Exhibit 10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

 

     )    In the Matter of    )       )    GREER STATE BANK    )   

STIPULATION TO THE

GREER, SOUTH CAROLINA    )   

ISSUANCE OF A

   )   

CONSENT ORDER

(Insured State Nonmember Bank)    )   

FDIC-10-904b

   )         )   

Subject to the acceptance of this STIPULATION TO THE ISSUANCE OF A CONSENT ORDER
(“STIPULATION”) by the Federal Deposit Insurance Corporation (“FDIC”), it is
hereby stipulated and agreed by and between a representative of the Legal
Division of the FDIC, the Commissioner of Banking on behalf of the South
Carolina Board of Financial Institutions (“State Board”), and Greer State Bank,
Greer, South Carolina (“Bank”), through its Board of Directors, as follows:

1. The Bank has been advised of its right to receive a written Notice of Charges
and of Hearing (“Notice”) detailing the unsafe or unsound banking practices or
violations of law or regulation relating to weaknesses in capital, asset
quality, earnings, management, liquidity and sensitivity to market risk alleged
to have been committed by the Bank and of its right to a hearing on the alleged
charges under section 8(b)(1) of the Federal Deposit Insurance Act (“Act”), 12
U.S.C. § 1818(b)(1), and the FDIC’s Rules of Practice and Procedure (“Rules”),
12 C.F.R. Part 308, and has waived those rights.

 

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2. The Bank, solely for the purpose of this proceeding and without admitting or
denying any of the alleged charges of unsafe or unsound banking practices or
violations of law or regulation hereby consents and agrees to the issuance of a
CONSENT ORDER (“ORDER”) by the FDIC and the State Board in the form attached
hereto. The Bank further stipulates and agrees that such ORDER shall become
effective immediately upon issuance by the FDIC and the State Board and be fully
enforceable by the FDIC pursuant to the provisions of section 8(i)(1) of the
Act, 12 U.S.C. § 1818(i)(1), and the Rules, and by the State Board pursuant to
S.C. Code Ann. § 34-1-60, subject only to the conditions set forth in paragraph
3 of this STIPULATION.

3. In the event the FDIC accepts this STIPULATION and issues the ORDER, it is
agreed that no action to enforce said ORDER in the United States District Court
will be taken by the FDIC unless the Bank or any “institution-affiliated party”,
as such term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), has
violated or is about to violate any provision of the ORDER.

4. The Bank hereby waives:

 

  (a) the receipt of a written Notice;

 

  (b) all defenses to the charges to be set forth in the Notice;

 

  (c) a hearing for the purpose of taking evidence regarding the allegations to
be set forth in the Notice;

 

  (d) the filing of Proposed Findings of Fact and Conclusions of Law;

 

  (e) a Recommended Decision of an Administrative Law Judge;

 

  (f) exceptions and briefs with respect to such Recommended Decision; and

 

  (g) judicial review of the ORDER as provided by 12 U.S.C. § 1818(h), and any
other challenge to the validity of the ORDER.

 

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Dated: February 24, 2011

 

FEDERAL DEPOSIT INSURANCE CORPORATION

LEGAL DIVISION

BY:

/s/ Lynn Gavin

Lynn Gavin Senior Regional Attorney SOUTH CAROLINA BOARD OF FINANCIAL
INSTITUTIONS BY:

/s/ Louie A. Jacobs

Louie A. Jacobs Commissioner GREER STATE BANK GREER, SOUTH CAROLINA BY:

/s/ Mark S. Ashmore

Mark S. Ashmore

/s/ Steven M. Bateman

Steven M. Bateman

/s/ Walter M. Burch

Walter M. Burch

/s/ Raj K.S. Dhillon

Raj K.S. Dhillon

/s/ Gary M. Griffin

Gary M. Griffin

 

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/s/ Kenneth M. Harper

Kenneth M. Harper

/s/ R. Dennis Hennett

R. Dennis Hennett

/s/ Harold K. James

Harold K. James

/s/ Paul D. Lister

Paul D. Lister

/s/ Theron C. Smith, III

Theron C. Smith, III

/s/ C. Don Wall

C. Don Wall

THE BOARD OF DIRECTORS

 

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FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

 

    )    In the Matter of   )      )    GREER STATE BANK   )   

CONSENT ORDER

GREER, SOUTH CAROLINA   )      )   

FDIC-10-904b

(Insured State Nonmember Bank)   )      )        )   

The Federal Deposit Insurance Corporation (“FDIC”) is the appropriate Federal
banking agency for Greer State Bank, Greer, South Carolina (“Bank”), under 12
U.S.C. § 1813(q).

The Bank, by and through its duly elected and acting Board of Directors
(“Board”), has executed a “Stipulation to the Issuance of a Consent Order”
(“STIPULATION”), dated February 24, 2011, that is accepted by the FDIC and the
Commissioner of Banking (“Commissioner”) on behalf of the South Carolina Board
of Financial Institutions (“State Board”). The State Board may issue an order
pursuant to the provisions of S.C. Code Ann. § 34-1-60.

With the Stipulation, the Bank has consented, without admitting or denying any
charges of unsafe or unsound banking practices or violations of law or
regulation relating to weaknesses in asset quality, management, earnings,
capital, liquidity, and sensitivity to market risk, to the issuance of this
Consent Order (“ORDER”) by the FDIC and the State Board.

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Having determined that the requirements for issuance of an order under 12 U.S.C.
§ 1818(b) and S.C. Code Ann. § 34-1-60 have been satisfied, the FDIC and the
State Board hereby order that:

 

1. BOARD OF DIRECTORS

(a) Beginning with the effective date of this ORDER, the Board shall increase
its participation in the 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. The Board shall prepare in advance
and follow a detailed written agenda for each meeting, including consideration
of the actions of any committees. Nothing in the foregoing sentences shall
preclude the Board from considering matters other than those contained in the
agenda. 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; operating policies; and
individual committee actions. Board minutes shall document those reviews and
approvals, including the names of any dissenting directors.

(b) Within 30 days from the effective date of this ORDER, the Board shall
establish a Board committee (“Directors’ Committee”), consisting of at least
four members, to oversee the Bank’s compliance with this ORDER. Three of the
members of the Directors’ Committee shall not be officers of the Bank. The
Directors’ Committee shall receive from Bank management monthly reports
detailing the Bank’s actions with respect to compliance with this ORDER. The
Directors’ Committee shall present a report detailing the Bank’s adherence to
this ORDER to the Board at each regularly scheduled Board meeting. Such report
shall be recorded in the appropriate minutes of the Board’s meeting and shall be
retained in the Bank’s records. Establishment of this committee does not in any
way diminish the responsibility of the entire Board to ensure compliance with
the provisions of this ORDER.

 

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2. MANAGEMENT

(a) While this ORDER is in effect, the Bank shall have and retain qualified
management with the qualifications and experience commensurate with assigned
duties and responsibilities at the Bank. Each member of management shall be
provided appropriate written authority from the Bank’s Board to implement the
provisions of this ORDER.

(b) While this ORDER is in effect, the Bank shall notify the Regional Director
of the FDIC’s Atlanta Regional Office (“Regional Director”) and the Commissioner
on behalf of the State Board (collectively, “Supervisory Authorities”), in
writing, of the resignation or termination of any of the Bank’s directors or
senior executive officers. Prior to the addition of any individual to the Board
or the employment of any individual as a senior executive officer, the Bank
shall comply with the requirements of Section 32 of the Act, 12 U.S.C. § 1831i,
and Subpart F of Part 303 of the FDIC Rules and Regulations, 12 C.F.R. §§
303.100-303.104 and any requirement of the State of South Carolina for prior
notification and approval.

(c) Within 45 days from the effective date of this ORDER, the Bank shall develop
and approve a written analysis and independent assessment of the Bank’s
management and staffing needs (“Management Plan”) for the purpose of providing
qualified management for the Bank. The Management Plan shall address those
specific areas identified in the Joint Report of Examination (the “Report”)
dated as of August 16, 2010, and shall include, at a minimum:

(i) a review of each officers’ performance, abilities and assignments to
positions within the Bank;

(ii) identification of both the type and number of officer positions needed to
properly manage and supervise the affairs of the Bank;

 

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(iii) identification and establishment of such Bank committees as are needed to
provide guidance and oversight to active management;

(iv) annual written evaluations of all Bank officers to determine whether those
individuals possess the ability, experience and other qualifications required to
perform present and anticipated duties, including, but not limited to, adherence
to the Bank’s established policies and practices, and restoration and
maintenance of the Bank in a safe and sound condition;

(v) a plan to recruit and hire any additional or replacement personnel with the
requisite ability, experience and other qualifications to fill those officer or
staff member positions consistent with the needs identified in the Management
Plan; and

(vi) an organizational chart.

(d) The written Management Plan shall also include the requirement that the
Board, or a committee thereof consisting of not less than a majority of the
directors who are independent with respect to the Bank, provide supervision over
lending, investment and operating policies of the Bank sufficient to ensure that
the Bank complies with the provisions of this ORDER.

(e) Such Management Plan shall be forwarded to the Supervisory Authorities and
the Management Plan and its implementation shall be satisfactory to the
Supervisory Authorities.

(f) While this ORDER is in effect, the Bank shall comply with the requirements
of Part 359 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 359.

 

3. CAPITAL

(a) Within 150 days from the effective date of this ORDER, the Bank shall have
Tier 1 capital in such an amount as to equal or exceed 8 percent of total assets
(“Leverage Ratio”) and

 

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Total Risk-Based capital in such an amount so as to equal or exceed 10% of total
risk-weighted assets (“Total Risk-Based Capital Ratio”). The Leverage Ratio and
Total Risk-Based Capital Ratio shall be calculated using the definitions
contained in Section 325.2 of the FDIC’s Rules and Regulations, 12 C.F.R. §
325.2. Thereafter, in the event the Leverage Ratio falls below 8 percent or the
Total Risk-Based Capital Ratio falls below 10 percent, the Bank shall promptly
notify the Supervisory Authorities in writing and capital shall be increased in
an amount sufficient to meet the ratios required by this provision within 30
days.

(b) The level of Tier 1 capital to be maintained during the life of this ORDER
pursuant to paragraph 3(a) shall be in addition to a fully funded allowance for
loan and lease losses (“ALLL”), the adequacy of which shall be satisfactory to
the Supervisory Authorities as determined at subsequent examinations and/or
visitations.

(c) Within 90 days from the effective date of this ORDER, the Bank shall submit
to the Supervisory Authorities a written capital plan. Such capital plan shall
detail the steps that the Bank shall take to achieve and maintain the capital
requirements set forth in paragraph 3(a) above. In developing the capital plan,
the Bank must take into consideration:

(i) the volume of the Bank’s adversely classified assets;

(ii) the nature and level of the Bank’s asset concentrations;

(iii) the adequacy of the Bank’s ALLL;

(iv) the anticipated level of retained earnings;

(v) the Bank’s cumulative loss estimates;

(vi) anticipated and contingent liquidity needs; and

(vii) the source and timing of additional funds to fulfill future capital needs.

 

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(d) In addition, the capital plan must include a contingency plan in the event
that the Bank has failed to:

(i) maintain the minimum capital ratios required by paragraph 3(a);

(ii) submit an acceptable capital plan as required by this paragraph; or

(iii) implement or adhere to a capital plan to which the Supervisory

Authorities have taken no written objection pursuant to this paragraph. Such
contingency plan shall include a plan to sell or merge the Bank. The Bank shall
implement the contingency plan upon written notice from the Supervisory
Authorities.

(e) Any increase in Tier 1 capital necessary to meet the requirements of
paragraph 3(a) of this ORDER may be accomplished by the following:

(i) sale of common stock; or

(ii) sale of noncumulative perpetual preferred stock; or

(iii) direct contribution of cash by the Board, shareholders, and/or parent
holding company; or

(iv) any combination of the above means; or

(v) any other means acceptable to the Supervisory Authorities.

Any increase in Tier 1 capital necessary to meet the requirements of paragraph
3(a) of this ORDER may not be accomplished through a deduction from the Bank’s
ALLL.

(f) If all or part of any necessary increase in Tier 1 capital required by
paragraph 3(a) of this ORDER is accomplished by the sale of new securities, the
Board shall forthwith take all necessary steps to adopt and implement a plan for
the sale of such additional securities, including the voting of any shares owned
or proxies held or controlled by them in favor of the plan. Should the
implementation of the plan involve a public distribution of the Bank’s
securities

 

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(including a distribution limited only to the Bank’s existing shareholders), the
Bank shall prepare 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 any other material
disclosures necessary to comply with the Federal securities laws. Prior to the
implementation of the plan and, in any event, not less than fifteen (15) days
prior to the dissemination of such materials, the plan and any materials used in
the sale of the securities shall be submitted for review to the FDIC, Division
of Supervision and Consumer Protection, Accounting and Securities Disclosure
Section, 550 17th Street, N.W., Room F-6066, Washington, D.C. 20429, and to the
Commissioner, South Carolina Board of Financial Institutions, 1205 Pendleton
Street, Suite 305, Columbia, South Carolina 29201. Any changes requested to be
made in the plan or materials shall be made prior to their dissemination. If the
increase in Tier 1 capital is provided by the sale of noncumulative perpetual
preferred stock, then all terms and conditions of the issue, including but not
limited to those terms and conditions relative to interest rate and
convertibility factor, shall be presented to the Supervisory Authorities for
prior approval.

(g) In complying with the provisions of paragraph 3(f) of this ORDER, the Bank
shall provide to any subscriber and/or purchaser of the Bank’s securities a
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 ten (10) days from the date such
material development or change was planned or occurred, whichever is earlier,
and shall be furnished to every subscriber and/or purchaser of the Bank’s
securities who received or was tendered the information contained in the Bank’s
original offering materials.

 

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4. LIQUIDITY AND FUNDS MANAGEMENT POLICY

Within 60 days from the effective date of this ORDER, the Bank shall adopt and
implement a written plan addressing liquidity, contingency funding, and asset
liability management. A copy of the plan shall be submitted to the Supervisory
Authorities upon its completion for review and comment. Within 30 days from the
receipt of any comments from the Supervisory Authorities, the Bank shall
incorporate those recommended changes. Thereafter, the Bank shall implement and
follow the plan, and implementation shall be in a form and manner acceptable to
the Supervisory Authorities as determined at subsequent examinations or
visitations.

 

5. CHARGE-OFF

(a) Within 30 days from the effective date of this ORDER, the Bank shall
eliminate from its books, by charge-off or collection, all assets or portions of
assets classified “Loss” and 50 percent of those assets classified “Doubtful” in
the Report that have not been previously collected or charged-off. If an asset
is classified “Doubtful,” the Bank may, in the alternative, charge off the
amount that is considered uncollectible in accordance with the Bank’s written
analysis of loan or lease impairment. Such analysis shall be accomplished in
accordance with generally accepted accounting principles and the Federal
Financial Institutions Examination Council’s Instructions for the Reports of
Condition and Income, Interagency Statements of Policy on the ALLL, and other
applicable regulatory guidance. Elimination of any of those assets through
proceeds of other loans made by the Bank is not considered collection for
purposes of this paragraph.

(b) Additionally, while this ORDER remains in effect, the Bank shall, within 30
days from the receipt of any official Report of Examination of the Bank from the
FDIC or the State

 

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Board, eliminate from its books, by collection, charge-off, or other proper
entries, the remaining balance of any asset classified “Loss” and 50 percent of
those classified “Doubtful” unless otherwise approved in writing by Supervisory
Authorities.

 

6. REDUCTION OF CLASSIFIED ASSETS

(a) Within 60 days from the effective date of this ORDER, the Bank shall
formulate a written plan to reduce the Bank’s risk exposure in relationships
with assets in excess of $500,000 classified as “Substandard” or “Doubtful” in
the Report. For purposes of this paragraph, “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 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.

(b) In addition, the written plan mandated by this paragraph shall also include,
but not be limited to, the following:

(i) a schedule for reducing the outstanding dollar amount of each adversely
classified asset, including timeframes for achieving the reduced dollar amounts
(at a minimum, the schedule for each adversely classified asset must show its
expected dollar balance on a quarterly basis);

(ii) specific action plans intended to reduce the Bank’s risk exposure in each
classified asset;

 

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(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 its Board; and

(v) a provision mandating Board review of the progress reports, with a notation
of the review recorded in the Board minutes.

(c) The plan mandated by this paragraph shall further require a reduction in the
aggregate balance of assets classified as “Substandard” or “Doubtful” in the
Report in accordance with the following schedule. For purposes of this
paragraph, “number of days” means number of days from the effective date of this
ORDER.

(i) within 180 days, a reduction of twenty-five percent (25%) in the balance of
assets classified “Substandard” or “Doubtful.”

(ii) within 360 days, a reduction of forty-five percent (45%) in the balance of
assets classified “Substandard” or “Doubtful.”

(iii) within 540 days, a reduction of sixty-five percent (65%) in the balance of
assets classified “Substandard” or “Doubtful.”

(iv) within 720 days, a reduction of seventy-five percent (75%) in the balance
of assets classified “Substandard” or “Doubtful.”

(d) 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.

 

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(e) Within 60 days from the effective date of this ORDER, the Bank shall submit
the written reduction 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 plan, which approval shall be recorded in the minutes of the
meeting of the Board. Thereafter, the Bank shall implement and fully comply with
the plan. Such plans shall be monitored and progress reports thereon shall be
submitted to the Supervisory Authorities at 90-day intervals concurrently with
the other reporting requirements set forth in this ORDER.

 

7. NO ADDITIONAL CREDIT

(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
has a loan or other extension of credit from the Bank that has been charged off
or classified, in whole or in part, “Loss” or “Doubtful,” and is uncollected.
The requirements of this paragraph shall not prohibit the Bank from renewing
(after collection in cash of interest due from the borrower) any credit already
extended to any borrower.

(b) Additionally, 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 has a loan or other extension of credit from the Bank that has
been classified, in whole or part, “Substandard” and is uncollected.

(c) Paragraph 7(b) 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 the extending of any additional credit pursuant to this
paragraph, either in the form of a renewal, extension or further advance of
funds, such additional credit shall be approved by a majority of the Board or a
designated committee thereof, who shall certify in writing as follows:

(i) why the failure of the Bank to extend such credit would be detrimental to
the best interests of the Bank;

 

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(ii) that the Bank’s position would be improved thereby, including an
explanatory statement of how the Bank’s position would be improved; and

(iii) that an appropriate workout plan has been developed and will be
implemented in conjunction with the additional credit to be extended.

(d) The signed certification shall be made a part of the minutes of the Board or
its designated committee and a copy of the signed certification shall be
retained in the borrower’s credit file.

 

8. WRITTEN STRATEGIC/BUSINESS PLAN

Within 90 days from the effective date of this ORDER, the Bank shall prepare and
submit to the Supervisory Authorities its written strategic plan consisting of
long-term goals designed to improve the condition of the Bank and its viability,
and strategies for achieving those goals. At a minimum, the plan shall establish
objectives for the Bank’s earnings performance, growth, balance sheet mix,
liability structure, capital adequacy, and reduction of nonperforming and
underperforming assets, together with strategies for achieving those objectives.
The plan shall also identify capital, funding, managerial and other resources
needed to accomplish its objectives. The plan shall be in a form and manner
acceptable to the Supervisory Authorities, but at a minimum shall cover three
years and provide specific objectives for asset growth, market focus, earnings
projections, capital needs, and liquidity position.

 

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9. LENDING AND COLLECTION POLICIES

Within 30 days from the effective date of this ORDER, the Bank shall revise as
necessary and fully implement its written lending and collection policies to
provide effective guidance and control over the Bank’s lending function, which
implementation shall include the resolution of those exceptions enumerated in
the Report. The written lending and collection policies must contain specific
guidelines for placing loans on a nonaccrual basis, contain policies and
procedures regarding capitalized interest and interest reserve procedures,
require a determination that loan officers have the necessary expertise to make,
monitor, and service the types and kinds of loans that will be assigned to them,
require prior written approval by the Bank’s Board for any extension of credit,
renewal, or disbursement to insiders of the Bank, and contain guidelines for the
issuance of interest-only loans. In addition, the Bank shall obtain adequate and
current documentation for all loans in the Bank’s loan portfolio. Such policies
and their implementation shall be in a form and manner acceptable to the
Supervisory Authorities as determined at subsequent examinations and/or
visitations.

 

10. CONCENTRATIONS OF CREDIT

Within 45 days from the effective date of this ORDER, the Bank shall perform a
risk segmentation analysis with respect to the Concentrations of Credit
identified in the Report. Concentrations should be identified by product type,
geographic distribution, underlying collateral, or other asset groups that are
considered economically related and in the aggregate represent a large portion
of the Bank’s Tier 1 capital. The Bank shall provide a copy of this analysis to
the Supervisory Authorities. The Board shall develop a plan to reduce any
segment of the portfolio which the Supervisory Authorities deem to be an undue
concentration of credit in relation to the Bank’s Tier 1 capital. The plan and
its implementation shall be in a form and manner acceptable to the Supervisory
Authorities.

 

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11. ALLOWANCE FOR LOAN AND LEASE LOSSES

Within 60 days from the effective date of this ORDER, the Board shall review the
adequacy of the ALLL and establish a comprehensive policy for determining the
adequacy of the ALLL. For the purpose of this determination, the adequacy of the
ALLL shall be determined after the charge-off of all loans or other items
classified “Loss.” The policy shall provide for a review of the ALLL at least
once each calendar quarter. Said review shall be completed in time to properly
report the ALLL in the quarterly Reports of Condition and Income. The review
shall focus on the results of the Bank’s internal loan review, loan and lease
loss experience, trends of delinquent and non-accrual loans, an estimate of
potential loss exposure of significant credits, concentrations of credit, and
present and prospective economic conditions. A deficiency in the ALLL shall be
remedied in the calendar quarter it is discovered, prior to submitting the
Reports of Condition and Income, by a charge to current operating earnings. 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.

 

12. PLAN FOR EXPENSES/PROFITABILITY

(a) Within 90 days from the effective date of this ORDER, the Bank shall
formulate and implement a written plan to improve and sustain Bank earnings.
This plan shall be forwarded to the Supervisory Authorities for review and
comment and shall address, at a minimum, the following:

(i) goals and strategies for improving and sustaining the earnings of the Bank;

(ii) the major areas in, and means by which the Bank will seek to improve the
Bank’s operating performance;

 

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(iii) realistic and comprehensive budgets;

(iv) a budget review process to monitor the income and expenses of the Bank to
compare actual figures with budgetary projections;

(v) the operating assumptions that form the basis for, and adequately support,
major projected income and expense components; and

(vi) coordination of the Bank’s loan, investment, and operating policies and
budget and profit planning with the funds management policy.

(b) Following the end of each calendar quarter, the Board shall evaluate the
Bank’s actual performance in relation to the plan required by this paragraph and
shall record the results of the evaluation, and any actions taken by the Bank in
the minutes of the Board meeting at which such evaluation is undertaken.

(c) The Bank shall formulate such a plan and budget described in paragraph 12(a)
by November 30 of each year beginning in 2011. Those plans and budgets shall be
submitted to the Supervisory Authorities for review and comment by December 15
of each year.

 

13. INTEREST RATE RISK MANAGEMENT

Within 30 days from the effective date of this ORDER, the Bank shall develop and
implement a written policy for managing interest rate risk in a manner that is
appropriate to the size of the Bank and the complexity of its assets. The policy
shall comply with the Joint Inter-agency Policy Statement on Interest Rate Risk,
shall be consistent with the comments and recommendations detailed in the Report
and shall include, at a minimum, the means by which the interest rate risk
position will be monitored, the establishment of risk parameters, and provision
for periodic reporting to management and the Board regarding interest rate risk
with adequate information provided to assess the level of risk. The Bank shall
also, within 45 days

 

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from the effective date of this ORDER, submit the policy to the Supervisory
Authorities for review and comment. Such policy and its implementation shall be
satisfactory to the Supervisory Authorities.

 

14. VIOLATIONS OF REGULATION AND POLICY

(a) Within 30 days from the effective date of this ORDER, the Bank shall
eliminate and/or correct all violations of regulation described in the Report.
In addition, the Bank shall take all necessary steps to ensure future compliance
with all applicable laws and regulations.

(b) Within 30 days from the effective date of this ORDER, the Bank shall
eliminate and/or correct all contraventions of policy described in the Report.
In addition, the Bank shall take all necessary steps to ensure future compliance
with all applicable statements of policy.

 

15. RESTRICTIONS ON CERTAIN PAYMENTS

(a) While this ORDER is in effect, the Bank shall not declare or pay dividends
or bonuses without the prior written approval of the Supervisory Authorities.
All requests for prior approval shall be received at least 30 days prior to the
proposed dividend or bonus payment declaration date (at least 5 days with
respect to any request filed within the first 30 days after the date of this
ORDER) and shall contain, but not be limited to, an analysis of the impact such
dividend or bonus payment would have on the Bank’s capital, income, and/or
liquidity positions.

(b) While this ORDER is in effect, the Bank shall not make any distributions of
interest, principal or other sums on subordinated debentures, if any, without
the prior written approval of the Supervisory Authorities.

 

16. BROKERED DEPOSITS

(a) While this ORDER is in effect, the Bank shall not accept, renew, or rollover
any brokered deposit, as defined by 12 C.F.R. § 337.6(a)(2), unless it is in
compliance with the requirements of 12 C.F.R. § 337.6(b) governing solicitation
and acceptance of brokered deposits by insured depository institutions.

 

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(b) Within 30 days of the effective date of this ORDER, the Bank shall submit to
the Supervisory Authorities a written plan for eliminating its reliance on
brokered deposits. The plan shall detail the current composition of brokered
deposits by maturity and explain the means by which such deposits will be paid
or rolled over. Within 30 days of receipt of comments from the Supervisory
Authorities, the Bank shall incorporate those comments into the plan and approve
the revised plan, which approval shall be recorded in the minutes of the Board
meeting. For purposes of this ORDER, brokered deposits are defined as described
in 12 C.F. R. § 337.6.

(c) The Bank shall comply with the restrictions on the effective yields on
deposits described in 12 C.F.R. § 337.6.

 

17. ASSET GROWTH LIMITATIONS

While this ORDER is in effect, the Bank shall limit asset growth to no more than
five percent (5%) per calendar year and in no event shall asset growth result in
noncompliance with the capital maintenance provisions of this ORDER without
receiving prior written approval of the Supervisory Authorities.

 

18. PROGRESS REPORTS

Within 30 days from the end of the first quarter following the effective date of
this ORDER, and within 30 days of the end of each quarter thereafter, the Bank
shall furnish written progress reports to the Supervisory Authorities detailing
the form and manner of any actions taken to secure compliance with this ORDER
and the results thereof. Such reports shall include a copy of the Bank’s Reports
of Condition and Income. Such reports may be discontinued when the corrections
required by this ORDER have been accomplished and the Supervisory

 

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Authorities have released the Bank in writing from making further reports. All
progress reports and other written responses to this ORDER shall be reviewed by
the Board and made a part of the minutes of the appropriate Board meeting.

 

19. DISCLOSURE

Following the effective date of this ORDER, the Bank shall send to its
shareholders or otherwise furnish a description of this ORDER in conjunction
with the Bank’s next shareholder communication and also in conjunction with its
notice or proxy statement preceding the Bank’s next shareholder meeting. The
description shall fully describe the ORDER in all material respects. The
description and any accompanying communication, statement, or notice shall be
sent to the FDIC, Division of Supervision and Consumer Protection, Accounting
and Securities Disclosure Section, 550 17th Street, Room F-6066, Washington,
D.C. 20429 and to the Commissioner, South Carolina Board of Financial
Institutions, 1205 Pendleton Street, Suite 305, Columbia, South Carolina 29201,
at least fifteen (15) days prior to dissemination to shareholders. Any changes
requested to be made by the Supervisory Authorities shall be made prior to
dissemination of the description, communication, notice, or statement.

The provisions of this ORDER shall not bar, estop, or otherwise prevent the
FDIC, the State Board, or any other federal or state agency or department from
taking any other action against the Bank or any of the Bank’s current or former
institution-affiliated parties.

This ORDER shall be effective on the date of issuance.

The provisions of this ORDER shall be binding upon the Bank, its
institution-affiliated parties, and any successors and assigns thereof.

 

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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 in writing.

Issued Pursuant to Delegated Authority.

 

Dated this 1st day of March, 2011.

/s/ John P. Henrie, for

Thomas J. Dujenski Regional Director Atlanta Region Federal Deposit Insurance
Corporation

 

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The Commissioner, having duly approved the foregoing ORDER on behalf of the
State Board, and the Bank, through its Board, agree that the issuance of the
said ORDER by the Federal Deposit Insurance Corporation shall be binding as
between the Bank and the State Board to the same degree and legal effort that
such ORDER would be binding on the Bank if the State Board had issued a separate
ORDER that included and incorporated all of the provisions of the foregoing
ORDER pursuant to S.C. Code Ann. § 34-1-60.

Dated this 24th day of February, 2011.

 

/s/ Louie A. Jacobs

Louie A. Jacobs Commissioner South Carolina Board of Financial Institutions

 

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