Exhibit 10.1


 


AGREEMENT BY AND BETWEEN


First National Bank of Chester County


West Chester, Pennsylvania


and


The Office of the Comptroller of the
Currency


 


The First National Bank of Chester County, West
Chester, Pennsylvania (“Bank”) and The Office of the Comptroller of the
Currency of the United States of America (“Comptroller”) wish to protect the
interests of the depositors, other customers, and shareholders of the Bank,
and, toward that end, wish the Bank to operate safely and soundly and in
accordance with all applicable laws, rules and regulations.


 


The Comptroller, through his National Bank
Examiner, has examined the Bank, and his findings are contained in the Report
of Examination (“ROE”) for the examination that commenced on March 1,
2010.  The Comptroller has found unsafe
and unsound banking practices relating to management and board supervision,
asset quality, earnings, liquidity, and capital at the Bank.


 


In consideration of the above premises, it is
agreed, between the Bank, by and through its duly elected and acting Board of
Directors (“Board”), and the Comptroller, through his authorized
representative, that the Bank shall operate at all times in compliance with the
articles of this Agreement.


 


ARTICLE I


 


JURISDICTION


 


(1)           This
Agreement shall be construed to be a “formal written agreement” within the
meaning of 12 C.F.R. § 5.51(c)(6)(ii). 
See 12 U.S.C. § 1831i.


 

















 


(2)           This
Agreement shall be construed to be a “written agreement between such depository
institution and such agency” within the meaning of 12 U.S.C. § 1818(e)(l) and
12 U.S.C. § 1818(i)(2).


 


(3)           This
Agreement shall be construed to be a “written agreement” within the meaning of
12 U.S.C. § 1818(u)(l)(A).


 


(4)           This
Agreement shall cause the Bank to be designated as in “troubled condition,” as
set forth in 12 C.F.R. § 5.51(c)(6), unless otherwise informed in writing by
the Comptroller.  In addition, this
Agreement shall cause the Bank not to be designated as an “eligible bank” for
purposes of 12 C.F.R. § 5.3(g), unless otherwise informed in writing by the
Comptroller.


 


(5)           All
reports or plans which the Bank or Board has agreed to submit to the Assistant
Deputy Comptroller pursuant to this Agreement shall be forwarded to:


 


Emmit C. Odom, Jr.


Assistant Deputy Comptroller


Eastern Pennsylvania Field Office


1150 Northbrook Drive Suite 303


Trevose, Pennsylvania 19053


 


ARTICLE II


 


COMPLIANCE COMMITTEE


 


(1)           Within
thirty (30) days of the date of this Agreement, the Board shall appoint a
Compliance Committee of at least three (3) directors,
of which no more than one (1) shall be an employee or controlling
shareholder of the Bank or any of its affiliates (as the term “affiliate” is
defined in 12 U.S.C. § 371c(b)(l)), or a family member of any such person.  Upon appointment, the names of the members of
the Compliance Committee and, in the event of a change of the membership, the
name of any new member shall be submitted in


 


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writing
to the Assistant Deputy Comptroller.  The
Compliance Committee shall be responsible for monitoring and coordinating the
Bank’s adherence to the provisions of this Agreement.


 


(2)           The
Compliance Committee shall meet at least monthly.


 


(3)           Within
sixty (60) days of the date of this Agreement and quarterly thereafter, the Compliance
Committee shall submit a written progress report to the Board setting forth in
detail:


 


(a)           a description of the
action needed to achieve full compliance with each Article of this
Agreement;


 


(b)           actions
taken to comply with each Article of this Agreement; and


 


(c)           the
results and status of those actions.


 


(4)           The
Board shall forward a copy of the Compliance Committee’s report, with any
additional comments by the Board, to the Assistant Deputy Comptroller within
ten (10) days of receiving such report.


 


ARTICLE III


 


BOARD TO ENSURE COMPETENT MANAGEMENT


 


(1)           Within
one hundred and twenty days (120), the Board shall ensure that the Bank has
management in place on a full-time basis in its senior management positions to
carry out the Board’s policies, ensure compliance with this Agreement,
applicable laws, rules and regulations, and manage the day-to-day
operations of the Bank in a safe and sound manner.


 


(2)           Within
thirty (30) days, the Board shall review the capabilities of the Bank’s
management to perform present and anticipated duties and the Board will
determine whether management changes will be made, including the need for
additions to or deletions from


 


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current
management.  The Board shall assess each
of the Bank’s officer’s experience, other qualifications and performance
compared to the position’s description, duties and responsibilities.


 


(3)           If the Board determines that an officer will continue in his/her
position but that the officer’s depth of skills needs improvement, the Board
will, within 60 days, develop and implement a written program, with specific
time frames to improve the officer’s supervision and management of the
Bank.  At a minimum the written program
shall include:


 


(a)           an
education program designed to ensure that the officer has skills and abilities
necessary to supervise effectively;


 


(b)           a
program to improve the effectiveness of the officer;


 


(c)           objectives
by which the officer’s effectiveness will be measured; and


 


(d)           a
performance appraisal program for evaluating performance according to the
position’s description and responsibilities and for measuring performance
against the Bank’s goals and objectives.


 


(4)           Upon
completion, a copy of the written program shall be submitted to the Assistant
Deputy Comptroller.


 


(5)           If a position mentioned in Paragraph (1) of this Article is
vacant now or in the future, including if the Board realigns an existing
officer’s responsibilities and a position mentioned in Paragraph (1) of
this Article becomes vacant, the Board shall within sixty days of such
vacancy appoint or assign a capable person to the vacant position who shall be
vested with sufficient executive authority to ensure the Bank’s compliance with
this Agreement and the safe and sound operation of functions within the scope
of that position’s responsibility.


 


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(6)           Prior
to the appointment of any individual to an executive officer position, the
Board shall submit to the Assistant Deputy Comptroller the following
information:


 


(a)           the
information sought in the “Changes in Directors and Senior Executive Officers”
and “Background Investigations” booklets of the Comptroller’s Licensing
Manual, together with a legible fingerprint card for the proposed
individual;


 


(b)           a
written statement of the Board’s reasons for selecting the proposed officer;
and,


 


(c)           a
written description of the proposed officer’s duties and responsibilities.


 


(7)           The Assistant Deputy Comptroller shall have the power to disapprove the
appointment of the proposed new officer.  
However, the lack of disapproval of such individual shall not constitute
an approval or endorsement of the proposed officer.


 


(8)           The
requirement to submit information and the prior disapproval provisions of this Article are
based on the authority of 12 U.S.C. §  1818(b)(G)(E) and
do not require the Comptroller to complete his/her review and act on any such
information or authority within ninety (90) days.


 


(9)           The
Board may request an extension to any deadlines under this Article.  Such request shall be submitted to the
Assistant Deputy Comptroller for prior approval.


 


ARTICLE IV


 


PROFIT PLAN


 


(1)           Within
sixty (60) days, the Board shall develop, implement, and thereafter ensure Bank
adherence to a written profit plan to improve and sustain the earnings of the
Bank.  This plan shall include, at
minimum, the following elements:


 


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(a)           identification
of the major areas in and means by which the Board will seek to improve the
Bank’s operating performance;


 


(b)           realistic
and comprehensive budgets, including projected balance sheets and year-end
income statements;


 


(c)           a
budget review process to monitor both the Bank’s income and expenses, and to
compare actual figures with budgetary projections; and


 


(d)           a
description of the operating assumptions that form the basis for major
projected income and expense components.


 


(2)           The
budgets and related documents required in paragraph (1) above for 2010
shall be submitted to the Assistant Deputy Comptroller upon completion.  The Board shall submit to the Assistant
Deputy Comptroller annual budgets as described in paragraph (1) above for
each year this Agreement remains in effect. 
The budget for 2011 shall be submitted on or before December 15,
2010.  The budget for 2012 and every year
thereafter shall be submitted on or before November 30 of the preceding
year.


 


(3)           The
Board shall forward comparisons of its balance sheet and profit and loss
statement to the profit plan projections to the Assistant Deputy Comptroller on
a quarterly basis.


 


(4)           The
Board shall ensure that the Bank has processes, personnel, and control systems
to ensure implementation of and adherence to the plan developed pursuant to
this Article.


 


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ARTICLE V


 


CAPITAL PLAN


 


(1)           Within
sixty (60) days, the Board shall develop, implement, and thereafter ensure Bank
adherence to a three year capital program. 
The program shall include:


 


(a)           specific
plans for the maintenance of adequate capital that may in no event be less than
the requirements of 12 C.F.R. Part 3;


 


(b)           projections
for growth and capital requirements based upon a detailed analysis of the Bank’s
assets, liabilities, earnings, fixed assets, and off-balance sheet activities;


 


(c)           projections
of the sources and timing of additional capital to meet the Bank’s current and
future needs;


 


(d)           the
primary source(s) from which the Bank will strengthen its capital
structure to meet the Bank’s needs;


 


(e)           contingency
plans that identify alternative methods should the primary source(s) under
(d) above not be available; and,


 


(f)            a
dividend policy that permits the declaration of a dividend only:


 


(i)            when the Bank is in
compliance with its approved capital program;


 


(ii)           when the Bank is in compliance with 12
U.S.C. §§  56 and 60; and,


 


(iii)          with the prior written
determination of no supervisory objection by the Assistant Deputy
Comptroller.  Upon receiving a
determination of no supervisory objection from the Assistant Deputy


 


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Comptroller, the Bank
shall implement and adhere to the dividend policy.


 


(2)           Upon completion, the Bank’s capital program shall
be submitted to the Assistant Deputy Comptroller for prior determination of no
supervisory objection.  Upon receiving a
determination of no supervisory objection from the Assistant Deputy
Comptroller, the Bank shall implement and adhere to the capital program.  The Board shall review and update the Bank’s
capital program on an annual basis, or more frequently if necessary.  Copies of the reviews and updates shall be
submitted to the Assistant Deputy Comptroller.


 


(3)           The Board shall ensure that the Bank has
processes, personnel, and control systems to ensure implementation of and
adherence to the program developed pursuant to this Article.


 


ARTICLE VI


 


CRITICIZED ASSETS


 


(1)           The Bank shall take immediate and continuing action
to protect its interest in those assets criticized in the ROE, in any
subsequent Report of Examination, by internal or external loan review, or in
any list provided to management by the National Bank Examiners during any
examination.


 


(2)           Within sixty (60)
days, the Board shall adopt,
implement, and thereafter ensure Bank adherence to a written program designed
to eliminate the basis o f criticism of assets criticized in the ROE, in any
subsequent Report of Examination, or by any internal or external loan review,
or in any list provided to management by the National Bank Examiners during any
examination as “doubtful,” “substandard,” or “special mention.” This program shall
include, at a minimum:


 


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(a)           an
identification of the expected sources of repayment;


 


(b)           the
appraised value of supporting collateral and the position of the Bank’s lien on
such collateral where applicable;


 


(c)           an
analysis of current and satisfactory credit information, including cash flow
analysis where loans are to be repaid from operations; and,


 


(d)           the
proposed action to eliminate the basis of criticism and the time frame for its
accomplishment.


 


(3)           Upon
adoption, a copy of the program for all criticized assets equal to or exceeding
seven hundred and fifty thousand dollars ($750,000) shall be forwarded to the
Assistant Deputy Comptroller.


 


(4)           The
Board, or a designated committee, shall conduct a review, on at least a monthly
basis, to determine:


 


(a)           the
status of each criticized asset or criticized portion thereof that equals or
exceeds seven hundred and fifty thousand dollars ($750,000);


 


(b)           management’s
adherence to the program adopted pursuant to this Article;


 


(c)           the
status and effectiveness of the written program; and,


 


(d)           the
need to revise the program or take alternative action.


 


(5)           A
copy of each review shall be forwarded to the Assistant Deputy Comptroller on a
quarterly) basis (in a format similar to Appendix A, attached hereto).


 


(6)           The Bank may extend credit, directly or indirectly, including renewals,
extensions or capitalization of accrued interest, to a borrower whose loans or
other extensions of credit are criticized in the ROE, in any subsequent Report
of Examination, in any internal or external loan review, or in any list
provided to management by the National Bank Examiners 


 


9

















 


during any examination and whose aggregate loans or
other extensions exceed seven hundred and fifty thousand dollars ($750,000)
only if each of the following conditions is met:


 


(a)           the
Board or designated committee finds that the extension of  additional
credit is necessary to promote the best interests of the Bank and that prior to
renewing, extending or capitalizing any additional credit, a majority of the
full Board (or designated committee) approves the credit extension and records,
in writing, why such extension is necessary to promote the best interests of
the Bank; and,


 


(b)           a
comparison to the written program adopted pursuant to this Article shows
that the Board’s formal plan to collect or strengthen the criticized asset will
not be compromised.


 


(7)           A
copy of the approval of the Board or of the designated committee shall be
maintained in the file of the affected borrower.


 


ARTICLE VII


 


PROBLEM LOAN IDENTIFICATION


 


(1)           Within
sixty (60) days of the date of this Agreement, the Board shall establish an
effective problem loan identification program that provides for early
identification of emerging and potential problem credits, along with a formal
plan to proactively manage these assets. 
This includes, but is not limited to:


 


(a)           ensuring
early problem loan identification and risk rating by loan officers and
establishing loan officer accountability for accurately risk rating loans and
recognizing nonaccrual loans under their respective supervision in a timely
manner;


 


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(b)           ensuring all employees are provided with adequate training on regulatory
risk rating definitions as well as guidelines for risk rating credits;


 


(c)           procedures requiring loan officers and credit administration employees
to provide narrative to support all assigned risk ratings, including the credit’s
primary source of repayment, guarantor support, collateral protection, and
triggers that could result in a rating upgrade or downgrade; and,


 


(d)           developing formal loan work out plans for problem credits that include
the current status of the loan, current financial condition of the borrower,
accrual status, source and date of the collateral valuation, and specific
action plans with target dates.


 


(2)           Upon
adoption, a copy of the program shall be forwarded to the Assistant Deputy
Comptroller for review and prior written determination of no supervisory
objection.  Upon receiving a
determination of no supervisory objection from the Assistant Deputy
Comptroller, the Bank shall implement and adhere to the program.


 


ARTICLE VIII


 


LOAN PORTFOLIO MANAGEMENT


 


(1)           The
Board shall, within sixty (60) days, develop, implement, and thereafter ensure
Bank adherence to a written program to improve the Bank’s loan portfolio
management.  The program shall include,
but not be limited to:


 


(a)           procedures to ensure satisfactory and perfected collateral
documentation;


 


(b)          procedures to ensure that adequate financial information is obtained,
such as information on contingent liabilities, current cash flow, and the
verification of liquid assets;


 


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(c)           procedures to ensure that extensions of credit are granted, by renewal
or otherwise, to any borrower only after obtaining and analyzing current and
satisfactory credit information;


 


(d)           procedures to ensure conformance with loan approval requirements;


 


(e)           a system to track and analyze exceptions;


 


(f)            procedures to ensure conformance with Call Report instructions,
including accounting for OREO;


 


(g)           procedures to ensure that risk-based appraisal reviews are incorporated
into the bank’s lending policy;


 


(h)           procedures to ensure the accuracy of internal management information
systems; and,


 


(i)            a performance appraisal process, including performance appraisals, job
descriptions, and incentive programs for loan officers, which adequately
consider their performance relative to policy compliance, documentation
standards, accuracy in credit grading, and other loan administration matters.


 


(2)           Upon
completion, a copy of the program shall be forwarded to the Assistant Deputy
Comptroller.


 


(3)           Within sixty (60) days, the Board shall develop, implement, and
thereafter ensure Bank adherence to systems which provide for effective
monitoring of:


 


(a)           the problem loan identification program required by Article VII;


 


12

















 


(b)           statistical records that will serve as a basis for identifying sources
of problem loans and leases by industry, size, collateral, division, group,
indirect dealer, and individual lending officer;


 


(c)           previously charged-off assets and their recovery potential;


 


(d)           compliance with the Bank’s lending policies and laws, rules, and
regulations pertaining to the Bank’s lending function;


 


(e)           adequacy of credit and collateral documentation; and,


 


(f)            concentrations of credit.


 


(4)           The
Board shall ensure that the Bank has processes, personnel, and control systems
to ensure implementation of and adherence to the program and systems developed
pursuant to this Article.


 


ARTICLE IX


 


ALLOWANCE FOR LOAN AND LEASE LOSSES


 


(1)           The
Board shall review the methodology of the Bank’s Allowance for Loan and Lease
Losses (“Allowance”) and shall establish a program for the maintenance of an
adequate Allowance.  This review and
program shall be designed in light of the comments on maintaining a proper
Allowance found in OCC Bulletin 2006-47, Interagency
Policy Statement on the Allowance for Loan and Lease Losses.  The Allowance shall focus
particular attention on the following factors:


 


(a)           results of the Bank’s internal loan review;


 


(b)           results of the Bank’s external loan review;


 


(c)           an estimate of inherent loss exposure on each significant credit;


 


(d)           loan loss experience;


 


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(e)           trends of delinquent and nonaccrual loans;


 


(f)            concentrations of credit in the Bank;


 


(g)           present and prospective economic conditions; and,


 


(h)           and any other applicable quantitative and qualitative assessment
factors.


 


(2)           The
program shall provide for a review of the Allowance by the Board at least once
each calendar quarter.  Any deficiency in
the Allowance shall be remedied in the quarter it is discovered, prior to the
filing of the Consolidated Reports of Condition and Income, by additional
provisions from earnings.  Written documentation
shall be maintained indicating the factors considered and conclusions reached
by the Board in determining the adequacy of the Allowance.


 


ARTICLE X


 


BANK SECRECY ACT INTERNAL CONTROLS


 


(1)           Within
sixty (60) days of the date of this Agreement, the Board shall develop,
implement, and thereafter ensure Bank adherence to a written program of
policies and procedures to provide for compliance with Bank Secrecy Act (“BSA”),
as amended 31 U.S.C. §§ 5311 et
seq., the regulations promulgated thereunder at 31 C.F.R. Part 103, as
amended, and 12 C.F.R. Part 21, Subparts B and C, and the rules and
regulations of the Office of Foreign Assets Control (“OFAC”) (collectively
referred to as the “Bank Secrecy Act” or “BSA”) and for the appropriate
identification and monitoring of transactions that pose greater than normal
risk for compliance with the BSA.  This
program shall include the following:


 


(a)           formal evaluation of the knowledge of the Bank’s operational and
supervisory personnel of the Bank’s policies and procedures for 


 


14

















 


identifying transactions that pose greater
than normal risk for compliance with the Bank Secrecy Act;


 


(b)           policies and procedures for identifying, monitoring, and recording
transactions that pose greater than normal risk for compliance with the Bank
Secrecy Act;


 


(c)           policies and procedures for the opening of new accounts, and existing
accounts when necessary, that provides for collecting customers’ identifying
information, verifying customers’ identification, maintaining identification
records, and determining whether customers appear on any list of suspected
terrorists or terrorist organizations;


 


(d)           procedures to identify and report to appropriate management personnel,
at a minimum:


 


(i)            frequent or large volume cash deposits or wire transfers to or from
offshore or domestic entities or individuals;


 


(ii)           wire transfers that are deposited into several accounts;


 


(iii)          receipt and disbursement of wire transfers without an apparent bona fide
business reason;


 


(iv)          receipt and disbursement of wire transfers that are suspicious or
inconsistent with the customers’ business;


 


(v)           receipt and disbursement of currency or monetary instruments that are
suspicious or inconsistent with the customers’ business; and accounts opened in
the name of or for the benefit of a financial institution or foreign bank, as
defined in 3 1 C.F.R. § 103.11 ;
and,


 


15

















 


(e)           processes to ensure that all branches are obtaining complete customer
identification information on new and existing customers, including nonresident
alien customers.


 


(2)           Within thirty (30) days of the date of this Agreement, the Board shall
develop, implement, and thereafter ensure Bank adherence to a written program
of policies and procedures to provide for the Bank’s monitoring of suspicious
cash, monetary instruments, wire transfers, and other activities for all types
of transactions, accounts, customers, products, services, and geographic
areas.  At a minimum, this written
program shall establish:


 


(a)           reviews of cash purchases of monetary instruments;


 


(b)           periodic analysis of aggregate cash, monetary instrument, wire activity,
automated clearing house (“ACH”) activity, internet transactions, and bill pay
for unusual or suspicious patterns;


 


(c)           periodic analysis of Currency Transaction Report filings;


 


(d)           automatic reviews of accounts or customers for which the Bank has
received criminal subpoenas that may involve the Bank Secrecy Act;


 


(e)           reviews of high risk transactions, accounts, customers, products,
services, and geographic areas; and,


 


(f)            submission of SARs based on these reviews and analyses.


 


(3)           Within sixty (60) days of the date of this Agreement, the Board shall
develop, implement, and thereafter ensure Bank adherence to expanded
account-opening procedures for all accounts that pose greater than normal risk
for compliance with the Bank Secrecy Act by requiring:


 


16

















 


(a)           identification of all account owners and beneficial owners in compliance
with 31 C.F.R. 3 103.121;


 


(b)           identification of the officers, directors, major shareholders or
partners, as applicable;


 


(c)           documentation of the following information for all deposit account
customers:


 


(i)            any relevant financial information concerning the customer;


 


(ii)           the type of business conducted by the customer;


 


(iii)          the customer’s source of income or wealth; and,


 


(iv)          any other due diligence required by this Agreement, the BSA Officer or
the Bank.


 


(4)           Bank
management shall obtain the information required in the preceding paragraph (3) of
this Article before renewing or modifying an existing customer’s account
within the scope of the preceding paragraph (3).


 


(5)           Bank management shall create a policy for not opening an account,
allowing the use of an account while verifying a customer’s identity or other
risks, closing an account and filing SARs if the Bank management does not
receive the information required by paragraphs (3) and (4) by the date
the information is due or if Bank management is not able to form a reasonable
belief that it knows the true identify of a customer.  Bank management shall consider not opening
any account for a customer and shall consider closing any existing account of a
customer if the information available to the Bank management indicates that the
customer’s relationship with the Bank would be detrimental to the reputation of
the Bank.


 


 


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(6)           The BSA Officer or his/her designee shall periodically review, not less
than each calendar year, all account documentation for all high risk accounts
and the related accounts of those customers at the Bank to determine whether
the account activity is consistent with the customer’s business and the stated
purpose of the account.


 


(7)           Within
90 days of the date of this Agreement, the Board shall determine whether any
changes are needed regarding the Bank’s BSA Officer, including the
responsibilities, authority, structure, independence or skills of the BSA
Officer.  In particular, the Board shall
ensure that the BSA Officer has sufficient training, authority, and skill to
perform his/her assigned responsibilities.


 


(8)           Within
90 days of the date of this Agreement, the Board shall determine whether any
changes are needed regarding the Bank’s BSA Officer’s supporting staff,
including the responsibilities, authority, structure, independence,
competencies, or capabilities of the BSA Officer’s supporting staff.


 


ARTICLE XI


 


INTEREST RATE RISK MONITORING


 


(1)           Within
thirty (30) days, the Board shall adopt, implement, and thereafter ensure Bank
adherence to a written interest rate risk policy.  In formulating this policy, the Board shall
refer to the “Interest Rate Risk” booklet of the Comptroller’s Handbook.  The policy shall provide for a coordinated
interest rate risk strategy and, at a minimum, address:


 


(a)           the establishment of adequate management reports on which to base sound
interest rate risk management decisions;


 


(b)           establishment and guidance of the Bank’s strategic direction and
tolerance for interest rate risk;


 


18

















 


(c)           implementation of effective tools to measure and monitor the Bank’s
performance and overall interest rate risk profile;


 


(d)           documentation for the interest rate risk model, including support for
the model assumptions, a formal process for tracking changes in the model
assumptions, and Board approval of the model assumptions no less than annually;


 


(e)           tests of the interest rate risk model for compliance with OCC Bulletin
2000- 16, Risk Modeling;


 


(f)            employment of competent personnel to manage interest rate risk;


 


(g)           prudent limits on the nature and amount of interest rate risk that can be
taken, which shall include periodic review of the bank’s policy limits; and,


 


(h)           periodic review of the Bank’s adherence to the policy.


 


(2)           Upon
adoption, a copy of the written policy shall be forwarded to the Assistant
Deputy Comptroller for review.


 


ARTICLE XI1


 


CLOSING


 


(1)           Although
the Board is by this Agreement required to submit certain proposed actions and
programs for the review or prior written determination of no supervisory
objection of the Assistant Deputy Comptroller, the Board has the ultimate
responsibility for proper and sound management of the Bank.


 


(2)           It
is expressly and clearly understood that if, at any time, the Comptroller deems
it appropriate in fulfilling the responsibilities placed upon it by the several
laws of the United 


 


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States of America to undertake any action affecting
the Bank, nothing in this Agreement shall in any way inhibit, estop, bar or
otherwise prevent the Comptroller from so doing.


 


(3)           Any
time limitations imposed by this Agreement shall begin to run from the
effective date of this Agreement.  Such
time limitations may be extended in writing by the Assistant Deputy Comptroller
for good cause upon written application by the Board.


 


(4)           The
provisions of this Agreement are effective upon issuance of this Agreement by
the Comptroller, through his authorized representative whose hand appears
below, and shall remain effective and enforceable, except to the extent that,
and until such time as, any provisions of this Agreement shall have been
amended, suspended, waived, or terminated in writing by the Comptroller.


 


(5)           In
each instance in this Agreement in which the Board is required to ensure
adherence to, and undertake to perform certain obligations of the Bank, it is
intended to mean that the Board shall:


 


(a)           authorize and adopt such actions on behalf of the Bank as may be
necessary for the Bank to perform its obligations and undertakings under the
terms of this Agreement;


 


(b)           require the timely reporting by Bank management of such actions directed
by the Board to be taken under the terms of this Agreement;


 


(c)           follow-up on any non-compliance with such actions in a timely and
appropriate manner; and,


 


(d)           require corrective action be taken in a timely manner of any
non-compliance with such actions.


 


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(6)           This
Agreement is intended to be, and shall be construed to be, a final Agreement
issued pursuant to 12 U.S.C. § 1818(b), and expressly does not form, and may
not be construed to form, a contract binding on the Comptroller of the United
States.


 


(7)           The
terms of this Agreement, including this paragraph, are not subject to amendment
or modification by any extraneous expression, prior agreements or prior
arrangements between the parties, whether oral or written.


 


 


	
  /s/
  Emmit C. Odom Jr.

  	
   

  
	
  Emmit
  C. Odom Jr.

  	
   

  
	
  Assistant
  Deputy Comptroller

  	
   

  
	
  Eastern
  Pennsylvania Field Office

  	
   

  



 


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IN TESTIMONY WHERE0F; the undersigned, as the duly
elected and acting Board of Directors of the Bank, have hereunto set their
hands on behalf of the Bank.


 


 


	
  /s/ Brian K. Campbell

  	
   

  	
  August 27, 2010

  
	
  Brian K. Campbell

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ M. Robert Clarke

  	
   

  	
  August 27, 2010

  
	
  M. Robert Clarke

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ Clifford E. DeBaptiste

  	
   

  	
  August 27, 2010

  
	
  Clifford E. DeBaptiste

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ John A. Featherman,
  III, Esq.

  	
   

  	
  August 27, 2010

  
	
  John A. Featherman, III,
  Esq.

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ John S. Halsted, Esq.

  	
   

  	
  August 27, 2010

  
	
  John S. Halsted, Esq.

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ J. Carol Hanson

  	
   

  	
  August 27, 2010

  
	
  J. Carol Hanson

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ Lynn Marie
  Johnson-Porter

  	
   

  	
  August 27, 2010

  
	
  Lynn Marie Johnson-Porter

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ Edward A. Leo

  	
   

  	
  August 27, 2010

  
	
  Edward A. Leo

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ Matthew S. Naylor

  	
   

  	
  August 30, 2010

  
	
  Matthew S. Naylor

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ David L. Pierce

  	
   

  	
  August 27, 2010

  
	
  David L. Pierce

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ John B. Waldron

  	
   

  	
  August 27, 2010

  
	
  John B. Waldron

  	
   

  	
  Date

  



 

















 


APPENDIX A


First National Bank of Chester County


West Chester, PA


 


	
  CRITICIZED
  ASSET REPORT AS OF:

  	
   

  
	
   

  
	
  BORROWER(S):

  
	
   

  
	
  ASSET
  BALANCE(S) AND OCC RATING (SM, SUBSTANDARD, DOUBTFUL OR LOSS):

  
	
   

  
	
  $

  	
  CRITICISM

  	
   

  
	
   

  
	
  AMOUNT
  CHARGED OFF TO DATE

  	
   

  
	
   

  
	
  FUTURE
  POTENTIAL CHARGE-OFF

  	
   

  
				





 





PRESENT
STATUS (Fully explain any increase in outstanding balance; include past due
status, nonperforming, significant progress or deterioration, etc.):


 




 


 





FINANCIAL,
AND/OR COLLATERAL SUPPORT (include brief summary of most current financial
information, appraised value of collateral and/or estimated value and date
thereof, bank’s lien position and amount of available equity, if any,
guarantor(s) info, etc.):


 


 




 





PROPOSED
PLAN OF ACTION TO ELIMINATE ASSET CRITICISM(S) AND TIME FRAME FOR ITS
ACCOMPLISHMENT:


 


 




 





IDENTIFIED
SOURCE OF REPAYMENT AND DEFINED REPAYMENT PROGRAM


(repayment
program should coincide with source of repayment): 


 


 




 





Use
this form for reporting each criticized asset that exceeds seven hundred and
fifty thousand dollars ($750,000) and retain the original in the credit file
for review by the examiners. Submit your reports monthly  until notified otherwise, in writing, by the
Assistant Deputy Comptroller.