Exhibit 10.1

UNITED STATES OF AMERICA

Before the

OFFICE OF THRIFT SUPERVISION

 

    )     

In the Matter of

  )      Order No.: SE-11-010   )        )      FIRST COMMUNITY BANK OF
AMERICA  

)

)

     Effective Date: February 24, 2011   )     

Pinellas Park, Florida

  )     

OTS Docket No. 08074

  )          )     

ORDER TO CEASE AND DESIST

WHEREAS, First Community Bank of America, Pinellas Park, Florida, OTS Docket
No. 08074 (Association), by and through its Board of Directors (Board), has
executed a Stipulation and Consent to the Issuance of an Order to Cease and
Desist (Stipulation); and

WHEREAS, the Association, by executing the Stipulation, has consented and agreed
to the issuance of this Order to Cease and Desist (Order) by the Office of
Thrift Supervision (OTS) pursuant to 12 U.S.C. § 1818(b); and

WHEREAS, pursuant to delegated authority, the OTS Regional Director for the
Southeast Region (Regional Director) is authorized to issue Orders to Cease and
Desist where a savings association has consented to the issuance of an order.

NOW, THEREFORE, IT IS ORDERED that:

 

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Cease and Desist.

1. The Association, its institution-affiliated parties,1 and its successors and
assigns, shall cease and desist from any action (alone or with others) for or
toward causing, bringing about, participating in, counseling, or the aiding and
abetting the unsafe or unsound banking practices that resulted in:

(a) operating the Association with an inadequate level of capital protection for
the volume, type and quality of assets held by the Association;

(b) operating with inadequate earnings to augment capital and support reserves;

(c) operating with an excessive level of adversely classified loans and assets;

(d) operating the Association without an adequate and effective risk management
function;

(e) operating the Association with an inadequate allowance for loan and lease
losses (ALLL) for the volume, type, and quality of loans and leases held;

(f) operating with inadequate liquidity and funds management policies;

(g) operating the Association with an excessive concentration of nonresidential
real estate, land, interest only residential, and home equity lines of credit
loans; and

(h) operating in contravention of supervisory policy statements and other
guidance, including, but not limited to:

(i) the Interagency Guidelines Establishing Standards for Safety and Soundness;

(ii) the Interagency Policy Statement on ALLL (December 13, 2006) and OTS

 

 

1

The term “institution-affiliated party” is defined at 12 U.S.C. § 1813(u).

 

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Chief Executive Officer Memorandum No. 304 (ALLL-Observed Thrift Practices
Including Sound Practices), and

(iii) the Interagency Policy Statement on Funding and Liquidity Risk Management
(March 17, 2010).

2. The Association, its institution-affiliated parties, and its successors and
assigns, shall also cease and desist from any action (alone or with others) for
or toward causing, bringing about, participating in, counseling, or the aiding
and abetting violations of the following laws and regulations:

(a) 12 C.F.R. Part 215 (relating to transactions with insiders);

(b) 12 C.F.R. Part 223 and 12 C.F.R. § 563.41 (relating to transactions with
affiliates);

(c) 12 C.F.R. § 560.160 (relating to ALLL);

(d) 12 C.F.R. § 563.180 (relating to SAR filings); and

(e) 12 C.F.R. § 572.9 (relating to flood insurance).

Capital.

3. By June 30, 2011, the Association shall have and maintain a Tier 1 (Core)
Capital Ratio equal to or greater than eight percent (8%) and a Total Risk-Based
Capital Ratio equal to or greater than thirteen percent (13%).2

4. Within sixty (60) days, the Association shall submit a written plan to
achieve and maintain the Association’s capital at the levels prescribed in
Paragraph 3 (Capital Plan) that is acceptable to the Regional Director. At a
minimum, the Capital Plan shall:

 

 

2

The requirement in Paragraph 3 to have and maintain a specific capital level
means that the Association may not be deemed to be “well-capitalized” for
purposes of 12 U.S.C. §1831o and 12 C.F.R. Part 565, pursuant to 12 C.F.R.
§565.4(b)(1)(iv).

 

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(a) identify the specific sources of additional capital needed, and the
timeframes and methods by which the additional capital will be raised, including
specific target dates and corresponding capital levels;

(b) detail the Association’s capital preservation and enhancement strategies
with specific narrative goals;

(c) address the requirements and restrictions imposed by this Order relating to
capital under different forward-looking scenarios involving progressively
stressed economic environments;

(d) include detailed quarterly financial projections, including Tier 1 (Core)
and Total Risk-Based Capital Ratios;

(e) address the Association’s level of classified assets, ALLL, earnings, asset
concentrations, liquidity needs, and trends in the foregoing areas; and

(f) address current and projected trends in real estate market conditions.

5. Upon receipt of written notification from the Regional Director that the
Capital Plan is acceptable, the Association shall implement and adhere to the
Capital Plan. A copy of the Capital Plan and the Board meeting minutes
reflecting the Board’s adoption thereof shall be provided to the Regional
Director within twenty (20) days after the Board meeting.

6. At each monthly board meeting, beginning with the first board meeting
following receipt of written notification from the Regional Director that the
Capital Plan is acceptable, the Board shall review the Association’s compliance
with the Capital Plan. At a minimum, the Board’s review shall include:

(a) a comparison of actual operating results to projected results;

 

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(b) detailed explanations of any material deviations;3 and

(c) a discussion of specific corrective actions or measures that have been or
will be implemented to address each material deviation.

7. Within fifteen (15) days after: (a) the Association fails to meet the capital
requirements prescribed in Paragraph 3; (b) the Association fails to comply with
the Capital Plan prescribed in Paragraph 4; or (c) any written request from the
Regional Director, the Association shall submit a written Contingency Plan that
is acceptable to the Regional Director.

8. The Contingency Plan shall detail the actions to be taken, with specific time
frames, to achieve one of the following results by the later of the date of
receipt of all required regulatory approvals or sixty (60) days after the
implementation of the Contingency Plan: (a) merger with, or acquisition by,
another federally insured depository institution or holding company thereof; or
(b) voluntary dissolution by filing an appropriate application with the OTS in
conformity with applicable laws, regulations and regulatory guidance.

9. Upon receipt of written notification from the Regional Director, the
Association shall implement and adhere to the Contingency Plan immediately. The
Association shall provide the Regional Director with written status reports
detailing the Association’s progress in implementing the Contingency Plan by no
later than the first (1st) and fifteenth (15th) of each month following
implementation of the Contingency Plan.

Business Plan.

10. Within sixty (60) days , the Association shall submit an updated
comprehensive business plan for calendar years 2011 and 2012 (Business Plan)
that addresses all corrective actions in the

 

 

3

A deviation shall be considered material under this Paragraph of the Order when
the Association: determines that it needs to adjust its identified sources of
additional capital, timeframes, methods, or target dates by which it will raise
capital.

 

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2010 Examination relating to the Association’s business operations to the
Regional Director for review and non-objection. Thereafter, the Association
shall submit an updated two year Business Plan at least sixty (60) days prior to
the end of each calendar year. At a minimum, the Business Plan shall conform to
applicable laws, regulations and regulatory guidance and:

(a) include plans to improve the Association’s core earnings and achieve
profitability on a consistent basis throughout the term of the Business Plan;

(b) address detailed strategies and actions the Association will take to reduce
the overall risk profile of the Association;

(c) include specific targets, dates and supporting documentation to demonstrate
the reduction in the overall risk profile of the institution;

(d) include a written contingency funding plan that complies with applicable
law, regulation and regulatory guidance and will ensure that the Association
maintains adequate liquidity to meet deposit demands, including extraordinary
deposit demands, under various adverse scenarios;

(e) include quarterly pro forma financial projections (balance sheet, regulatory
capital ratios, and income statement) for each quarter covered by the Business
Plan; and

(f) include consideration of the requirements of this Order.

11. Upon receipt of written notification of non-objection from the Regional
Director, the Association shall implement and adhere to the Business Plan. A
copy of the Business Plan and the Board meeting minutes reflecting the Board’s
adoption thereof shall be provided to the Regional Director within twenty
(20) days after the Board meeting.

 

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12. Any material modifications4 to the Business Plan must receive the prior
written non-objection of the Regional Director. The Association shall submit
proposed material modifications to the Regional Director at least thirty
(30) days prior to implementation.

13. Within thirty (30) days after the end of each quarter, beginning with the
quarter during which Regional Director non-objection to the Business Plan is
received, the Board shall review quarterly variance reports on the Association’s
compliance with the Business Plan (Variance Reports). The Variance Reports
shall:

(a) identify variances in the Association’s actual performance during the
preceding quarter as compared to the projections set forth in the Business Plan;

(b) contain an analysis and explanation of identified variances; and

(c) discuss the specific measures taken or to be taken to address identified
variances.

14. A copy of the Variance Reports and Board meeting minutes shall be provided
to the Regional Director within ten (10) days after the Board meeting.

Lending.

15. Effective immediately, the Association shall not originate or purchase, or
commit to originate or purchase, any new nonresidential real estate loans
(Covered Loans) until receipt of (a) written notification from the Regional
Director that the Capital Plan is acceptable and (b) written non-objection from
the Regional Director to the Association’s Business Plan.

 

 

4

A modification shall be considered material under this Section of the Agreement
if the Association plans to: (a) engage in any activity that is inconsistent
with the Business Plan; or (b) exceed the level of any activity contemplated in
the Business Plan or fail to meet target amounts established in the Business
Plan by more than ten percent (10%), unless the activity involves assets
risk-weighted fifty percent (50%) or less, in which case a variance of more than
twenty-five percent (25%) shall be deemed to be a material modification.

 

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Allowance for Loan and Lease Losses.

16. Within sixty (60) days, the Association shall revise its policies,
procedures, and methodology relating to the timely establishment and maintenance
of an adequate allowance for loan and lease losses (ALLL) level (ALLL Policy) to
address all corrective actions set forth in the 2010 Examination relating to
ALLL. The ALLL Policy shall comply with applicable laws, regulations, and
regulatory guidance and shall:

(a) incorporate the results of all internal loan reviews and classifications;

(b) address the historical loan loss rates of the Association in compliance with
regulatory guidance;

(c) require an expanded segmentation of the Association’s loan portfolio for
internal loan review analysis;

(d) include an estimate of the potential loss exposure on each significant5
credit;

(e) require the stress testing of loss rates and delinquency rates to:
(i) determine the sensitivity of the ALLL methodology to changes from primary
inputs, and (ii) evaluate the appropriateness of the ALLL in a range of credit
environments;

(g) address the level and impact of the Association’s current concentrations of
credit, including geographic concentrations; and

(h) take into consideration current and prospective market and economic
conditions.

17. Within sixty(60) days, the Association shall retain a qualified and
independent third party to: (a) assess the adequacy and effectiveness of the
Association’s ALLL methodology and its compliance with this Order and applicable
regulatory guidance; and (b) validate the

 

 

5

A credit shall be considered significant for the purposes of assessing,
establishing, and maintaining an appropriate level of ALLL if it is/was FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00) or greater at origination.

 

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sufficiency of the ALLL level as of December 31, 2010 (ALLL Analysis Report).
The Association shall submit a copy of the ALLL Analysis Report to the Regional
Director by May 31, 2011.

18. Within thirty (30) days after the end of each quarter, beginning with the
quarter ending March 31, 2011, the Association shall analyze the adequacy of the
ALLL consistent with its ALLL Policy (Quarterly ALLL Report). The Board’s review
of the Quarterly ALLL Report, including, but not limited to, all qualitative
factors considered in determining the adequacy of the Association’s ALLL, shall
be fully documented in the Board meeting minutes. Any deficiency in the ALLL
shall be remedied by the Association in the quarter in which it is discovered
and before the Association files its Thrift Financial Report (TFR) with the OTS.

Problem Asset Plan.

19. Within sixty (60) days, the Association shall submit an updated
comprehensive written plan with specific strategies, targets and timeframes to
reduce6 the Association’s level of problem assets (Problem Asset Reduction
Plan). The Problem Asset Reduction Plan, at a minimum, shall include:

(a) monthly targets for the level of problem assets expressed as dollar amounts
and a percentage of Tier 1 (Core) capital plus ALLL;

(b) a description of the specific methods for reducing the Association’s level
of problem assets to the established targets;

(c) all relevant assumptions and projections; and

 

 

6

For purposes of this Paragraph, “reduce” means to collect, sell, charge off, or
improve the quality of an asset sufficient to warrant its removal from adverse
criticism or classification.

 

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(d) individual written workout plans for each problem asset, group of loans to
any one borrower or lending relationship of Five Hundred Thousand Dollars
($500,000.00) or greater (Individual Workout Plans).

20. Effective immediately, the Association shall ensure that all Individual
Workout Plans address all corrective actions in the 2010 Examination. Each
Individual Workout Plan shall:

(a) contain detailed strategies and actions that are designed to eliminate the
basis of criticism or classification for each asset or dispose of the asset;

(b) include specific timeframes for the completion of all detailed strategies
and actions, including an exit strategy for each problem asset;

(c) include a thoroughly documented review and analysis of the financial
position of the borrower including, but not limited to, source of repayment,
repayment ability, alternative repayment sources, the value and accessibility of
any pledged or assigned collateral;

(d) include a list of any credit and collateral documentation that is needed to
comply with the Associations lending and appraisal policies; and

(e) detail the actions and steps the Association will take to enhance
collectability of the credit and obtain any necessary credit and collateral
documentation.

21. Within thirty (30) days after the end of each quarter, beginning with the
quarter ending March 31, 2011, the Association shall submit a quarterly written
asset status report (Quarterly Asset Report) to the Board. The Board’s review of
the Quarterly Asset Report shall be documented in the Board meeting minutes. At
a minimum, the Quarterly Asset Report shall include:

 

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(a) a review of the current status of all Individual Workout Plans, including
completion of any required actions by the Association;

(b) a comparison of problem assets to Tier 1 (Core) capital plus ALLL and Total
Risk-Based capital expressed in both dollar amounts and percentages;

(c) a comparison of the level of problem assets at the current quarter end with
the level at the preceding four (4) quarters;

(d) a breakdown of problem assets by type and risk factor;

(e) an assessment of the Association’s compliance with the Problem Asset
Reduction Plan; and

(f) a discussion of the actions taken during the preceding quarter to reduce the
Association’s level of problem.

22. Within twenty (20) days after the end of each quarter, a copy of the
Quarterly Asset Report shall be provided to the Regional Director.

Fair Value Calculations.

23. Effective immediately, the Board shall ensure that Management: (a) performs
fair value calculations on classified loans and loans ninety (90) or more days
past due; (b) updates fair value calculations at least annually for
nonresidential real estate owned (REO) and classified loans not secured by
single-family residences; and (c) updates fair value calculations at least
semi-annually for classified loans secured by single-family residential lots,
single family residences, and residential REO.

 

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Risk Management.

24. Within sixty (60) days, the Association shall develop, implement and adhere
to a formal written Risk Management Function and Plan (RMP) that addresses all
corrective actions discussed in the 2010 Examination related to risk management.
At a minimum, the RMP shall:

(a) require a formal risk assessment that evaluates strategic, functional, and
external environment risks, along with business line and process level risk
assessments, to determine the overall risks in the entire corporate structure;

(b) consider and address the enterprise wide risk management plan adopted by the
Association’s parent holding company;

(c) development of a board level risk committee to monitor and evaluate risk,
including development of corrective actions or steps necessary to address
identified risks; (d) require periodic risk management reports to be presented
to the risk committee analyzing newly identified risks or changes in previously
identified risks, including updates on the completion of corrective actions; and

(e) quarterly reporting to the full Board.

Liquidity Management.

25. Within sixty (60) days, the Association shall revise its liquidity and funds
management policies and procedures (Liquidity Management Policy) to address all
corrective actions set forth in the 2010 Examination relating to liquidity and
funds management. The Liquidity Management Policy shall comply with all
applicable laws, regulations and regulatory guidance, including the Interagency
Policy Statement on Funding and Liquidity Risk Management (March 17, 2010) (the
“Liquidity IPS”). The Liquidity Management Policy shall incorporate a projected

 

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sources and uses of funds analysis that is consistent with the guidance set
forth in the Liquidity IPS.

26. The Liquidity Management Policy shall include a Contingency Funding Plan,
which shall, at a minimum, include:

(a) alternative funding sources for meeting extraordinary demands or to provide
liquidity in the event the sources identified are insufficient. Such alternative
funding sources must consider, at a minimum, the selling of assets, obtaining
secured lines of credit, recovering charged-off assets, injecting additional
equity capital, and the priority of their implementation; and

(b) sources and uses of funds projections under various stress scenarios
including, but not limited to, (i) falling below PCA well-capitalized status;
(ii) restricted access to brokered deposits; (iii) restricted access to FHLB
borrowings; (iv) loss of uninsured deposits; and (v) limitations on deposit
offering rates.

27. Beginning on April 30, 2011, the Association shall submit to the Regional
Director a monthly written assessment of its current liquidity position
(Liquidity Report). The Liquidity Report shall be acceptable to the Regional
Director and include an assessment of the Association’s compliance with its
Liquidity Management Policy and Contingency Funding Plan. At a minimum, the
Liquidity Report shall include:

(a) cash on hand;

(b) a maturity schedule of certificates of deposit, including, but not limited
to, large uninsured deposits, brokered deposits, and public funds deposits;

(c) the volatility of demand deposits, including escrow deposits;

 

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(d) a schedule of all funding obligations, including money market accounts,
unfunded loan commitments, outstanding lines of credit and outstanding letters
of credit;

(e) a listing of funding sources, including federal funds sold; unpledged assets
and assets available for sale; and borrowing lines by lender, including original
amount, remaining availability, type and book value of collateral pledged,
terms, and maturity date, if applicable;

(f) an analysis of the continuing availability and volatility of present funding
sources;

(g) an analysis of the impact of decreased cash flow from the Association’s loan
portfolio resulting from delinquent and non-performing loans;

(h) an analysis of the impact of decreased cash flow from the sale of loans or
loan participations; and

(i) a schedule of deposit offering rates by type and maturity compared to
national offering rates as published by the FDIC.

28. Within ten (10) days after receipt of communication from a Federal Home Loan
Bank, Federal Reserve Bank, correspondent bank, or government agency with
collateralized public unit deposits regarding changes in the Association’s
borrowing and/or collateral requirements, the Association shall notify the
Regional Director of such communication.

Non-Agency Securities.

29. Within thirty (30) days after the end of each quarter, beginning with the
quarter ending March 31, 2011, the Association shall prepare and submit a
quarterly written monitoring report on all non-agency securities (Non-Agency
Securities Report) to the Board. The Non-Agency Securities Report shall include
updated price valuations, cash flow stress tests, yield analysis,

 

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and credit ratings. The Association shall obtain quarterly valuations on all
non-agency securities utilizing at least two independent broker price quotes to
support the fair value of these securities.

Fair Lending Monitoring Program.

30. Within sixty (60) days, the Association shall revise its fair lending
program for all lending products (Fair Lending Program) to ensure that it
addresses the corrective actions in the 2010 ROE related to fair lending. The
Association’s Fair Lending Program shall comply with all applicable
nondiscrimination laws, regulations and regulatory guidance and, at a minimum,
shall:

(a) require the Association to institute a comprehensive system to perform
detailed, periodic fair lending monitoring analyses and reviews to detect
violations of applicable nondiscrimination laws, regulations and regulatory
guidance;

(b) require the submission to the Board, or its designated committee, of
periodic written reports regarding the Association’s compliance with its Fair
Lending Program and corrective actions implemented based on the monitoring
analyses and reviews;

(c) require an annual review and revision of applicable written credit product
manuals and other materials, including, but not limited to, advertising and
marketing materials, to ensure ongoing compliance with applicable
nondiscrimination laws, regulations and regulatory guidance;

(d) specify procedures required for new product development to assess any
potential fair lending consequences, particularly relating to nonstandard,
special or added underwriting requirements for particular lending products;

 

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(e) require mandatory and documented fair lending training for appropriate
Association job positions on a periodic basis;

(f) require a comprehensive data integrity program to ensure the accuracy and
completeness of data and other information the Association collects regarding
loan applicants, loan officer compensation, and loan pricing; and

(g) specify appropriate documentation and record retention requirements for the
Association’s products that shall be applicable to all products regardless of
the delivery channel.

Suspicious Activity Reports.

31. Within sixty (60) days, the Association shall revise its policies,
procedures and systems related to Bank Secrecy Act and Anti-Money Laundering
compliance (BSA/AML Compliance Program) to address all corrective actions in the
2010 Examination related to BSA/AML compliance and ensure the Association’s
compliance with all applicable BSA/AML laws, regulations and regulatory
guidance.7 The BSA/AML Compliance Program shall include additional procedures
and controls to ensure that all Suspicious Activity Report (SAR) filing
decisions are thoroughly documented and supported.

Consumer Compliance Program.

32. Within sixty (60) days, the Association shall revise its written consumer
compliance program (Compliance Program) to address all corrective actions set
forth in the 2010 Examination relating to consumer compliance. The Association’s
Compliance Program shall

 

 

7

BSA/AML laws, regulations, and regulatory guidance include, but are not limited
to, the Currency and Foreign Transactions Reporting Act, as amended by the USA
PATRIOT Act and other laws (the Bank Secrecy Act or BSA), 31 USC §§ 5311 et
seq.; the related regulations issued and/or administered by the U.S. Department
of the Treasury’s Financial Crimes Enforcement Network (FinCEN), 31 CFR § 103.11
et seq.; the BSA regulations issued by OTS, 12 CFR § 563.177 and § 563.180; and
the Office of Foreign Assets Control (OFAC) regulations set forth at 31 CFR Part
500 (the OFAC Regulations).

 

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comply with all applicable consumer and other compliance laws, regulations and
regulatory guidance (Compliance Laws and Regulations)8 and be appropriate for
the Association’s size, complexity, product lines and business operations.

Flood Insurance.

33. Within sixty (60) days, the Association shall revise its policies,
procedures and systems related to flood insurance (Flood Program) to address all
corrective actions set forth in the 2010 Examination relating to flood
insurance. The Flood Program shall comply with all applicable laws, regulations
and regulatory guidance, including the requirements of the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as amended,
42 U.S.C. §§ 4001-4129, as implemented by Part 572 of the OTS’s Rules and
Regulations, 12 C.F.R. Part 572 (collectively, Flood Laws and Regulations) Laws
and Regulations.

Brokered Deposits.

34. Effective immediately, the Association shall comply with the requirements of
12 C.F.R. § 337.6(b). The Association shall provide to the Regional Director a
copy of any waiver request submitted to the Federal Deposit Insurance
Corporation (FDIC).

Directorate and Management Changes.

35. Effective immediately, the Association shall comply with the prior
notification requirements for changes in directors and Senior Executive
Officers9 set forth in 12 C.F.R. Part 563, Subpart H.

 

 

8

The term “consumer and other compliance laws, regulations and regulatory
guidance” includes all laws and regulations referenced in Section 1100
(Compliance Oversight Examination Program) of the OTS Examination Handbook.

9

The term “Senior Executive Officer” is defined at 12 C.F.R. § 563.555.

 

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Dividends and Other Capital Distributions.

36. Effective immediately, the Association shall not declare or pay dividends or
make any other capital distributions, as that term is defined in 12 C.F.R. §
563.141, without receiving the prior written approval of the Regional Director
in accordance with applicable regulations and regulatory guidance. The
Association’s written request for approval shall be submitted to the Regional
Director at least thirty (30) days prior to the anticipated date of the proposed
declaration, dividend payment or distribution of capital.

Employment Contracts and Compensation Arrangements.

37. Effective immediately, the Association shall not enter into, renew, extend
or revise any contractual arrangement relating to compensation or benefits for
any Senior Executive Officer or director of the Association, unless it first
provides the Regional Director with not less than forty-five (45) days prior
written notice of the proposed transaction. The notice to the Regional Director
shall include a copy of the proposed employment contract or compensation
arrangement or a detailed, written description of the compensation arrangement
to be offered to such officer or director, including all benefits and
perquisites. The Board shall ensure that any contract, Order or arrangement
submitted to the Regional Director fully complies with the requirements of 12
C.F.R. Part 359, 12 C.F.R. §§ 563.39 and 563.161(b), and 12 C.F.R. Part 570 –
Appendix A, and the Interagency Guidance on Sound Incentive Compensation
Policies contained in OTS Chief Executive Officer Memorandum No. 354.

 

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Golden Parachute and Indemnification Payments.

38. Effective immediately, the Association shall not make any golden parachute
payment10 or prohibited indemnification payment11 unless, with respect to each
such payment, the Association has complied with the requirements of 12 C.F.R.
Part 359 and, as to indemnification payments, 12 C.F.R. § 545.121.

Growth.

39. Effective immediately, the Association shall not increase its total assets
during any quarter in excess of an amount equal to net interest credited on
deposit liabilities during the prior quarter without the prior written notice of
non-objection of the Regional Director.

Third Party Contracts.

40. Effective immediately, the Association shall not enter into any arrangement
or contract with a third party service provider that is significant to the
overall operation or financial condition of the Association12 or outside the
Association’s normal course of business unless, with respect to each such
contract, the Association has: (a) provided the Regional Director with a minimum
of forty-five (45) days prior written notice of such arrangement or contract and
a written determination that the arrangement or contract complies with the
standards and guidelines set forth in Thrift Bulletin 82a (TB 82a); and
(b) received written notice of non-objection from the Regional Director.

 

 

10

The term “golden parachute payment” is defined at 12 C.F.R. § 359.1(f).

11

The term “prohibited indemnification payment” is defined at 12 C.F.R. §
359.1(l).

12

A contract will be considered significant to the overall operation or financial
condition of the Association where the annual contract amount equals or exceeds
two percent (2%) of the Association’s total capital, where there is a foreign
service provider, or where it involves information technology that is critical
to the Association’s daily operations without regard to the contract amount.

 

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Transactions with Affiliates.

41. Effective immediately, the Association shall not engage in any new
transaction with an affiliate unless, with respect to each such transaction, the
Association has complied with the notice requirements set forth in 12 C.F.R. §
563.41(c)(4), which shall include the information set forth in 12 C.F.R. §
563.41(c)(3). The Board shall ensure that any transaction with an affiliate for
which notice is submitted pursuant to this Paragraph, complies with the
requirements of 12 C.F.R. § 563.41 and Regulation W, 12 C.F.R. Part 223.

Violations of Law.

42. Within sixty (60) days, the Association shall ensure that all violations of
law and/or regulation discussed in the 2010 Examination are corrected and that
adequate policies, procedures and systems are established or revised and
thereafter implemented to prevent future violations.

Debt Limitations.

43. Effective immediately, the Association shall not: (a) incur, issue, renew,
or rollover any debt,13 increase any current lines of credit, or otherwise incur
any additional debt without receiving the prior written non-objection of the
Regional Director; or (b) authorize or permit any subsidiary of the Association
to incur, issue, renew, or rollover any debt, increase any current lines of
credit, or otherwise incur any additional debt without receiving the prior
written non-objection of the Regional Director. All written requests to the
Regional Director shall include, at a minimum: a statement regarding the purpose
of the debt; a copy of the debt agreement; the

 

 

13

For purposes of this Paragraph of the Agreement, the term “debt” includes, but
is not limited to: loans, bonds, cumulative preferred stock, hybrid capital
instruments such as subordinated debt or trust preferred securities, and
guarantees of debt; and does not include: liabilities that are incurred in the
ordinary course of business to acquire goods and services and that are normally
recorded as accounts payable under generally accepted accounting principles.

 

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planned source(s) for debt repayment; and an analysis of the cash flow resources
available to meet such debt repayment. The Association’s written request for
non-objection shall be submitted to the Regional Director at least forty-five
(45) days prior to the anticipated date of the proposed debt issuance, renewal,
or rollover; the proposed increase in any current lines of credit; the proposed
guarantee of the debt of any entity; or any other incurrence of additional debt.

Board Oversight of Compliance with Order.

44. Within thirty (30) days, the Board shall designate a committee to monitor
and coordinate the Association’s compliance with the provisions of this Order
and the completion of all corrective actions required in the 2010 Examination
(Compliance Committee). The Compliance Committee shall review all of
management’s corrective actions and make an independent determination of the
Association’s compliance with this Order. The Compliance Committee shall be
comprised of three (3) or more directors, the majority of whom shall be
independent14 directors.

45. Within thirty (30) days after the end of each quarter, beginning with the
quarter ending March 31, 2011, the Compliance Committee shall submit a written
compliance progress report to

 

 

14

For purposes of this Agreement, an individual who is “independent” with respect
to the Association shall be any individual who:

(a) is not employed in any capacity by the Association, its subsidiaries, or its
affiliates, other than as a director;

(b) does not own or control more than ten percent (10%) of the outstanding
shares of the Association or any of its affiliates;

(c) is not related by blood or marriage to any officer or director of the
Association or any of its affiliates, or to any shareholder owning more than ten
percent (10%) of the outstanding shares of the Association or any of its
affiliates, and who does not otherwise share a common financial interest with
any such officer, director or shareholder;

(d) is not indebted, directly or indirectly, to the Association or any of its
affiliates, including the indebtedness of any entity in which the individual has
a substantial financial interest, in an amount exceeding 10 percent (10%) of the
Association’s total Tier 1 (Core) capital; and

(e) has not served as a consultant, advisor, underwriter, or legal counsel to
the Association or any of its affiliates.

 

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the Board (Compliance Tracking Report). The Compliance Tracking Report shall, at
a minimum:

(a) separately list each corrective action required by this and the 2010
Examination;

(b) identify the required or anticipated completion date for each corrective
action; and

(c) discuss the current status of each corrective action, including the
action(s) taken or to be taken to comply with each corrective action; and

(d) detail the Compliance Committee’s determinations regarding the Association’s
compliance with the Order and completion of all corrective actions required in
the 2010 Examination.

46. Within forty-five (45) days after the end of each quarter, beginning with
the quarter ending March 30, 2011, the Board shall review the Compliance
Tracking Report and all reports required by this Order. Following its review,
the Board shall adopt a resolution: (a) certifying that each director has
reviewed the Compliance Tracking Report and all required reports; and
(b) documenting any corrective actions adopted by the Board. A copy of the
Compliance Tracking Report and the Board resolution shall be provided to the
Regional Director within ten (10) days after the Board meeting.

Effective Date, Incorporation of Stipulation.

47. This Order is effective on the Effective Date as shown on the first page.
The Stipulation is made a part hereof and is incorporated herein by this
reference.

Duration.

48. This Order shall remain in effect until terminated, modified, or suspended
by written notice of such action by the OTS, acting by and through its
authorized representatives.

 

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Time Calculations.

49. Calculation of time limitations for compliance with the terms of this Order
run from the Effective Date and shall be based on calendar days, unless
otherwise noted.

50. The Regional Director, or an OTS authorized representative, may extend any
of the deadlines set forth in the provisions of this Order upon written request
by the Association that includes reasons in support for any such extension. Any
OTS extension shall be made in writing.

Submissions and Notices.

51. All submissions, including any reports, to the OTS that are required by or
contemplated by this Order shall be submitted within the specified timeframes.

52. Except as otherwise provided herein, all submissions, requests,
communications, consents or other documents relating to this Order shall be in
writing and sent by first class U.S. mail (or by reputable overnight carrier,
electronic facsimile transmission or hand delivery by messenger) addressed as
follows:

 

  (a) To the OTS:

Regional Director

Office of Thrift Supervision

1475 Peachtree St., NE

Atlanta, Georgia 30309

 

  (b) To the Bank:

Board of Directors

c/o Robert M. Menke, Chairman

First Community Bank of America

9001 Belcher Road

Pinellas Park, FL 33782

 

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No Violations Authorized.

53. Nothing in this Order or the Stipulation shall be construed as allowing the
Association, its Board, officers, or employees to violate any law, rule, or
regulation.

IT IS SO ORDERED.

 

OFFICE OF THRIFT SUPERVISION

By:

 

/s/ James G. Price

  James G. Price   Regional Director, Southeast Region

Date: See Effective Date on page 1

 

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