Exhibit 10.1
    

    

    

    
      FEDERAL DEPOSIT INSURANCE CORPORATION
    

    
      WASHINGTON, D.C.
    

    
      CALIFORNIA DEPARTMENT OF FINANCIAL INSTITUTIONS
    

    
      SAN FRANCISCO, CALIFORNIA
    

    
    	
           
        	

        	

        
	

        	
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          In the Matter of
        	
          )
        	

        
	

        	
          )
        	
          STIPULATION AND CONSENT
        
	
          TEMECULA VALLEY BANK
        	
          )
        	
          TO THE ISSUANCE
        
	
          TEMECULA, CALIFORNIA
        	
          )
        	
          OF AN ORDER
        
	

        	
          )
        	
          TO CEASE AND DESIST
        
	
          (INSURED STATE NONMEMBER BANK)
        	
          )
        	

        
	

        	
          )
        	
          Docket FDIC-09-057b
        
	
           
        	
          )
        	

        


    

    

    

    
               Subject to the acceptance of this STIPULATION AND CONSENT TO
      THE ISSUANCE OF AN ORDER TO CEASE AND DESIST (“CONSENT AGREEMENT”) by
      the Federal Deposit Insurance Corporation (“FDIC”) and the California
      Department of Financial Institutions (“CDFI”), it is hereby stipulated
      and agreed by and between a representative of the Legal Division of
      FDIC, a representative of the CDFI, and Temecula Valley Bank, Temecula,
      California (“Bank”), as follows:
    

    
      1.       The Bank has been advised of its right to receive a NOTICE OF
      CHARGES AND OF HEARING (“NOTICE”) detailing the unsafe or unsound
      banking practices and violations of law alleged to have been committed
      by the Bank and of its right to a public hearing on the alleged charges
      under section 8(b)(1) of the Federal Deposit Insurance Act (“Act”), 12
      U.S.C. § 1818(b)(1), and Section 1912 of the California Financial Code
      (“CFC”), and has waived those rights.
    

    
      2.       The Bank, solely for the purpose of this proceeding and without
      admitting or denying any of the alleged charges of unsafe or unsound
      banking practices and any violations of law, hereby consents and agrees
      to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC
      and the CDFI. The Bank further stipulates and agrees that such ORDER
      will be deemed to be an order which has become final under the Act and
      the CFC, and that said ORDER shall become effective upon its issuance by
      the FDIC and the CDFI, and fully enforceable by the FDIC and the CDFI
      pursuant to the provisions of the Act and the CFC.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      3.       In the event the FDIC and the CDFI accepts the CONSENT
      AGREEMENT and issues the ORDER, it is agreed that no action to enforce
      said ORDER in the United States District Court will be taken by the
      FDIC, and no action to enforce said ORDER in State Superior Court will
      be taken by the CDFI, unless the Bank or any institution-affiliated
      party, as such term is defined in section 3(u) of the Act, 12 U.S.C. §
      1813(u), has violated or is about to violate any provision of the ORDER.
    

    
      4.       The Bank hereby waives:
    

    
      (a)       The receipt of a NOTICE;
    

    
      (b)       All defenses in this proceeding;
    

    
      (c)       A public hearing for the purpose of taking evidence on such
      alleged charges;
    

    
      (d)       The filing of Proposed Findings of Fact and Conclusions of Law;
    

    
      (e)       A recommended decision of an Administrative Law Judge; and
    

    
      (f)       Exceptions and briefs with respect to such recommended
      decision.
    

    
      Dated:   February 10, 2009
    

    
      
        

        

      

      
        
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          FEDERAL DEPOSIT INSURANCE
        	
           
        	
          TEMECULA VALLEY BANK
        
	
          CORPORATION, LEGAL DIVISION
        	

        	
          TEMECULA, CALIFORNIA
        
	
          BY: February 10, 2009
        	

        	

        
	

        	

        	
           
        
	
          /s/ SANDRA A. QUIGLEY
        	

        	
          /s/ STEVE W. AICHLE
        
	
          Sandra A. Quigley
        	

        	
          Steve W. Aichle
        
	
          Counsel
        	

        	

        
	
          CALIFORNIA DEPARTMENT OF
        	

        	

        
	
          FINANCIAL INSTITUTIONS
        	

        	

        
	
          BY:
        	

        	

        
	

        	

        	
           
        
	
          /s/ PAUL T. CRAYTON
        	

        	
          /s/ FRANK BASIRICO
        
	
          Paul T. Crayton
        	

        	
          Frank Basirico
        
	
          Senior Counsel
        	

        	

        
	

        	

        	
           
        
	

        	

        	
          /s/ ROBERT P. BECK
        
	

        	

        	
          Robert P. Beck
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ NEIL M. CLEVELAND
        
	

        	

        	
          Neil M. Cleveland
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ GEORGE COSSOLIAS
        
	

        	

        	
          George Cossolias
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ LUTHER J. MOHR
        
	

        	

        	
          Luther J. Mohr
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ MARTIN E. PLOURD
        
	

        	

        	
          Martin E. Plourd
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ RICHARD W. WRIGHT
        
	

        	

        	
          Richard W. Wright
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          Comprising the Board of Directors
        
	

        	

        	
          of Temecula Valley Bank,
        
	

        	

        	
          Temecula, California
        


    

    

    

    
      
        

        

      

      
        
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      FEDERAL DEPOSIT INSURANCE CORPORATION
    

    
      WASHINGTON, D.C.
    

    
      CALIFORNIA DEPARTMENT OF FINANCIAL INSTITUTIONS
    

    
      SAN FRANCISCO, CALIFORNIA
    

    
    	
           
        	

        	

        
	

        	
          )
        	

        
	

        	
          )
        	

        
	
          In the Matter of
        	
          )
        	

        
	

        	
          )
        	
          ORDER TO
        
	
          TEMECULA VALLEY BANK
        	
          )
        	
          CEASE AND DESIST
        
	
          TEMECULA, CALIFORNIA
        	
          )
        	

        
	

        	
          )
        	
          Docket FDIC-09-057b
        
	
          (INSURED STATE NONMEMBER BANK)
        	
          )
        	

        
	

        	
          )
        	

        
	
           
        	
          )
        	

        


    

    
               Temecula Valley Bank, Temecula, California ("Bank"), having
      been advised of its right to a NOTICE OF CHARGES AND OF HEARING
      detailing the unsafe or unsound banking practices alleged to have been
      committed by the Bank and of its right to a hearing on the alleged
      charges under section 8(b)(1) of the Federal Deposit Insurance Act
      ("Act"), 12 U.S.C. § 1818(b)(1), and Section 1912 of the California
      Financial Code, and having waived those rights, entered into a
      STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST
      ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance
      Corporation ("FDIC"), and with counsel for the California Department of
      Financial Institutions (“CDFI”), dated February 10, 2009, whereby solely
      for the purpose of this proceeding and without admitting or denying the
      alleged charges of unsafe or unsound banking practices and violations of
      law and/or regulations, the Bank consented to the issuance of an ORDER
      TO CEASE AND DESIST ("ORDER") by the FDIC and the CDFI.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
               The FDIC and the CDFI considered the matter and determined that
      they had reason to believe that the Bank had engaged in unsafe or
      unsound banking practices.  The FDIC and the CDFI, therefore, accepted
      the CONSENT AGREEMENT and issued the following:
    

    
      ORDER TO CEASE AND DESIST
    

    
               IT IS HEREBY ORDERED, that the Bank, its institution-affiliated
      parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. §
      1813(u), and its successors and assigns, cease and desist from the
      following unsafe and unsound banking practices, as more fully set forth
      in the joint FDIC and CDFI Report of Examination (“ROE”) dated December
      1, 2008:
    

    
      (a)      operating with management whose policies and practices are
      detrimental to the Bank and jeopardize the safety of its deposits;
    

    
      (b)      operating with a board of directors which has failed to provide
      adequate supervision over and direction to the active management of the
      Bank;
    

    
      (c)      operating with inadequate capital in relation to the kind and
      quality of assets held by the Bank;
    

    
      (d)      operating with an inadequate loan valuation reserve;
    

    
      (e)      operating with a large volume of poor quality loans;
    

    
      (f)      operating in such a manner as to produce operating losses; and
    

    
      (g)      operating with inadequate provisions for liquidity.
    

    
               IT IS FURTHER ORDERED, that the Bank, its
      institution-affiliated parties, and its successors and assigns, take
      affirmative action as follows:
    

    
      1.       The Bank shall have and retain qualified management.
    

    
      
        

        

      

      
        
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      (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 following:  (i) a chief
      executive officer with proven ability in managing a bank of comparable
      size, and experience in upgrading a low quality loan portfolio,
      improving earnings, and other matters needing particular attention; (ii)
      a chief financial officer with demonstrated ability in all financial
      areas including but not limited to, accounting, regulatory reporting,
      budgeting and planning, management of the investment function, liquidity
      management, and interest rate risk management; and (iii) a chief credit
      officer with significant appropriate lending, collection, and loan
      supervision experience and experience in upgrading a low quality loan
      portfolio.  The chief executive officer, the chief financial officer,
      and the chief credit officer are hereafter referred to collectively as
      “Senior Executive Officers.”  Each Senior Executive Officer shall be
      provided appropriate written authority from the Bank’s Board to
      implement provisions of this ORDER and shall perform his or her duties
      onsite at the Bank.  Without limiting the generality of the foregoing,
      the Regional Director of the FDIC’s San Francisco Regional Office
      (“Regional Director”) and the Commissioner of the CDFI (“Commissioner”)
      reserve the right to determine whether current senior executive officers
      and directors of the Bank will be considered to be qualified for
      purposes of this Order.
    

    
      (b)      During the life of this ORDER, the Bank shall notify the
      Regional Director and the Commissioner in writing when it proposes to
      add any individual to the Bank's Board or employ any individual as a
      senior executive officer.  The notification must be received at least 30
      days before such addition or employment is intended to become effective
      and should include a description of the background and experience of the
      individual or individuals to be added or employed.  The Bank shall not
      add, elect or appoint any individual to the Bank’s Board or employ any
      individual as a senior executive officer if the Regional Director or
      Commissioner, in response to the Bank’s notification as required in this
      paragraph, notifies the Bank of his or her disapproval.
    

    
      
        

        

      

      
        
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      2.       Within 30 days from the effective date of this ORDER, the
      Bank’s 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.  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.  The Bank’s Board minutes shall document these reviews and
      approvals, including the names of any dissenting directors.
    

    
      3.       (a)       Within 90 days from the effective date of this ORDER,
      the Bank shall develop and adopt a capital plan that requires the
      maintenance of the Bank’s Tier 1 Leverage Capital ratio above 10 (ten)
      percent throughout the life of this ORDER.
    

    
      (b)      Within 60 days from the effective date of this ORDER, the Bank
      shall develop and adopt a plan to meet and thereafter maintain the
      minimum risk-based capital requirements as described in the FDIC’s
      Statement of Policy on Risk-Based Capital contained in Appendix A to
      Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325,
      Appendix A.  The Plan shall be in a form and manner acceptable to the
      Regional Director and the Commissioner as determined at subsequent
      examinations.
    

    
      
        

        

      

      
        
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      (c)      If all or part of the increase in Tier 1 capital required by
      Paragraph 3 of this Order is accomplished by the sale of new securities,
      the Bank’s Board shall forthwith take all necessary steps to adopt and
      implement a plan for the sale of such additional securities, including
      the voting of any shares owned or proxies held or controlled by them in
      favor of the plan.  Should the implementation of the plan involve a
      public distribution of the Bank’s securities (including a distribution
      limited only to the Bank’s existing shareholders), the Bank shall
      prepare offering materials fully describing the securities being
      offered, including an accurate description of the financial condition of
      the Bank and the circumstances giving rise to the offering, and any
      other material disclosures necessary to comply with the federal
      securities laws.  Prior to the implementation of the plan and, in any
      event, not less than fifteen (15) days prior to the dissemination of
      such materials, the plan and any materials used in the sale of the
      securities shall be submitted to the FDIC, Registration and Disclosure
      Unit, Washington, D.C. 20429, for review and to the Commissioner to
      obtain any and all necessary securities permits or other approvals.  Any
      changes requested to be made in the plan or materials by the FDIC or the
      Commissioner shall be made prior to their dissemination.  If the
      increase in Tier 1 capital is provided by the sale of noncumulative
      perpetual preferred stock, then all terms and conditions of the issue,
      including but not limited to those terms and conditions relative to
      interest rate and convertibility factor, shall be presented to the
      Regional Director and the Commissioner for prior approval.
    

    
      (d)      For the purposes of this ORDER, the terms "Tier 1 capital" and
      "total assets" shall have, the meanings ascribed to them in Part 325 of
      the FDIC’s Rules and Regulations, 12 C.F.R. §§ 325.2(v) and 325.2(x).
    

    
      4.       (a)       Within 60 days from the effective date of this ORDER,
      the Bank shall develop written asset disposition plans for each
      classified asset greater than 2.5 million.  The plans shall be reviewed
      and approved by the Bank’s Board and acceptable to the Regional Director
      and the Commissioner as determined at subsequent examinations and/or
      visitations.
    

    
                         (b)       Within 60 days from the effective date of
      this ORDER, the Bank shall adopt and implement a written plan for the
      reduction and collection of delinquent loans and a written plan to
      reduce the overall level of classified assets.  The plans shall be
      acceptable to the Regional Director and the Commissioner as determined
      at subsequent examinations and/or visitations.
    

    
      
        

        

      

      
        
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      5.       Within 60 days from the effective date of this ORDER, the Bank
      shall develop, adopt, and implement a comprehensive policy for
      determining the appropriateness of the allowance for loan and lease
      losses.  The policy shall include requirements for complying with the
      standards and guidelines in the Policy Statement on Allowance for Loan
      and Lease Loss Methodology and Documentation for the Bank and Savings
      and Loans dated July 2, 2001, and the Interagency Policy Statement on
      Allowance for Loan and Lease Losses dated December 13, 2006.
    

    
      6.       Within 60 days from the effective date of this ORDER, the Bank
      shall develop a written plan, approved by its Board and acceptable to
      the Regional Director and the Commissioner for systematically reducing
      the amount of loans or other extensions of credit advanced, directly or
      indirectly, to or for the benefit of, any borrowers in the “Land &
      Construction Loan” Concentrations, as more fully set forth in the ROE
      dated December 1, 2008.  
    

    
      7.       Within 90 days of the effective date of this ORDER, the Bank
      shall develop and submit to the Regional Director and the Commissioner a
      written three-year strategic plan.  Such plan shall include specific
      goals for the dollar volume of total loans, total investment securities,
      and total deposits as of December 31, 2009, December 31, 2010, and
      December 31, 2011.  For each time frame, the plan will also specify the
      anticipated average maturity and average yield on loans and securities;
      the average maturity and average cost of deposits; the level of earning
      assets as a percentage of total assets; and the ratio of net interest
      income to average earning assets.  The plan shall be in a form and
      manner acceptable to the Regional Director and the Commissioner as
      determined at subsequent examinations and/or visitations.
    

    
      
        

        

      

      
        
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      8.       Within 90 days from the effective date of this ORDER, the Bank
      shall formulate and implement a written profit plan.  This plan shall be
      forwarded to the Regional Director and the Commissioner for review and
      comment and shall address, at a minimum, the following:
    

    
      (a)      goals and strategies for improving and sustaining the earnings
      of the Bank, including:
    

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

    
      (ii)     realistic and comprehensive budgets;
    

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

    
      (iv)     a description of the operating assumptions that form the basis
      for, and adequately support, major projected income and expense
      components.
    

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

    
      9.       Within 60 days from the effective date of this ORDER, the Bank
      shall develop or revise, adopt, and implement a written liquidity and
      funds management policy.  Such policy and its implementation shall be in
      a form and manner acceptable to the Regional Director and the
      Commissioner as determined at subsequent examinations and/or visitations.
    

    
      10.      Within 30 days of the effective date of this ORDER, the Bank
      shall submit to the Regional Director and the Commissioner a written
      plan for reducing its reliance on brokered deposits.  The plan should
      contain details as to the current composition of brokered deposits by
      maturity and explain the means by which such deposits will be paid in
      compliance with 12 C.F.R. § 337.6.  The Regional Director and the
      Commissioner shall have the right to reject the Bank’s plan.  On the 15th
      day of each month, the Bank shall provide a written progress report to
      the Regional Director and the Commissioner with specific reference to
      progress under the Bank’s plan.  For purposes of this ORDER, brokered
      deposits are defined as described in section 337.6(a)(2) of the FDIC’s
      Rules and Regulations to include any deposits funded by third party
      agents or nominees for depositors, including deposits managed by a
      trustee or custodian when each individual beneficial interest is
      entitled to or asserts a right to federal deposit insurance.
    

    
      
        

        

      

      
        
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      11.      The Bank shall not pay cash dividends without the prior written
      consent of the Regional Director and the Commissioner.
    

    
      12.      Within 30 days of 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 Regional Director and the Commissioner 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 Report
      of Condition and the Bank's Report of Income.  Such reports may be
      discontinued when the corrections required by this ORDER have been
      accomplished and the Regional Director and the Commissioner have
      released the Bank in writing from making further reports.
    

    
      13.      Following the effective date of this ORDER, the Bank shall send
      to its shareholder(s) 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,
      Accounting and Securities Section, Washington, D.C. 20429, and to the
      Commissioner, at least 15 days prior to dissemination to
      shareholders.  Any changes requested to be made by the FDIC shall be
      made prior to dissemination of the description, communication, notice,
      or statement.
    

    
      
        

        

      

      
        
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               This ORDER will become effective upon its issuance by the FDIC
      and the CDFI.  Violation of any provision of this Order will be deemed
      to be conducting business in an unsafe or unsound manner, and will
      subject the Bank to further regulatory enforcement action.  The
      provisions of this ORDER shall remain effective and enforceable except
      to the extent that, and until such time as, any provisions of this ORDER
      shall have been modified, terminated, suspended, or set aside by the
      FDIC and the CDFI.
    

    
               Pursuant to delegated authority.
    

    
               Dated at San Francisco, California, this 12th
      day of February, 2009.
    

    
    	
           
        	

        
	

        	
          /s/ J. GEORGE DOERR, for
        
	

        	
          Stan Ivie
        
	

        	
          Regional Director
        
	

        	
          Division of Supervision and Consumer Protection
        
	

        	
          San Francisco Region
        
	

        	
          Federal Deposit Insurance Corporation
        
	

        	
           
        
	

        	
           
        
	

        	
           
        
	

        	
          /s/ WILLIAM S. HARAF
        
	

        	
          William S. Haraf
        
	

        	
          Commissioner
        
	

        	
          California Department of Financial Institutions
        


    

    

    

    
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