Exhibit 10.1

 

UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.

 

Written Agreement by and between

 

TIDELANDS BANCSHARES, INC.

Mount Pleasant, South Carolina

 

and

 

 

 

 

Docket No. 11-022-WA/RB-HC

FEDERAL RESERVE BANK OF RICHMOND

Richmond, Virginia

 

 

 

WHEREAS, Tidelands Bancshares, Inc., Mount Pleasant, South Carolina
(“Bancshares”), a registered bank holding company, owns and controls Tidelands
Bank, Mount Pleasant, South Carolina (the “Bank”), a state-chartered nonmember
bank, and various nonbank subsidiaries;

 

WHEREAS, it is the common goal of Bancshares and the Federal Reserve Bank of
Richmond (the “Reserve Bank”) to maintain the financial soundness of Bancshares
so that Bancshares may serve as a source of strength to the Bank;

 

WHEREAS, Bancshares and the Reserve Bank have mutually agreed to enter into this
Written Agreement (the “Agreement”); and

 

WHEREAS, on March 4, 2011, the board of directors of Bancshares, at a duly
constituted meeting, adopted a resolution authorizing and directing Larry W.
Tarleton to enter into this Agreement on behalf of Bancshares, and consenting to
compliance with each and every provision of this Agreement by Bancshares and its
institution-affiliated parties, as

 

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defined in sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as
amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

 

NOW, THEREFORE, Bancshares and the Reserve Bank agree as follows:

 

Source of Strength

 

1.                                       The board of directors of Bancshares
shall take appropriate steps to fully utilize Bancshares’ financial and
managerial resources, pursuant to section 225.4 (a) of Regulation Y of the Board
of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R.
§ 225.4(a)), to serve as a source of strength to the Bank, including, but not
limited to, taking steps to ensure that the Bank complies with the Consent Order
issued by the Federal Deposit Insurance Corporation (“FDIC”) on December 28,
2010, and any other supervisory action taken by the Bank’s federal or state
regulator.

 

Dividends and Distributions

 

2.                                       (a)                                 
Bancshares shall not declare or pay any dividends without the prior written
approval of the Reserve Bank and the Director of the Division of Banking
Supervision and Regulation of the Board of Governors (the “Director”).

 

(b)                                 Bancshares shall not directly or indirectly
take dividends or any other form of payment representing a reduction in capital
from the Bank without the prior written approval of the Reserve Bank.

 

(c)                                  Bancshares and its nonbank subsidiaries
shall not make any distributions of interest, principal, or other sums on
subordinated debentures or trust preferred securities without the prior written
approval of the Reserve Bank and the Director.

 

(d)                                 All requests for prior approval shall be
received by the Reserve Bank at least 30 days prior to the proposed dividend
declaration date. All requests shall contain, at a

 

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minimum, current and projected information on Bancshares’s capital, earnings,
and cash flow; the Bank’s capital, asset quality, earnings, and allowance for
loan and lease losses; and identification of the sources of funds for the
proposed payment or distribution. For requests to declare or pay dividends,
Bancshares must also demonstrate that the requested declaration or payment of
dividends is consistent with the Board of Governors’ Policy Statement on the
Payment of Cash Dividends by State Member Banks and Bank Holding Companies,
dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at
page 4-323).

 

Capital Plan

 

3.                                       Within 60 days of this Agreement,
Bancshares shall submit to the Reserve Bank an acceptable written plan to
maintain sufficient capital at Bancshares on a consolidated basis. The plan
shall, at a minimum, address, consider, and include:

 

(a)                             The consolidated organization’s and the Bank’s
current and future capital requirements, including compliance with the Capital
Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1
Leverage Measure, Appendices A and D of Regulation Y of the Board of Governors
(12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy
guidelines for the Bank issued by the Bank’s federal regulator;

 

(b)                            the adequacy of the Bank’s capital, taking into
account the volume of classified credits, its risk profile, the adequacy of the
allowance for loan and lease losses, current and projected asset growth, and
projected earnings;

 

(c)                             the source and timing of additional funds
necessary to fulfill the consolidated organization’s and the Bank’s future
capital requirements;

 

(d)                            supervisory requests for additional capital at
the Bank or the requirements of any supervisory action imposed on the Bank by
its federal or state regulator; and

 

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(e)                                  the requirements of section 225.4(a) of
Regulation Y of the Board of Governors that Bancshares serve as a source of
strength to the Bank.

 

4.                                       Bancshares shall notify the Reserve
Bank, in writing, no more than 45 days after the end of any quarter in which any
of Bancshares’s capital ratios fall below the approved plan’s minimum ratios.
Together with the notification, Bancshares shall submit an acceptable written
plan that details the steps that Bancshares will take to increase Bancshares’
capital ratios to or above the approved plan’s minimums.

 

Debt and Stock Redemption

 

5.                                       (a)                                 
Bancshares and its nonbank subsidiaries shall not, directly or indirectly,
incur, increase, or guarantee any debt without the prior written approval of the
Reserve Bank. All requests for prior written approval shall contain, but not be
limited to, a statement regarding the purpose of the debt, the terms of the
debt, and the planned source(s) for debt repayment, and an analysis of the cash
flow resources available to meet such debt repayment.

 

(b)                                 Bancshares shall not, directly or
indirectly, purchase or redeem any shares of its stock without the prior written
approval of the Reserve Bank.

 

Compliance with Laws and Regulations

 

6.                                       (a)                                  In
appointing any new director or senior executive officer, or changing the
responsibilities of any senior executive officer so that the officer would
assume a different senior executive officer position, Bancshares shall comply
with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and
Subpart H of Regulation Y of the Board of Governors (12 C. F.R. §§ 225.71 et
seq.).

 

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(b)                                 Bancshares shall comply with the
restrictions on indemnification and severance payments of section 18 (k) of the
FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the FDIC’s regulations (12 C.F.R.
Part 359).

 

Approval and Implementation of Plans

 

7.                                       (a)                                 
Bancshares shall submit written plans that are acceptable to the Reserve Bank
within the applicable time periods set forth in paragraphs 3 and 4.

 

(b)                                 Within 10 days of approval by the Reserve
Bank, Bancshares shall adopt the approved plans. Upon adoption, Bancshares shall
promptly implement the approved plans, and thereafter fully comply with them.

 

(c)                                  During the term of this Agreement, the
approved plans shall not be amended or rescinded without the prior written
approval of the Reserve Bank.

 

Progress Reports

 

8.                                       Within 30 days after the end of each
calendar quarter following the date of this Agreement, the board of directors
shall submit to the Reserve Bank written progress reports detailing the form and
manner of all actions taken to secure compliance with the provisions of this
Agreement and the results thereof, and a parent company only balance sheet,
income statement, and, as applicable, report of changes in stockholders’ equity.

 

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Communications

 

9.                                  All communications regarding this Agreement
shall be sent to:

 

(a)                                  A. Linwood Gill, III

Vice President

Federal Reserve Bank of Richmond

P.O. Box 27622

Richmond, Virginia 23261-7622

 

(b)                                 Mr. Robert E. Coffee, Jr.

President and CEO

Tidelands Bancshares, Inc.

P.O. Box 1087

Mount Pleasant, South Carolina 29465

 

Miscellaneous

 

10.                                 Notwithstanding any provision of this
Agreement, the Reserve Bank may, in its sole discretion, grant written
extensions of time to Bancshares to comply with any provision of this Agreement.

 

11.                                 The provisions of this Agreement shall be
binding upon Bancshares and its institution-affiliated parties, in their
capacities as such, and their successors and assigns.

 

12.                                 Each provision of this Agreement shall
remain effective and enforceable until stayed, modified, terminated, or
suspended in writing by the Reserve Bank.

 

13.                                 The provisions of this Agreement shall not
bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or
any other federal or state agency from taking any other action affecting
Bancshares, the Bank, the nonbank subsidiaries of Bancshares, or any of their
current or former institution-affiliated parties and their successors and
assigns.

 

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14.                                 Pursuant to section 50 of the FDI Act (12
U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under
section 8 of the FDI Act (12 U.S.C. § 1818).

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the 18th day of March, 2011.

 

 

TIDELANDS BANCSHARES, INC.

 

FEDERAL RESERVE BANK OF RICHMOND

 

 

 

 

 

 

By:

/s/ Larry W. Tarleton

 

By:

/s/ A. Linwood Gill, III

 

Larry W. Tarleton

 

 

A. Linwood Gill, III

 

Acting Chairman

 

 

Vice President

 

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