Exhibit 10.1

 
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
__________________________________
)
In the Matter
of                                                                        )       SUPERVISORY
)       PROMPT CORRECTIVE ACTION
COMMUNITY SHORES
BANK                                            )       DIRECTIVE
MUSKEGON, MICHIGAN                                                     )
)
)       FDIC–11–412PCAS
(INSURED STATE NONMEMBER BANK)                        )
__________________________________                    )

WHEREAS, Community Shores Bank, Muskegon, Michigan (“Bank”), is an
undercapitalized depository institution as that term is defined in Section
38(b)(1) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1831o(b)(1),
and section 325.103 of the Federal Deposit Insurance Corporation (“FDIC”) Rules
and Regulations, 12 C.F.R. § 325.103;
 
WHEREAS, pursuant to a letter dated February 8, 2011, the FDIC notified the Bank
of its undercapitalized capital category as a result of the filing of the
December 31, 2010 Call Report and required the Bank to submit an acceptable
capital restoration plan compliant with Section 38(e)(2) of the Act, 12 U.S.C. §
1831o(e)(2), and section 325.104 for the FDIC Rules and Regulations, 12 C.F.R. §
325.104;
 
WHEREAS, the Bank submitted a capital restoration plan dated March 14, 2011,
that failed to adequately specify the information required under Section
38(e)(2) of the Act, 12
U.S.C. § 1831o(e)(2), and section 325.104 of the FDIC Rules and Regulations, 12
C.F.R. § 325.104;
 
 
 

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WHEREAS, on April 29, 2011, the Bank submitted a revised capital restoration
plan that also failed to satisfy the requirements of Section 38(e)(2) of the
Act, 12 U.S.C. § 1831o(e)(2), and section 325.104 of the FDIC Rules and
Regulations, 12 C.F.R. § 325.104;
 
WHEREAS, the Bank’s condition continues to deteriorate;
 
WHEREAS, the Bank’s management has not demonstrated the ability to return the
Bank to a safe and sound condition;
 
WHEREAS, the Bank’s unacceptable capital restoration plan and deteriorating
condition and management’s inability to return the Bank to a safe and sound
condition require that prompt corrective action be taken immediately;
 
WHEREAS, the actions in this SUPERVISORY PROMPT CORRECTIVE ACTION DIRECTIVE
(“Directive”) are necessary to carry out the purposes of Section 38 of the Act
including Section 38(e)(5), 12 U.S.C. § 1831o(e)(5);
 
THEREFORE, the FDIC finds it necessary, in order to carry out the purposes of
Section 38 of the Act, to issue this Directive without providing notice as set
forth in section 308.201(a)(1) of the FDIC’s Rules of Practice and Procedure, 12
C.F.R. § 308.201(a)(1), and hereby issues this Directive pursuant to Section 38
of the Act, 12 U.S.C. § 1831o, and section 308.201(a)(2) of the FDIC’s Rules of
Practice and Procedure, 12 C.F.R. § 308.201(a)(2).
 
 
 

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SUPERVISORY PROMPT CORRECTIVE ACTION DIRECTIVE
 
IT IS HEREBY DIRECTED:
 
(a)           That within 60 days of the effective date of this Directive, the
Bank shall increase the volume of capital to a level sufficient to restore the
Bank to an “adequately capitalized” capital category as defined in section
325.103(b)(2) of the FDIC Rules and Regulations, 12 C.F.R. § 325.103(b)(2).
 
(b)           Any increase in Tier 1 capital necessary to meet the requirements
of this Directive may be accomplished by the following:
 
(i)  
the sale of common stock; or

(ii)  
the sale of non cumulative perpetual preferred stock; or

(iii)  
the direct contribution of cash by the board of directors and/or shareholders of
the Bank; or

(iv)  
any other means acceptable to the Regional Director of the FDIC’s Chicago
Regional Office.

 
(c)           Any increase in Tier 1 capital necessary to meet the requirements
of this Directive may not be accomplished through a deduction from the Bank’s
allowance for loan and lease losses.
 
FURTHER DIRECTED, that the provisions of this Directive shall not affect the
obligations imposed on the Bank by Section 38 of the Act, 12 U.S.C. § 1831o, or
by the mandatory provisions applicable to undercapitalized institutions found at
Section 325.105(a)(1)–(2) of the FDIC Rules and Regulations, 12 C.F.R. §
325.105.
 
 
 

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FURTHER DIRECTED, that the provisions of this Directive shall not affect the
obligations of the Bank pursuant to any other action issued against the Bank by
the FDIC;
 
FURTHER DIRECTED, that this Directive shall become effective immediately.
 
Each provision of this Directive shall be binding upon the Bank, its directors,
officers, employees, agents, successors, assigns, and other
institution-affiliated parties of the Bank.
 
Each provision of this Directive shall remain effective and enforceable until
the Bank has been adequately capitalized on average for four (4) consecutive
calendar quarters, except to the extent that any provision shall be modified,
terminated, suspended, or set aside by the FDIC.
 
The Bank may file a written appeal of this Directive within fourteen (14)
calendar days from the date of the issuance of this Directive as provided in
section 308.201(a)(2) of the FDIC’s Rules of Practice and Procedure, 12 C.F.R. §
308.201(a)(2).
 
The appeal shall be filed with M. Anthony Lowe, Regional Director, Federal
Deposit Insurance Corporation, Chicago Regional Office, 300 South Riverside
Plaza, Suite 1700, Chicago, Illinois, 60606, with a copy to Timothy E. Divis,
Regional Counsel, Federal Deposit Insurance Corporation, Chicago Regional
Office, 300 South Riverside Plaza, Suite 1700, Chicago, Illinois 60606.
 
 
 

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Pursuant to delegated authority.
Date this _17TH___ day of August, 2011.

/s/                                                             
M. Anthony Lowe
Regional Director
Division of Risk Management
Supervision