Cease and Desist Order



 Exhibit 10.1 
 UNITED STATE OF AMERICA 
 BEFORE THE 
 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 
 WASHINGTON, D.C. 
 STATE OF ALABAMA 
 STATE BANKING DEPARTMENT

 MONTGOMERY, ALABAMA 
  

					
	In the Matter of	 		  	
			
		 		  	Docket No. 09-086-B-HC
			
	THE COLONIAL BANCGROUP, INC.	 		  	Cease and Desist Order Issued
	Montgomery, Alabama	 		  	Upon Consent Pursuant to the
		 		  	Federal Deposit Insurance Act.,
	 	 		  	As Amended

 WHEREAS, in recognition of their common goal to maintain the financial soundness of The Colonial
BancGroup, Inc., Montgomery, Alabama, a registered bank holding company (“BancGroup”), and its subsidiary bank, Colonial Bank (the “Bank”), a state chartered nonmember bank, BancGroup has consented to the issuance of a Cease and
Desist Order (the “Order”) by the Board of Governors of the Federal Reserve System (the “Board of Governors”) and the Alabama State Banking Department (the “Superintendent”); 
 WHEREAS , on July 15, 2009 , the board of directors of BancGroup at a duly constituted meeting adopted a resolution authorizing and directing Simuel
Sippial, Jr. to enter into this Order on behalf of BancGroup, and consenting to compliance with each and every provision of this Order by BancGroup 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)), and waiving any and all rights that BancGroup may have pursuant to section 8 of the FDI Act (12 U.S.C. § 1818) to: (i) a hearing
for the purpose of taking evidence 









 
on any matters set forth in this Order; (ii) judicial review of this Order; (iii) contest the issuance of this Order by the Board of Governors
pursuant to section 8 of the FDI Act and the Superintendent pursuant to Section 5-2A-12 (1975) of the Alabama Banking Code; and (iv) challenge or contest, in any manner, the basis, issuance, validity, terms, effectiveness or
enforceability of this Order or any provisions hereof. 
 NOW, THEREFORE, IT IS HEREBY ORDERED that, pursuant to sections 8(b)(1) and (3) of
the FDI Act, and Section 5-2A-12 of the Code of Alabama, that BancGroup and its institution-affiliated parties shall cease and desist and take affirmative action as follows: 
 Source of Strength 
 1. The board of directors of BancGroup shall take appropriate steps to ensure
that the Bank complies with the Order to Cease and Desist entered into with the Federal Deposit Insurance Corporation (the “FDIC”) and the Superintendent effective as June 15, 2009, and any other supervisory action taken by the
Bank’s federal or state regulators. 
 Capital Plan 
 2. Within 30 days of this Order, BancGroup shall submit to the Reserve Bank and the Superintendent an acceptable written plan to maintain sufficient capital at BancGroup, on a consolidated basis, and the Bank, as a
separate legal entity on a stand-alone 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; 
  

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 (b) the adequacy of the Bank’s capital, taking into account the volume of classified credits,
concentrations of credit, allowance for loan and lease losses (“ALLL”), current and projected asset growth, and projected retained earnings; 
 (c) the source and timing of additional funds 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 
 (e) the requirements of section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. § 225.4(a)) that
BancGroup serve as a source of strength to the Bank. 
 3. BancGroup shall notify the Reserve Bank and the Superintendent, in writing, no
more than 30 days after the end of any quarter in which BancGroup’s consolidated capital ratios or the Bank’s capital ratios (total risk-based, tier 1 risk-based, or leverage) fall below the plan’s minimum ratios. Together with the
notification, BancGroup shall submit an acceptable written plan that details the steps BancGroup will take to increase its and/or the Bank’s capital ratios above the plan’s minimums. 
 Liquidity Risk Management 
 4. Within 60 days
of the date of this Order, BancGroup will submit to the Reserve Bank and the Superintendent an acceptable written plan for liquidity management at the consolidated organization. The plan will, at a minimum, address, consider, and include:  

 (a) Analysis of additional liquidity sources; 
 (b) appropriate risk limits for each liquidity source; 
 (c) the ability to meet short-term funding needs,
including the maintenance of a sufficient asset liquidity cushion; and 
  

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 (d) a contingency funding plan that includes: (i) an assessment of all potential funding needs; and
(ii) the establishment of quantitative triggers. 
 Allowance for Loan and Lease Losses 
 5. (a) Within 30 days of this Agreement, BancGroup, including its nonbank subsidiaries (collectively “BancGroup”), shall eliminate from
their books, by charge-off or collection, all assets or portions of assets identified as “loss” that have not been previously collected in full or charged off. Thereafter BancGroup shall, within 30 days from the receipt of any federal
report of inspection, charge off all assets classified or identified as “loss” unless otherwise approved in writing by the Reserve Bank and the Superintendent. 
 (b) Within 60 days of this Agreement, BancGroup shall review and revise as appropriate its consolidated ALLL methodology to assure that it is consistent with relevant supervisory guidance, including the Interagency
Policy Statements on the Allowance for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR 06-17). BancGroup shall submit a description of the methodology to the Reserve Bank and the Superintendent upon
adoption. 
 (c) Within 60 days of this Agreement, BancGroup shall submit to the Reserve Bank and the Superintendent an acceptable written
program to be implemented for determining, documenting, and recording an adequate consolidated ALLL. The program shall include policies and procedures to ensure adherence to the consolidated ALLL methodology and provide for periodic reviews and
updates to the consolidated ALLL methodology as appropriate. The program shall also provide for a review of the consolidated ALLL by the board of directors on at least a quarterly calendar basis. Any deficiency found in the consolidated ALLL shall
be remedied in the quarter it is discovered, prior to the filing of any required regulatory reports, by 

  

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additional provisions. The board of directors shall maintain written documentation of its review, including the factors considered and conclusions reached by
the Bancorp or any nonbank subsidiary in determining the adequacy of the consolidated ALLL. During the term of this Agreement, BancGroup shall submit to the Reserve Bank and the Superintendent, within 30 days after the end of each calendar quarter,
a written report regarding the board of directors’ quarterly review of the consolidated ALLL and a description of any changes to the methodology used in determining the amount of consolidated ALLL for that quarter 
 Dividends and Distributions 
 6. (a) BancGroup
shall not declare or pay any dividends without the prior written approval of the Reserve Bank, the Director of the Division of Banking Supervision and Regulation of the Board of Governors (the “Director”), and the Superintendent.

 (b) BancGroup 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 and the Superintendent. 
 (c) BancGroup 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, the Director, and the Superintendent. 
 (d) All requests for prior approval shall be received by the Reserve Bank and the Superintendent 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 BancGroup’s capital, earnings, and
cash flow; the Bank’s capital, asset quality, earnings, and ALLL; and identification of the sources of funds for the proposed payment or distribution. For 

  

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requests to declare or pay dividends, BancGroup 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), and Alabama State policies on
dividends. 
 Debt and Stock Redemption 
 7. (a) BancGroup and any nonbank subsidiary shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank and the Superintendent. 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) BancGroup shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the
Reserve Bank and the Superintendent. 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, BancGroup 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.) and also provide thirty days prior written notice to the Superintendent. 
  

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 (b) BancGroup 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,
a Program, and Progress Reports 
 9. (a) BancGroup shall submit plans and a program that are acceptable to the Reserve Bank and the
Superintendent within the applicable time periods set forth in paragraphs 2,4, and 5(c) of this Order. 
 (b) Within 10 days of approval by
the Reserve Bank and the Superintendent, BancGroup shall adopt the approved plans and program. Upon adoption, BancGroup shall implement the approved plans and program and thereafter fully comply with them. 
 (c) During the term of this Order, the approved plans and program shall not be amended or rescinded without the prior written approval of the Reserve
Bank and the Superintendent. 
 10. Within 30 days after the end of each calendar quarter following the date of this Order, the board of
directors shall submit to the Reserve Bank and the Superintendent written progress response detailing the form and manner of all actions taken to secure BancGroup’s compliance with the provisions of this Order and the results thereof, and a
parent company only balance sheet, income statement, and, as applicable, a report of changes in stockholders’ equity. The Reserve Bank and the Superintendent may, in writing, discontinue the requirements for progress reports or modify the
reporting schedule. 
 Communications 
 11. All communications regarding this Order shall be sent to: 
  

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	 	(a)	Ms. Maria Smith 
Assistant Vice President 
Federal Reserve Bank of Atlanta 
1000 Peachtree Street, N.E. 
Atlanta, Georgia 30309-4470 

  

	 	(b)	Mr. John D. Harrison 
Superintendent of Banks 
State of Alabama State Banking Department 
401 Adams A venue, Ste. 680 
Montgomery, Alabama 36130-1201


  

	 	(c)	Mr. Simuel Sippial, Jr. 
Chairman 
The Colonial BancGroup, Inc. 
100 Colonial Bank Boulevard 
Montgomery, Alabama 36117 

 Miscellaneous 
 12. Notwithstanding any provision of
this Order to the contrary, the Reserve Bank and the Superintendent may, in their sole discretion, grant written extensions of time to BancGroup to comply with any provision of this Order. 
 13. The provisions of this Order shall be binding upon BancGroup and its institution- affiliated parties, in their capacities as such, and their
successors and assigns. 
 14. Each provision of this Order shall remain effective and enforceable until stayed, modified, terminated or
suspended in writing by the Reserve Bank and the Superintendent. 
 15. The provisions of this Order shall not bar, estop or otherwise
prevent the Board of Governors, the Reserve Bank, the Superintendent, or any other federal or state agency from taking any other action affecting BancGroup or any of its current or former institution-affiliated parties and their successors and
assigns. 
  

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 16. The Superintendent, having duly approved this Order, and BancGroup, through its board of directors,
agree that the issuance of this Order by the Board of Governors shall be binding as between BancGroup and the Superintendent to the same degree and legal effect that such Order would be binding upon BancGroup if the Superintendent had issued a
separate Order and included and incorporate all of the provisions of this Order pursuant to the provisions of section 5-2A-12 of the Code of Alabama. 
 By Order of the Board of Governors of the Federal Reserve System and the Superintendent effective this 22nd day of July, 2009. 
  

									
	THE COLONIAL BANCGROUP, INC.	 		 	 BOARD OF GOVERNORS OF
 THE FEDERAL RESERVE
SYSTEM

					
	By:	 	/s/ Simuel Sippial, Jr.	 		 	By:	 	/s/ Robert deV. Frierson
		 	 Simuel Sippial, Jr.
 Chairman
	 		 		 	 Robert deV. Frierson
 Deputy Secretary of the Board



  
  
  

									
		 		 	 ALABAMA STATE SUPERINTENDENT
 OF
BANKS

					
		 		 		 	By:	 	/s/ John D Harrison
		 		 		 		 	 John D Harrison
 Superintendent of Banks
 State of Alabama


  
  
  
  
  
  

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