes of
the Board
 
meeting. Thereafter, the Bank shall implement and fully comply with the Earnings
Plan.
 
26.         The Bank shall immediately revise its 2008 business plan and
operating budget and
 
earnings forecast to reflect the continuing unsatisfactory asset quality, the
$8,295,000 additional provision for loan and lease losses ("PLLL") in the second
quarter, realistic future PLLL and
 
their effects on 2008 earnings, and reasonable expectations for losses on sales
of OREO. No
 
later than December 1, 2008, the Bank shall finalize and submit to the
Supervisory Authorities a comprehensive business plan and budget and earnings
forecast for 2009 and 2010. The business plan and budget and earnings forecast
shall contain narrative comments which address the
 
Bank's expectations for asset growth rates and limitations, implementation of
the Earnings Plan required by paragraph 25 of this ORDER, and the underlying
assumptions used in determining the Bank's financial projections. Thereafter,
quarterly progress reports regarding the Bank's
 
actual performance compared with the budget plans shall be submitted
concurrently with other reporting requirements set forth in Paragraph 31 of this
ORDER.

 
LIQUIDITY
 
27.         Upon the effective date of this ORDER, and so long as this ORDER
remains in effect, the
 
Bank shall not increase the amount of brokered deposits above the amount
outstanding as of the effective date of this ORDER.
 
a.         Within. 10 days of the effective date of this ORDER, the Bank shall
submit to the
 
Supervisory Authorities for review and comment a written plan for reducing its
 
reliance on brokered deposits ("Deposit Plan"), which shall detail the current
 
composition of brokered deposits by maturity and explain the means by which such
 
deposits will be paid. Within 30 days of receipt and after consideration of all
such
 
comments from the Supervisory Authorities, the Board shall approve the revised
 
Deposit Plan, which approval shall be recorded in the minutes of the Board
meeting.
 
Thereafter, the Bank shall implement and fully comply with the Deposit Plan. For
 
purposes of this ORDER, brokered deposits are defined in Section 337.6(a)(2) of
the
 
FDIC Rules and Regulations, 12 C.F.R. Sec.337.6(a)(2);

 
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b.         During the life of this Order, the Bank shall limit its use of
brokered deposit funds
 
and accounts to levels acceptable to the Supervisory Authorities and in
accordance
 
with the Deposit Plan adopted pursuant to this paragraph. Controls commensurate
 
with the liquidity and funding risks associated with the use of brokered
deposits, as
 
articulated-in the May 2001 Joint Agency Advisory on Brokered and Rate-Sensitive
 
Deposits, shall be implemented. The Bank shall not accept brokered deposits
except
 
in compliance with the provisions of Section 29 of the FDI Act, 12 U. S. C. Sec.
1831 f,
 
and Section 337.6 of the FDIC Rules and Regulations, 12 C.F.R. Sec. 337.6; and,
 
c.         Within 30 days of the effective date of this ORDER, the Bank's
management shall
 
prepare and implement internal controls and reports that track the extent to
which
 
rates of interest paid on new or renewed deposits vary from other interest rates
in
 
accordance with the measures and methods of calculation specified in Section
 
337.6 (b) of the FDIC Rules and Regulations.
 
The Bank shall provide a written progress report to the Supervisory Authorities
detailing the level, source, and use of brokered deposits with specific
reference to progress under the Bank's Deposit Plan together with the progress
reports required by paragraph 31.
 
28.         During the life of this ORDER, the Bank shall not borrow money or
issue evidences of
 
indebtedness, other than deposits, Federal Funds purchased, and Federal Home
Loan Bank
 
borrowings in compliance with all applicable state and/or federal banking
regulations and the
 
other provisions of this ORDER, without first obtaining written approval from
the Supervisory Authorities. Every effort shall be made to reduce the Net Non
Core Funding Dependence ratio to 25 percent or less.

 
INTEREST RATE RISK MANAGEMENT
 
29.         Within 30 days of the effective date of this ORDER:
 
a.         Minutes of the Asset/Liability Committee shall document that members
are
 
knowledgeable of and agree or disagree with assumptions used in the IPS Sendero
simulation model run by Compass Bank;
 
b.         Management shall quantify significant rate and volume variances to
help explain why
 
actual results are different from the forecasted results provided by the IPS
Sendero
 
simulation model; and,

 
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c.         Internal audit reviews of the IPS Sendero simulation model shall test
the
 
mathematical accuracy of the model.

 
VIOLATIONS OF LAWS AND REGULATIONS
 
30.         Within 30 days of the effective date of this ORDER, the Bank shall
eliminate or correct the
 
violation of 12 C.F.R. 323.3(a) noted on page 29 of the Report relating to real
estate appraisals.

 
PROGRESS REPORTS
 
31.         Within 30 days after the end of each calendar quarter following the
effective date of
 
this ORDER, the Bank shall furnish written progress reports to the Supervisory
 
Authorities detailing steps taken to comply with the requirements of this ORDER.
The
 
requirements for progress reports shall continue during the life of this ORDER
unless
 
modified or terminated in writing by the Supervisory Authorities. All progress
reports
 
and other written responses to this ORDER shall be reviewed. by the Board of
Directors and be made a part of the minutes of the Board meeting that conducted
the review.
 
Each quarterly progress report shall include a copy of the Consolidated Reports
of
 
Condition and Income for the quarter just ended. Upon written request from the
Bank and a showing of good cause, the Office, in its sole discretion, may grant
extensions of time for any reporting or compliance deadline specified in this
ORDER.

 
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EFFECTIVE DATE AND DURATION OF ORDER
 
The provisions of this ORDER shall become effective immediately upon execution
by the Commissioner of the Office of Financial Regulation, or his designee, and
shall be binding upon the Bank, its directors, officers, employees, agents,
successors and assigns, financial institutionaffiliated parties, and other
persons participating in the conduct of the affairs of the Bank.
 
Further, this ORDER shall remain effective and enforceable except to the extent
that, and until such time as, any provision of this ORDER shall be modified,
terminated, suspended, or set aside by the Office. The existence of this ORDER
shall not preclude either of the Supervisory
 
Authorities from initiating other actions with respect to the Bank.
 
The Final Order of May 31, 2007, in Administrative Proceeding Number
0342-B-9/06, is hereby terminated, effective immediately upon execution of this
ORDER.

 
DONE AND ORDERED in Tallahassee, Florida, this _ day
of                                                                                                                                 ,           2008.

 
Linda B. Charity, Director
 
Division of Financial Institutions For the Commissioner,
 
Office of Financial Regulation

 
NOTICE OF RIGHT TO APPELLATE REVIEW
 
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED
 
TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES.
 
REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE
 
PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING THE ORIGINAL
 
NOTICE OF APPEAL WITH THE AGENCY CLERK, OFFICE OF FINANCIAL
 
REGULATION, LEGAL SERVICES OFFICE, THE FLETCHER BUILDING, SUITE 526, 200
 
EAST GAINES STREET, TALLAHASSEE, FLORIDA 32399-0379; AND A COPY,
 
ACCOMPANIED BY THE FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT
 
COURT OF APPEAL, FIRST DISTRICT, 300 MARTIN LUTHER KING, JR. BLVD.,

 
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TALLAHASSEE, FLORIDA 32399-1850, OR IN THE APPELLATE DISTRICT IN WHICH
 
THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN THIRTY
 
(30) DAYS OF RENDITION OF THE FINAL ORDER TO BE REVIEWED.

 
CERTIFICATE OF SERVICE

 
I hereby certify that a true and correct copy of the foregoing ORDER TO CEASE
AND

 
DESIST has been furnished by U.S, Mail
this                                                                                                            day
of                      ,           2008 to the Board of

 
Directors, Florida Community Bank, 1400 North 15th Street, Immokalee, Florida
34142.

 
Bruce Kuhse (Florida Bar #0308470)
 
Assistant General Counsel
 
Office of Financial Regulation 200 East Gaines St.
 
The Fletcher Building, Suite 526
 
Tallahassee, FL                                 32399-0379
 
Tel: (850) 410-9896

 
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