EXHIBIT 10
FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

AND

STATE OF MICHIGAN

OFFICE OF FINANCIAL AND INSURANCE REGULATION

LANSING, MICHIGAN

       
)
 
In the Matter of
)
CONSENT ORDER
 
)
 
MONROE BANK & TRUST
)
FDIC-10-163b
MONROE, MICHIGAN
)
   
)
 
(STATE CHARTERED
)
 
INSURED NONMEMBER BANK)
)
   
)
 

Monroe Bank & Trust, Monroe, Michigan (“Bank”), having been advised of its right
to a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking
practices alleged to have been committed by the Bank, and of its right to a
hearing on the charges under section 8(b) of the Federal Deposit Insurance Act
(“Act”), 12 U.S.C. § 1818(b), and under § 2304 of the Banking Code of 1999,
Mich. Comp Laws § 487.12304, regarding hearings before the Office of Financial
and Insurance Regulation for the State of Michigan (“OFIR”), and having waived
those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A
CONSENT  ORDER (“STIPULATION”) with representatives of the Federal Deposit
Insurance Corporation (“FDIC”) and the OFIR, dated July 12, 2010, whereby,
solely for the purpose of this proceeding and without admitting or denying the
charges of unsafe or unsound banking practices relating to capital, earnings,
and asset quality, the Bank consented to the issuance of a CONSENT ORDER
(“ORDER”) by the FDIC and the OFIR.
The FDIC and the OFIR considered the matter and decided to accept this
STIPULATION
Having also determined that the requirements for issuance of an order under 12
U.S.C. § 1818(b) and under Section 2304 of the Banking Code of 1999, Mich. Comp.
Laws 487.12304 have been satisfied, the FDIC and OFIR HEREBY ORDER that the
Bank, its institution-affiliated parties, as that term is defined in section
3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns, take
affirmative action as follows:
 
CAPITAL
1.           (a)           Within 90 days from the effective date of this ORDER,
the Bank shall have and maintain its level of Tier 1 capital as a percentage of
its total assets (“capital ratio”) at a minimum of 8.0 percent and its level of
qualifying total capital as a percentage of risk-weighted assets (“total risk
based capital ratio”) at a minimum of 11.0 percent. For purposes of this ORDER,
Tier 1 capital, qualifying total capital, total assets, and risk-weighted assets
shall be calculated in accordance with Part 325 of the FDIC Rules and
Regulations (“Part 325”), 12 C.F.R. Part 325.
(b)           Within 180 days of the effective date of this ORDER, the Bank
shall increase and maintain its capital ratio at a minimum of 9% and its total
risk-based capital ratio at a minimum of 12%.
(c)           If, while this ORDER is in effect, the Bank increases capital by
the sale of new securities, the board of directors of the Bank shall adopt and
implement a plan for the sale of such additional securities, including the
voting of any shares owned or proxies held by or controlled by them in favor of
said plan.  Should the implementation of the plan involve public distribution of
Bank securities, including a distribution limited only to the Bank’s existing
shareholders, the Bank shall prepare detailed offering materials fully
describing the securities being offered, including an accurate description of
the financial condition of the Bank and the circumstances giving rise to the
offering, and other material disclosures necessary to comply with Federal
securities laws.  Prior to the implementation of the plan and, in any event, not
less than 20 days prior to the dissemination of such materials, the materials
used in the sale of the securities shall be submitted to the FDIC Registration
and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 and to the
OFIR Securities Section, 611 W Ottawa, Lansing, MI, 48933 for review.  Any
changes requested to be made in the materials by the FDIC or the OFIR shall be
made prior to their dissemination.
 

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(d)           In complying with the provisions of this paragraph, the Bank shall
provide to any subscriber and/or purchaser of Bank securities written notice of
any planned or existing development or other changes which are materially
different from the information reflected in any offering materials used in
connection with the sale of Bank securities.  The written notice required by
this paragraph shall be furnished within 10 calendar days of the date any
material development or change was planned or occurred, whichever is earlier,
and shall be furnished to every purchaser and/or subscriber of the Bank’s
original offering materials.
 
LOSS CHARGE-OFF
2.           As of the effective date of this Order, the Bank shall charge off
from its books and records any loan classified “Loss” pursuant to the Report of
Examination (“ROE”)of the Bank dated October 26, 2009, that has not already been
charged-off.
 
PROHIBITION OF ADDITIONAL LOANS TO CLASSIFIED BORROWERS
3.           (a)           As of the effective date of this ORDER, the Bank
shall not extend, directly or indirectly, any additional credit to, or for the
benefit of, any borrower who is already obligated in any manner to the Bank on
any extensions of credit (including any portion thereof) that has been charged
off the books of the Bank or classified “Loss” in the ROE, so long as such
credit remains uncollected.
(b)           As of the effective date of this ORDER, the Bank shall not extend,
directly or indirectly, any additional credit to, or for the benefit of, any
borrower whose loan or other credit has been classified “Substandard” or
“Doubtful”  in the ROE, and is uncollected, unless the Bank’s board of directors
has adopted, prior to such extension of credit, a detailed written statement
giving the reasons why such extension of credit is in the best interest of the
Bank.  A copy of the statement shall be signed by each Director, and
incorporated in the minutes of the applicable board of directors’ meeting. A
copy of the statement shall be placed in the appropriate loan file.

REDUCTION OF DELINQUENCIES AND CLASSIFIED ASSETS
4.           (a)           Within 60 days from the effective date of this ORDER,
the Bank shall adopt, implement, and adhere to, a written plan to reduce the
Bank’s risk position in each asset in excess of $1,000,000 which is more than 90
days delinquent or classified “Substandard” or “Doubtful” in the ROE. The plan
shall include, but not be limited to, provisions which:
 
(i)
Prohibit an extension of credit for the payment of interest, unless the Board
provides, in writing, a detailed explanation of why the extension is in the best
interest of the Bank;

 
(ii)
Provide for review of the current financial condition of such delinquent or
classified borrower, as defined above, including a review of borrower cash flow
and collateral value;

 
(iii)
Delineate areas of responsibility for loan officers;

 
(iv)
Establish dollar levels to which the Bank shall reduce delinquencies and
classified assets within 6 and 12 months from the effective date of this ORDER;
and

 
(v)
Provide for the submission of monthly written progress reports to the Bank’s
board of directors for review and notation in minutes of the meetings of the
board of directors.

(b)           As used in this paragraph, “reduce” means to: (1) collect; (2)
charge off; (3) sell; or (4) improve the quality of such assets so as to warrant
removal of any adverse classification by the FDIC and the OFIR.
(c)           A copy of the plan required by this paragraph shall be submitted
to the Regional Director of the FDIC (“Regional Director”) and Chief Deputy
Commissioner of the OFIR (“Chief Deputy Commissioner”).
(d)           While this ORDER remains in effect, the plan shall be revised to
include assets in excess of $1 million which become more than 90 days delinquent
after the effective date of this ORDER or are adversely classified at any
subsequent examinations.
 
DIVIDEND RESTRICTION
5.           As of the effective date of this ORDER, the Bank shall not declare
or pay any dividend without the prior written consent of the Regional Director
and Chief Deputy Commissioner.
 
ALLOWANCE FOR LOAN AND LEASE LOSSES
6.           (a)           After the effective date of this ORDER, and prior to
the submission of all Reports of Condition and Income required by the FDIC, the
board of directors of the Bank shall review the adequacy of the Bank’s ALLL,
provide for an adequate ALLL, and accurately report the same. The minutes of the
board meeting at which such review is undertaken shall indicate the findings of
the review, the amount of increase in the ALLL recommended, if any, and the
basis for determination of the amount of ALLL provided.  In making these
determinations, the board of directors shall consider the FFIEC Instructions for
the Reports of Condition and Income and any analysis of the Bank’s ALLL provided
by the FDIC or OFIR.
 

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(b)           ALLL entries required by this paragraph shall be made prior to any
capital determinations required by this ORDER.
 
PROFIT PLAN AND BUDGET
7.           (a)           Within 60 days from the effective date of this ORDER,
the Bank shall adopt, implement, and adhere to a written profit plan and a
realistic, comprehensive budget for all categories of income and expense for
calendar years 2010 and 2011.  The plans required by this paragraph shall
contain formal goals and strategies, consistent with sound banking practices, to
reduce discretionary expenses and to improve the Bank’s overall earnings; and
shall contain a description of the operating assumptions that form the basis for
major projected income and expense components; and shall identify the major
areas in, and means by which, earnings will be improved and expenses reduced..
(b)           Within 30 days from the end of each calendar quarter following
completion of the profit plans and budgets required by this paragraph, the
Bank’s board of directors shall evaluate the Bank’s actual performance in
relation to the plan and budget, record the results of the evaluation, and note
any actions taken by the Bank in the minutes of the board of directors’ meeting
at which such evaluation is undertaken.
(c)           A written profit plan and budget shall be prepared for each
calendar year for which this ORDER is in effect.
(d)           Copies of the plans and budgets required by this paragraph shall
be submitted to the Regional Director and Chief Deputy Commissioner.
 
NOTIFICATION TO SHAREHOLDER
8.           Following the effective date of this ORDER, the Bank shall send to
its shareholder, a copy of this ORDER: (1) in conjunction with the Bank’s next
shareholder communication; or (2) in conjunction with its notice or proxy
statement preceding the Bank’s next shareholder meeting.
 
MONITORING
9.           Within 30 days from the effective date of this ORDER, the Bank’s
board of directors shall have in place a program that will provide for
monitoring of the Bank’s compliance with this ORDER.
 
PROGRESS REPORTS
10.         Within 30 days from the end of each calendar quarter following the
effective date of this ORDER, the Bank shall furnish to the Regional Director
and Chief Deputy Commissioner written progress reports signed by each member of
the Bank’s board of directors, detailing the actions taken to secure compliance
with the ORDER and the results thereof.
The effective date of this ORDER shall be 10 days after the date of its issuance
by the FDIC and the OFIR.
The provisions of this ORDER shall be binding upon the Bank, its
institution-affiliated parties, and any successors and assigns thereof.
The provisions of this ORDER shall remain effective and enforceable except to
the extent that, and until such time as, any provision has been modified,
terminated, suspended, or set aside by the FDIC and the OFIR.

Pursuant to delegated authority.
 
Dated:  July 12, 2010

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

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