EX-10.4






EXHIBIT 10.4




AGREEMENT BY AND BETWEEN

Seacoast National Bank

Stuart, Florida

and

The Comptroller of the Currency




     Seacoast National Bank, Stuart, Florida (“Bank”) and 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 has found unsafe and unsound banking practices relating to asset quality and
earnings performance 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 “written agreement entered into with the agency”
within the meaning of 12 U.S.C. § 1818(b)(1)



     (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)(1) and 12 U.S.C. § 1818(e)(1)(2)



     (3) 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.



     (4) This Agreement shall be construed to be a “written agreement” within the meaning of 12
U.S.C. § 1818(u)(1)(A).



     (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 the:




Assistant Deputy Comptroller

South Florida Field Office

9800 N.W. 41st Street, Suite 120

Miami, Florida 33178



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)(1)), 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 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 thirty (30) 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




CREDIT RISK




     (1) Within ninety (90) days, the Board shall develop, implement, and thereafter ensure Bank
adherence to a written program to reduce the level of credit risk in the Bank. The program shall
include, but not be limited to:



     (a) procedures to strengthen credit underwriting, particularly in the real estate portfolios;



     (b) procedures to strengthen management of credit risk and to maintain an adequate, qualified
staff in all credit related areas;



     (c) procedures for strengthening collections; and



     (d) an action plan to control growth in commercial real estate lending.



     (e) The Board shall submit a copy of the program to the Assistant Deputy Comptroller.



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     (f) At least quarterly, the Board shall prepare a written assessment of the Bank’s credit
risk, which shall evaluate the Bank’s progress under the aforementioned program. The Board shall
submit a copy of this assessment to the Assistant Deputy Comptroller.



     (2) 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 IV




CRITICIZED ASSETS




     (1) The Bank shall take immediate and continuing action to protect its interest in those
assets criticized in the Bank’s most recent Report of Examination (“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 ninety (90) days, the Board shall adopt, implement, and thereafter ensure Bank
adherence to a written program designed to eliminate the basis of 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:



     (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 three
million dollars ($3,000,000) shall be forwarded to the Assistant Deputy Comptroller.



     (4) 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.



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



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     (a) the status of each criticized asset or criticized portion thereof that equals or exceeds
three million dollars ($3,000,000);



     (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.



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



     (7) 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 during any examination
and whose aggregate loans or other extensions exceed three million dollars ($3,000,000) 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.



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



ARTICLE V




COMMERCIAL REAL ESTATE CONCENTRATION RISK MANAGEMENT




     (1) Within ninety (90) days, the Board shall adopt, implement, and thereafter ensure Bank
adherence to a written commercial real estate (“CRE”) concentration risk management program
consistent with OCC Bulletin 2006-46. The program shall include, but not necessarily be limited to,
the following:



     (a) Ongoing risk assessments to identify potential CRE concentrations in the portfolio,
including exposures to similar or interrelated groups or borrowers;



     (b) Board and management oversight of CRE concentrations, to include:



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     (i) policy guidelines and an overall CRE lending strategy, including actions required when the
Bank approaches the limits of its CRE guidelines;



     (ii) procedures and controls to effectively adhere to and monitor compliance with the Bank’s
lending policies and strategies;



     (iii) regular review of information and reports that identify, analyze, and quantify the
nature and level of risk presented by CRE concentrations; and



     (iv) periodic review and approval of CRE risk exposure limits;



     (c) Portfolio management, to include internal lending guidelines and concentration limits that
control the Bank’s overall risk exposure to CRE, and a contingency plan to reduce or mitigate
concentrations in the event of adverse market conditions;



     (d) Management information systems, to provide sufficient timely information to management to
identify, measure, monitor, and manage CRE concentration risk;



     (e) Periodic market analysis, to provide management and the Board with information to assess
whether its CRE lending strategy and policies continue to be appropriate in light of changes in
CRE market conditions;



     (f) Credit underwriting standards for CRE, to include:



     (i) maximum loan amount by type of property;



     (ii) loan terms;



     (iii) pricing structures;



     (iv) collateral valuation;



     (v) loan-to-value limits by property type;



     (vi) requirements for feasibility studies and sensitivity analysis or stress testing;



     (vii) minimum requirements for initial investment and maintenance of hard equity by the
borrower; and



     (viii) minimum standards for borrower net worth, property cash flow, and debt service coverage
for the property;



     (g) Portfolio stress testing and sensitivity analysis of CRE concentrations; and



     (h) Credit risk review of CRE, to include an effective, accurate, and timely risk-rating
system.



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     (2) The Board shall forward a copy of any analysis performed on existing or potential CRE
concentrations to the Assistant Deputy Comptroller immediately following the review.



     (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




CLOSING




     (1) Although the Board has agreed to submit certain pro grams and reports to the Assistant
Deputy Comptroller for review or prior written determination of no supervisory objection, 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 him by the several laws of the United
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 requirements 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 shall be effective upon execution by the parties hereto
and its provisions shall continue in full force and effect unless or until such provisions are
amended in writing by mutual consent of the parties to the Agreement or excepted, 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 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 supervisory “written
agreement entered into with the agency” as contemplated by 12 U. S.C. § 1818(b)(1), and expressly
does not form, and may not be construed to form, a contract binding on the Comptroller or the
United States. Notwithstanding the absence of mutuality of obligation, or of consideration, or of a
contract, the Comptroller may enforce any of the commitments or obligations herein undertaken by
the Bank under his supervisory powers, including 12 U.S.C. § 1818(b)(1), and not as a matter of
contract law. The Bank expressly acknowledges that neither the Bank nor the Comptroller has any
intention to enter into a contract. The Bank also expressly acknowledges that no officer or
employee of the Office of the Comptroller of the Currency has statutory or other authority to bind
the United States, the U.S. Treasury Department, the Comptroller, or any other federal bank
regulatory agency or entity, or any officer or employee of any of those entities to a contract
affecting the Comptroller’s exercise of his supervisory responsibilities. 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.



     IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller, has hereunto set his
hand on behalf of the Comptroller.



	 	 	 	 	 	 	 
	/s/ C. Wayne Crowell
 

C. Wayne Crowell

	 	 	 	 	 	 
	Assistant Deputy Comptroller 

South Florida Field Office
	 	 	 	December 16, 2008
 

Date
	 	 






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     IN TESTIMONY WHEREOF, 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/ Dennis J. Arczynski
 

Dennis J. Arczynski

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Stephen E. Bohner
 

Stephen E. Bohner

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Jeffrey C. Bruner
 

Jeffrey C. Bruner

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ John H. Crane
 

John H. Crane

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Michael T. Crook
 

Michael T. Crook

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Gilbert H. Culbreth
 

Gilbert H. Culbreth

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Christopher E. Fogal
 

Christopher E. Fogal

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Jeffrey S. Furst
 

Jeffrey S. Furst

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Douglas A. Gilbert
 

Douglas A. Gilbert

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Dale M. Hudson
 

Dale M. Hudson

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Dennis S. Hudson III
 

Dennis S. Hudson III

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Dennis S. Hudson, Jr.
 

Dennis S. Hudson, Jr.

	 	 	 	December 16, 2008
 

Date
	 	 






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Marian B. Monroe

	 	 	 	 
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Thomas E. Rossin
 

Thomas E. Rossin

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Jean Strickland
 

Jean Strickland

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Thomas H. Thurlow, Jr.
 

Thomas H. Thurlow, Jr.

	 	 	 	December 16, 2008
 

Date
	 	 
	 
	 	 	 	 	 	 
	/s/ Edwin E. Walpole III
 

Edwin E. Walpole III

	 	 	 	December 16, 2008
 

Date
	 	 







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