Exhibit 10.1


 


FEDERAL DEPOSIT INSURANCE
CORPORATION


 


WASHINGTON, D.C.


 


	
   

  	
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  In the Matter of

  	
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  CONSENT ORDER

  
	 
	
  CONGAREE STATE BANK

  	
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  WEST COLUMBIA, SOUTH CAROLINA

  	
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  FDIC-10-047b

  
	 
	
   

  	
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  (Insured State Nonmember Bank)

  	
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The Federal Deposit
Insurance Corporation (“FDIC”) is the appropriate Federal banking agency for
Congaree State Bank, West Columbia, South Carolina (“Bank”), under 12 U.S.C. §
1813(q).


 


The Bank, by and through
its duly elected and acting Board of Directors (“Board”), has executed a
“Stipulation to the Issuance of a Consent Order” (“STIPULATION”), dated
May 11, 2010, that is accepted by the FDIC and the Commissioner of Banking
(“Commissioner”) on behalf of the State Board of Financial Institutions for the
State of South Carolina (“State Board”). 
With the STIPULATION, the Bank has consented, without admitting or
denying any charges of unsafe or unsound banking practices and violations of
law and/or regulation relating to asset quality, capital adequacy, earnings,
management effectiveness, liquidity, and sensitivity to market risk, to the
issuance of this Consent Order (“ORDER”) by the FDIC and the State Board.


 


Having determined that
the requirements for issuance of an order under 12 U.S.C. § 1818(b) and
S.C. Code Ann. § 34-1-60 have been satisfied, the FDIC and the State Board
hereby order that:


 


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BOARD
OF DIRECTORS


 


1.             (a)           Effective immediately, the Board shall
increase its participation in the affairs of the Bank, assuming full
responsibility for the approval of sound policies and objectives and for the
supervision of all of the Bank’s activities, consistent with the role and
expertise commonly expected for directors of banks of comparable size.  The Board shall prepare in advance and follow
a detailed written agenda for each meeting, including consideration of the
actions of any committees.  Nothing in
the foregoing sentences shall preclude the Board from considering matters other
than those contained in the agenda.  This
participation shall include meetings to be held no less frequently than monthly
at which, at a minimum, the following areas shall be reviewed and approved:
reports of income and expenses; new, overdue, renewal, insider, charged-off,
and recovered loans; investment activity; operating policies; and individual
committee actions.  Board minutes shall
document these reviews and approvals, including the names of any dissenting
directors.


 


(b)           Within 30 days from the effective date of
this ORDER, the Board shall have in place a program that will provide for
monitoring of the Bank’s compliance with this ORDER.  Following the adoption of the program, the
Board shall review the Bank’s compliance with this ORDER and record its review
in the minutes of each regularly scheduled Board meeting.  Establishment of this program does not in any
way diminish the responsibility of the entire Board to ensure compliance with
the provisions of this ORDER.


 


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MANAGEMENT


 


2.             Within 90 days of the effective date of
this ORDER, the Bank shall have and retain qualified management.


 


(a)           Each member of management shall have
qualifications and experience commensurate with his or her duties and
responsibilities at the Bank.  Management
shall include the chief executive officer, chief credit officer, and chief
financial officer.  All management
officials shall have an appropriate level of experience and expertise that is
needed to perform his or her duties. 
Each member of management shall be provided appropriate written
authority from the Bank’s Board to implement the provisions of this ORDER.


 


(b)           Within 60 days from the effective date of
this ORDER, the Bank shall develop and approve a written analysis and
assessment of the Bank’s management and staffing needs (“Management Plan”) for
the purpose of providing qualified management for the Bank.  The Management Plan shall be forwarded to the
Regional Director of the FDIC’s Atlanta Regional Office (“Regional Director”)
and to the Commissioner on behalf of the State Board (collectively “Supervisory
Authorities”) for review and comment and shall address, at a minimum, the
following:


 


(i)            A review of each officer’s performance,
abilities and assignments to positions within the Bank;


 


(ii)           identification of both the type and
number of officer positions needed to properly manage and supervise the affairs
of the Bank;


 


(iii)          identification and establishment of such
Bank committees as are needed to provide guidance and oversight to active
management;


 


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(iv)          annual written evaluations of all Bank
officers, and staff members to determine whether these individuals possess the
ability, experience and other qualifications required to perform present and
anticipated duties, including, but not limited to, adherence to the Bank’s
established policies and practices, and restoration and maintenance of the Bank
in a safe and sound condition;


 


(v)           a plan to recruit and hire any additional
or replacement personnel with the requisite ability, experience and other
qualifications to fill those officer or staff member positions consistent with
the needs identified in the Management Plan; and


 


(vi)          an organizational chart.


 


CAPITAL


 


3.             (a)           While this ORDER is in effect the Bank
shall achieve and maintain the following minimum capital levels as defined in
Part 325 of the FDIC Rules and Regulations, 12 C.F.R. Part 325,
after establishing an adequate allowance for loan and lease losses (“ALLL”):


 


(i)            Tier 1 Capital at least equal to eight
percent (8.0%) of total assets; and


 


(ii)           Total Risk-Based Capital at least equal
to ten percent (10.0%) of total risk-weighted assets.


 


(b)           Thereafter during the life of this ORDER,
the Bank shall maintain Tier 1 Capital in such an amount as to equal or exceed
eight percent (8%) of the Bank’s total assets; and a Total Risk-Based Capital
Ratio of at least ten percent (10%) as described in 


 


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the FDIC Statement of Policy on Risk-Based Capital
contained in Appendix A to Part 325 of the FDIC Rules and
Regulations, 12 C.F.R. Part 325, Appendix A.


 


(c)           Within 30 days of the last day of each
calendar quarter, the Bank shall determine, from its Reports of Condition and
Income, its capital ratios for that calendar quarter.  If any capital measure falls below the
established minimum, within 30 days of such required determination of capital
ratios, the Bank shall submit a written plan to the Supervisory Authorities,
describing the means and timing by which the Bank shall increase such ratios up
to or in excess of the established minimums.


 


ALLOWANCE
FOR LOAN AND LEASE LOSSES


 


4.             Within 60 days from the effective date of
this ORDER, the Board shall review the adequacy of the ALLL and establish a
comprehensive policy for determining the adequacy of the ALLL.  For the purpose of this determination, the
adequacy of the ALLL shall be determined after the charge-off of all loans or
other items classified “Loss”.  The
policy shall provide for a review of the ALLL at least once each calendar
quarter.  Said review shall be completed
in time to properly report the ALLL in the quarterly Reports of Condition and
Income.  The review shall focus on the
results of the Bank’s internal loan review, loan and lease loss experience, trends
of delinquent and non-accrual loans, an estimate of potential loss exposure of
significant credits, concentrations of credit, and present and prospective
economic conditions.  A deficiency in the
ALLL shall be remedied in the calendar quarter it is discovered, prior to
submitting the Reports of Condition and Income, by a charge to current
operating earnings.  The minutes of the
Board meeting at which such review is undertaken shall indicate the results of
the review.


 


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The Bank’s policy for determining the adequacy of the
ALLL and its implementation shall be satisfactory to the Supervisory
Authorities.


 


PLAN FOR
EXPENSES/PROFITABILITY


 


5.             (a)           Within 30 days from the effective date of
this ORDER, the Bank shall formulate and implement a written profit plan and a
realistic, comprehensive budget for all categories of income and expense.  This plan shall be forwarded to the
Supervisory Authorities for review and comment and shall address, at a minimum,
the following:


 


(i)                                    goals and strategies for improving and
sustaining the earnings of the Bank;


 


(ii)                                   the major areas in, and means by which
the Bank will seek to improve the Bank’s operating performance;


 


(iii)                                  realistic and comprehensive budgets;


 


(iv)                                  a budget review process to monitor the
income and expenses of the Bank to compare actual figures with budgetary
projections;


 


(v)                                   the operating assumptions that form the
basis for, and adequately support, major projected income and expense
components; and


 


(vi)                                  coordination of the Bank’s loan,
investment, and operating policies and budget and profit planning with the
funds management policy.


 


(b)           Following the end of each calendar
quarter, the Board shall evaluate the Bank’s actual performance in relation to
the plan required by this paragraph and shall record the results of the
evaluation, and any actions taken by the Bank in the minutes of the Board
meeting at which such evaluation is undertaken.


 


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CHARGE-OFF


 


6.             (a)           Within 10 days from the effective date of
this ORDER, the Bank shall eliminate from its books, by charge-off or
collection, all assets or portions of assets classified “Loss” and 50 percent
of those assets classified “Doubtful” in the Report that have not been
previously collected or charged-off.  (If
an asset classified “Doubtful” is a loan or lease, the Bank may, in the
alternative, increase its ALLL by an amount equal to 50 percent of the loan or
lease classified “Doubtful”.) 
Elimination of any of these assets through proceeds of other loans made
by the Bank is not considered collection for purposes of this paragraph.


 


(b)           Additionally, while this ORDER remains in
effect, the Bank shall, within 30 days from the receipt of any official Report
of Examination of the Bank from the FDIC or the State Board, eliminate from its
books, by collection, charge-off, or other proper entries, the remaining
balance of any asset classified “Loss” and 50 percent of the those classified
“Doubtful” unless otherwise approved in writing by the Supervisory Authorities.


 


REDUCTION
OF CLASSIFIED ASSETS


 


7.             (a)           Within 60 days from the effective date of
this ORDER, the Bank shall submit to the Supervisory Authorities, for review
and comment, a written plan to reduce the Bank’s risk position in each asset in
excess of $100,000, which is classified “Substandard” or “Doubtful” in the
FDIC’s Report of Examination dated October 5, 2009 (“Report”).  Within 10 days from the receipt of any comment
from the Supervisory 


 


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Authorities, and after due consideration of any
recommended changes, the Bank shall approve the plan, which approval shall be
recorded in the minutes of a Board meeting. 
Thereafter, the Bank shall implement and follow this plan.


 


(b)           The written plan mandated by this
provision shall further require a reduction in the aggregate balance of assets
classified “Substandard” and “Doubtful” in the Report in accordance with the
following schedule.  For purposes of this paragraph, “number of days”
means number of days from the effective date of this ORDER.


 


(i)                                    Within 180 days, a reduction of
twenty-five percent (25%) in the balance of assets classified “Substandard” or
“Doubtful.”


 


(ii)                                   Within 360 days, a reduction of
forty-five percent (45%) in the balance of assets classified “Substandard” or
“Doubtful.”


 


(iii)                                  Within 540 days, a reduction of
sixty-five percent (65%) in the balance of assets classified “Substandard” or
“Doubtful.”


 


(iv)                                  Within 720 days, a reduction of
seventy-five percent (75%) in the balance of assets classified “Substandard” or
“Doubtful.”


 


(c)           The requirements of this paragraph are
not to be construed as standards for future operations of the Bank. 
Following compliance with the above reduction schedule, the Bank shall continue
to reduce the total volume of adversely classified assets.


 


NO
ADDITIONAL CREDIT


 


8.             (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 has a loan or other extension of credit
from the Bank that has been charged off or classified, in whole or in part,
“Loss” or “Doubtful” and is uncollected. 
The requirements of this


 


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paragraph shall not prohibit the Bank from renewing
(after collection in cash of interest due from the borrower) any credit already
extended to any borrower.


 


(b)           Additionally, 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 has a loan or other
extension of credit from the Bank that has been classified, in whole or part,
“Substandard” and is uncollected.


 


(c)           Paragraph 8(b) shall not apply if
the Bank’s failure to extend further credit to a particular borrower would be
detrimental to the best interests of the Bank. 
Prior to the extending of any additional credit pursuant to this
paragraph, either in the form of a renewal, extension, or further advance of
funds, such additional credit shall be approved by a majority of the Board or a
designated committee thereof, who shall certify in writing as follows:


 


(i)            why the failure of the Bank to extend
such credit would be detrimental to the best interests of the Bank;


(ii)           that the Bank’s position would be
improved thereby; and


(iii)          how the Bank’s position would be
improved.


 


(d)           The signed certification shall be made a
part of the minutes of the Board or its designated committee and a copy of the
signed certification shall be retained in the borrower’s credit file.


 


REDUCE
CONCENTRATIONS OF CREDIT


 


9.             Within 90 days from the effective date of
this ORDER, the Bank shall perform a risk segmentation analysis with respect to
the Concentrations of Credit discussed in the Report.  Concentrations should be identified by
product type, geographic distribution, 


 


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underlying collateral or other asset groups, which are
considered economically related and in the aggregate represent a large portion
of the Bank’s Tier 1 Capital.  The Bank
shall develop a written plan approved by its Board and acceptable to the
Supervisory Authorities to systematically reduce any segment of the portfolio
which the Supervisory Authorities deems to be an undue concentration of credit
in relation to the Bank’s Tier 1 Capital. 
At a minimum the plan must provide for written procedures for the
ongoing measurement and monitoring of the concentrations of credit, and a limit
on concentrations commensurate with the Bank’s capital position, safe and sound
banking practices, and the overall risk profile of the Bank.


 


LENDING
AND COLLECTION POLICIES/TECHNICAL EXCEPTIONS


 


10.           Within 90 days from the effective date of
this ORDER, the Bank shall ensure the full implementation of its written
lending and collection policy to provide effective guidance and control over
the Bank’s lending function, which implementation shall include the resolution
of those technical exceptions enumerated on page 29 of the Report.  In addition, the Bank shall obtain adequate
and current documentation for all loans in the Bank’s loan portfolio.  Such policy and its implementation shall be
in a form and manner acceptable to the Supervisory Authorities.


 


LIQUIDITY/FUNDS
MANAGEMENT PLAN


 


11.           Within 60 days from the effective date of
this ORDER, the Bank shall adopt and implement a written plan addressing
liquidity, contingent funding, and asset liability management.  A copy of the plan shall be submitted to the
Supervisory Authorities upon its completion for review and comment.  Within 30 days from the receipt of any
comments from the Supervisory Authorities, the Bank shall incorporate those 


 


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recommended changes. 
Thereafter, the Bank shall implement and follow the plan.  Annually during the life of this ORDER, the
Bank shall review this plan for adequacy and, based upon such review, shall
make appropriate revisions to the plan that are necessary to strengthen funds
management procedures and maintain adequate provisions to meet the Bank’s
liquidity needs.


 


VIOLATIONS
OF LAW, REGULATION AND POLICY


 


12.           (a)           Within 30 days from the effective date of
this ORDER, the Bank shall eliminate and/or correct all violations of law and
regulation, which are more fully set out in the Report.  In addition, the Bank shall take all
necessary steps to ensure future compliance with all applicable laws and
regulations.


 


(b)           Within 30 days from the effective date of
this ORDER, the Bank shall eliminate and/or correct all contraventions of
policy, which are more fully set out in the Report.  In addition, the Bank shall take all
necessary steps to ensure future compliance with all applicable statements of
policy.


 


BROKERED
DEPOSITS


 


13.           (a)           Throughout the life of this ORDER, the
Bank shall not accept, renew, or rollover any brokered deposit, as defined by
12 C.F.R. § 337.6(a)(2), unless it is in compliance with the requirements of 12
C.F.R. § 337.6(b), governing solicitation and acceptance of brokered deposits
by insured depository institutions.


 


(b)           Within 30 days of the effective date of
this ORDER, the Bank shall submit a written plan for eliminating its reliance
on brokered deposits to the Supervisory Authorities for review and
comment.  The plan shall detail the
current composition of brokered deposits by maturity and explain the means by
which such deposits will be paid.


 


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Within 30 days of receipt of all such comments from
the Supervisory Authorities, and after consideration of all such comments, the
Bank shall approve the revised plan, which approval shall be recorded in the
minutes of the Board meeting. 
Thereafter, the Bank shall implement and fully comply with the plan.


 


(c)           The Bank shall comply with the
restrictions on the effective yields on deposits described in 12 C.F.R. §
337.6.


 


ASSET
GROWTH LIMITATIONS


 


14.           During the life of this ORDER, the Bank
shall limit asset growth to ten percent (10.0%) per annum and in no event shall
asset growth result in noncompliance with the capital maintenance provisions of
this ORDER without receiving prior written approval of the Supervisory
Authorities.


 


RESTRICTIONS
ON CERTAIN PAYMENTS


 


15.           (a)           While this ORDER is in effect, the Bank
shall not declare or pay dividends or bonuses without the prior written
approval of the Supervisory Authorities. 
All requests for prior approval shall be received at least 30 days prior
to the proposed dividend declaration date or bonus payment date (at least 5
days with respect to any request filed within the first 30 days after the date
of this ORDER) and shall contain, but not be limited to, an analysis of the
impact such dividend or bonus payment would have on the Bank’s capital, income,
and/or liquidity positions.


 


(b)           During the term of this ORDER, the Bank
shall not make any distributions of interest, principal or other sums on
subordinated debentures, if any, without the prior written approval of the
Supervisory Authorities.


 


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DISCLOSURE


 


16.           Following the effective date of this
ORDER, the Bank shall send to its shareholders or otherwise furnish a
description of this ORDER in conjunction with the Bank’s next shareholder
communication and also in conjunction with its notice or proxy statement
preceding the Bank’s next shareholder meeting. 
The description shall fully describe the ORDER in all material
respects.  The description and any
accompanying communication, statement or notice shall be sent to the FDIC,
Division of Supervision and Consumer Protection, Accounting and Securities
Disclosure Section, 550 17th Street,
N.W., Room F-6066, Washington, D.C. 20429 and to the Commissioner for the
State Board, 1205 Pendleton Street, Suite 305, Columbia, SC 29201, at
least fifteen (15) days prior to dissemination to shareholders.  Any changes requested to be made by the
Supervisory Authorities shall be made prior to dissemination of the
description, communication, notice, or statement.


 


PROGRESS
REPORTS


 


17.           Within 30 days from the end of the first
quarter following the effective date of this ORDER, and within 30 days of the
end of each quarter thereafter, the Bank shall furnish written progress reports
to the Supervisory Authorities detailing the form and manner of any actions
taken to secure compliance with this ORDER and the results thereof.  Such reports shall include a copy of the
Bank’s Reports of Condition and of Income. 
Such reports may be discontinued when the corrections required by this
ORDER have been accomplished and the Supervisory Authorities have released the
Bank in writing from making further reports. 
All progress reports and other written responses to this ORDER shall be
reviewed by the Board and made a part of the minutes of the appropriate Board
meeting.


 


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The provisions of this
ORDER shall not bar, estop, or otherwise prevent the FDIC, the State Board, or
any other federal or state agency or department from taking any other action
against the Bank or any of the Bank’s current or former institution-affiliated
parties.


 


This ORDER shall be
effective on the date of issuance.


 


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 in writing.


 


Issued Pursuant to
Delegated Authority


 


	
   

  	
  Dated this 14h day of May, 2010.

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas J. Dujenski

  
	
   

  	
  Thomas J. Dujenski

  
	
   

  	
  Regional Director

  
	
   

  	
  Division of Supervision and Consumer Protection

  
	
   

  	
  Atlanta Region

  
	
   

  	
  Federal Deposit Insurance Corporation

  



 


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The Commissioner, having duly approved the foregoing
ORDER on behalf of the State Board, and the Bank, through its Board, agree that
the issuance of said ORDER by the FDIC shall be binding as between the Bank and
the State Board to the same degree and to the same legal effect that such ORDER
would be binding if the State Board had issued a separate ORDER that included
and incorporated all of the provisions of the foregoing ORDER, pursuant to S.C.
Code Ann. § 34-1-60 (1976).


 


	
   

  	
  Dated this 11th day of May, 2010.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Louie A. Jacobs

  
	
   

  	
  Louie A. Jacobs

  
	
   

  	
  Commissioner

  
	
   

  	
  South Carolina

  
	
   

  	
  Board of Financial Institutions

  



 


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