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


 


	
  FIRST NATIONAL COMMUNITY

  	
   

  	
  Docket
  No. 10-220-WA/RB-HC

  
	
  BANCORP, INC.

  	
   

  	
   

  
	
  Dunmore, Pennsylvania

  	
   

  	
   

  



 


and


 


FEDERAL RESERVE BANK


OF PHILADELPHIA


Philadelphia, Pennsylvania


 


WHEREAS,
First National Community Bancorp, Inc, Dunmore, Pennsylvania (“Bancorp”),
a registered bank holding company, owns and controls First National Community
Bank, Dunmore, Pennsylvania (“Bank”), a national bank, and a nonbank
subsidiary;


 


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


 


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


 


WHEREAS,
on November 24, 2010, the board of directors of Bancorp, at a duly
constituted meeting, adopted a resolution authorizing and directing Gerard A.
Champi to enter into this Agreement on behalf of Bancorp, and consenting to
compliance with each and every


 

















 


provision of this Agreement
by Bancorp and its institution-affiliated parties, as 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, Bancorp and the Reserve Bank agree as follows:


 


Source of Strength


 


1.             The board of directors of Bancorp shall take appropriate
steps to fully utilize Bancorp’s 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 entered
into with the Office of the Comptroller of the Currency on September 1, 2010 and any other supervisory
action taken by the Bank’s federal regulator.


 


Dividends, Distributions, and
Other Payments


 


2.             (a)           Bancorp
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 (the “Director”) of the Board of Governors.


 


(b)           Bancorp 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)           Bancorp and its nonbank subsidiary 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.


 


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(d)           Bancorp shall not make any payment of interest, principal,
or other sums on debt owed to insiders without the prior written approval of
the Reserve Bank and the Director.  For
the purposes of the Agreement, “insider” shall include any of Bancorp’s current
or former executive officers, directors, shareholders, members of their
immediate families, related interests thereof, or persons acting on their
behalf.  For purposes of this Agreement, “immediate
family” shall be defined as set forth in section 225.41(b)(3) of Regulation Y of the Board of Governors (12
C.F.R. § 225.41(b)(3)).


 


(e)           All requests for prior approval shall be received by the
Reserve Bank at least 30 days prior to the proposed dividend declaration date,
proposed distribution on subordinated debentures, and required notice of
deferral on trust preferred securities. All requests shall contain, at a
minimum, current and projected information on Bancorp’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, Bancorp 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).


 


Debt and Stock Redemption


 


3.             (a)           Bancorp
and its nonbank subsidiary 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.


 


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


 


Capital Plan


 


4.             Within 60 days of this Agreement, Bancorp shall submit
to the Reserve Bank an acceptable written plan to maintain sufficient capital
at Bancorp 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 availability of additional funds necessary
to fulfill the consolidated organization’s and the Bank’s future capital
requirements on a timely basis;


 


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


 


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


 


5.             Bancorp shall notify the
Reserve Bank, in writing, no more than 45 days after the end of any quarter in
which any of Bancorp’s capital ratios fall below the approved plan’s minimum
ratios. Together with the notification, Bancorp shall submit an acceptable
written plan


 


4

















 


that details the steps that
Bancorp will take to increase Bancorp’s capital ratios to or above the approved
plan’s minimums.


 


Regulatory Reports


 


6.             (a)           Bancorp
shall immediately take all actions as are necessary to ensure that: (i) each
regulatory report, including each Consolidated Financial Statements for Bank
Holding Companies with Total Consolidated Assets of $150 million or More, or
with More Than One Subsidiary Bank (Form Y-9 C), accurately reflects
Bancorp’s condition on the date for which it is filed and all material
transactions between the bank holding company and its subsidiaries; (ii) each
regulatory report is prepared in accordance with applicable instructions for
preparation; and (iii) all records indicating how the report was prepared
are maintained for subsequent supervisory review.


 


(b)           Within 60 days of this Agreement, Bancorp shall submit to
the Reserve Bank acceptable written procedures to strengthen and maintain
internal controls to ensure that all required regulatory reports and notices
filed with the Board of Governors are accurate and filed in accordance with the
applicable instructions for preparation.


 


Cash Flow Projections


 


7.             Within 45 days of this Agreement, Bancorp shall submit
to the Reserve Bank a written statement of its planned sources and uses of cash
for debt service, operating expenses, and other purposes (“Cash Flow Projection”)
for 2011. Bancorp shall submit to the Reserve Bank a Cash Flow Projection for
each calendar year subsequent to 2011 at least one month prior to the beginning
of that calendar year.


 


5

















 


Compliance with Laws and
Regulations


 


8.             (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, Bancorp shall comply with
the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831(i) and
Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).


 


(b)           Bancorp 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).


 


Progress Reports


 


9.             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.


 


Approval and Implementation of
Plan


 


10.           (a)           Bancorp
shall submit a written capital plan that is acceptable to the Reserve Bank
within the applicable time period set forth in paragraph 4 of this Agreement.


 


(b)           Within 10 days of approval by the Reserve Bank, Bancorp
shall adopt the approved capital plan. Upon adoption, Bancorp shall promptly
implement the approved plan, and thereafter fully comply with it.


 


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


 


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Communications


 


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


 


(a)           Mr. Eric
A. Sonnheim


Assistant Vice President


Federal Reserve Bank of Philadelphia


10 Independence Mall


Philadelphia, Pennsylvania 19106-1574


 


(b)           Mr. Gerard
A. Champi


Interim President and Chief Executive Officer


First National Community Bancorp, Inc.


102 East Drinker Street


Dunmore, Pennsylvania 18512-2491


 


Miscellaneous


 


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


 


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


 


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


 


15.           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 Bancorp, the
Bank, the nonbank subsidiary of Bancorp, or any of their current or former
institution-affiliated parties and their successors and assigns.


 


16.           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).


 


7

















 


IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the
24th day of November, 2010.


 


 


	
  FIRST NATIONAL COMMUNITY

  	
   

  	
  FEDERAL RESERVE BANK OF

  
	
  BANCORP, INC.

  	
   

  	
  PHILADELPHIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gerard A. Champi

  	
   

  	
  By:

  	
  /s/ Eric A. Sonnheim

  
	
   

  	
  Gerard A. Champi

  	
   

  	
   

  	
  Eric A. Sonnheim

  
	
   

  	
  Interim President and CEO

  	
   

  	
   

  	
  Assistant Vice President

  



 


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