Document:

exv10w1

EXHIBIT 10.1

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

COMPTROLLER OF THE CURRENCY

 

										

	In the Matter of:
	 	 	)	 	 	AA-EC-10-XX	 
	Citizens First National Bank
	 	 	)	 	 	 	 	 	 
	Princeton, Illinois
	 	 	)	 	 	 	 	 	 

 

CONSENT ORDER

     WHEREAS, the Comptroller of the Currency of the United States of America (“Comptroller”),
through his National Bank Examiner, has supervisory authority over Citizens First National Bank,
Princeton, Illinois (“Bank”);

     WHEREAS, the Bank, by and through its duly elected and acting Board of Directors (“Board”),
has executed a Stipulation and Consent to the Issuance of a Consent Order (“Stipulation and
Consent”), dated September 20, 2011 that is accepted by the Comptroller; and

     WHEREAS, by this Stipulation and Consent, which is incorporated by reference, the Bank, has
consented to the issuance of this Consent Order (“Order”) by the Comptroller.

     NOW, THEREFORE, pursuant to the authority vested in him by the Federal Deposit Insurance Act,
as amended, 12 U.S.C. § 1818, the Comptroller hereby orders that:

ARTICLE I

COMPLIANCE COMMITTEE

     (1) Within five (5) days of the date of this Order, the Board shall appoint a Compliance
Committee of at least three (3) directors, none of whom shall be employees, former employees or
controlling shareholders 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 immediately submitted in writing to the Director for Special
Supervision (“Director”). The Compliance Committee shall be responsible for monitoring and
coordinating the Bank’s adherence to the provisions of this Order.

     (2) The Compliance Committee shall meet at least monthly.

     (3) Within thirty (30) days of the date of this Order and every thirty (30) days thereafter,
the Compliance Committee shall submit a written progress report to the Board setting forth in
detail:

     (a)     a description of the actions needed to achieve full compliance with each
Article of this Order;

     (b)     actions taken to comply with each Article of this Order; and

     (c)     the results and status of those actions.

     (4) The Board shall forward a copy of the Compliance Committee’s reports, with any additional
comments by the Board, to the Director within twenty (20) days of the end of each calendar quarter.

ARTICLE II

STRATEGIC PLAN

     (1) Within ninety (90) days of the date of this Order, the Board shall develop and
forward to the Director for his review a written Strategic Plan for the Bank that is acceptable to
the Director, covering at least a three-year period. The Strategic Plan shall establish objectives
for the Bank’s overall risk profile, earnings performance, growth, balance sheet mix, off-balance
sheet activities, liability structure, reduction in the volume of nonperforming assets, product line

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development, and market segments that the Bank intends to promote or develop, together with
strategies to achieve those objectives, and shall, at a minimum, include:

	 	(a)	 	a mission statement that forms the framework for the establishment of strategic
goals and objectives;
	 
	 	(b)	 	a description of the Bank’s targeted market(s) and an assessment of the current
and projected risks and competitive factors in its identified target market(s);
	 
	 	(c)	 	the strategic goals and objectives to be accomplished;
	 
	 	(d)	 	specific actions designed to improve Bank earnings and accomplish the
identified strategic goals and objectives;
	 
	 	(e)	 	identification of Bank personnel to be responsible and accountable for
achieving each goal and objective of the Strategic Plan, including specific time frames
for the accomplishment of each goal and objective;
	 
	 	(f)	 	a financial forecast, to include projections for major balance sheet and income
statement accounts, targeted financial ratios, and growth projections over the period
covered by the Strategic Plan;
	 
	 	(g)	 	a description of the assumptions used to determine financial projections and
growth targets;
	 
	 	(h)	 	an identification and risk assessment of the Bank’s present and planned future
product lines (assets and liabilities) that will be utilized to accomplish the
strategic goals and objectives established in the Strategic Plan, with the requirement
that the risk assessment of new product lines must be completed prior to the offering
of such product lines;

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	 	(i)	 	a description of control systems to mitigate risks associated with planned new
products, growth, or any proposed changes in the Bank’s markets;
	 
	 	(j)	 	an evaluation of the Bank’s internal operations, staffing requirements, board
and management information systems, and policies and procedures to ensure that the
Bank’s internal operations, staffing requirements, board and management information
systems are adequate and contribute to the accomplishment of the goals and objectives
established in the Strategic Plan;
	 
	 	(k)	 	assigned responsibilities and accountability for the strategic planning
process, new products, growth goals, and proposed changes in the Bank’s operating
environment; and
	 
	 	(l)	 	a description of systems designed to monitor the Bank’s progress in meeting the
Strategic Plan’s goals and objectives.

     (2) If the Board’s Strategic Plan under paragraphs (1) or any revisions or deviations under
paragraph (5) or (6) of this Article includes a proposed sale or merger of the Bank, the Strategic
Plan shall, at a minimum, address the steps that will be taken and the associated timeline to
effectuate the implementation of that alternative.

     (3) At least quarterly, the Board shall prepare a written evaluation of the Bank’s performance
against the Strategic Plan, based on the Bank’s monthly reports, analyses, and written explanations
of any differences between actual performance and the Bank’s strategic goals and objectives, and
shall include a description of the actions the Board will require the Bank to take to address any
shortcomings, which shall be documented in the Board meeting minutes. Upon completion of its
evaluation, the Board shall submit a copy to the Director.

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     (4) Prior to adoption by the Board, the Strategic Plan shall be submitted to the Director for
a prior written determination of no supervisory objection. The Board shall review and update the
Bank’s Strategic Plan at least annually and more frequently if necessary or if required by the
Director in writing. Revisions to the Bank’s Strategic Plan shall be submitted to the Director for
a prior written determination of no supervisory objection. At the next Board meeting following
receipt of the Director’s written determination of no supervisory objection, the Board shall adopt
and the Bank, subject to Board review and ongoing monitoring, shall implement and thereafter ensure
adherence to the Strategic Plan and any amendments or revisions thereto.

     (5) Until the Strategic Plan required under this Article has been submitted by the Bank for
OCC review, has received a written determination of no supervisory objection from the OCC, and is
being implemented by the Bank, the Bank shall not significantly deviate from the products,
services, asset composition and size, funding sources, structure, operations, policies, procedures,
and markets of the Bank that existed before this Consent Order without first obtaining the OCC’s
prior written determination of no supervisory objection to such significant deviation. Any request
to the OCC for prior written determination of no supervisory objections to a significant deviation
must be submitted to the Director 30 days in advance of the significant deviation and shall
include:

	 	(a)	 	an assessment of the adequacy of the Bank’s management, staffing levels,
organizational structure, financial condition, capital adequacy, funding sources,
management information systems, internal controls, and written policies and procedures
with respect to the proposed significant deviation, and
	 
	 	(b)	 	the Bank’s evaluation of its capability to indentify, measure, monitor, and
control the risks associated with the proposed significant deviation.

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     (6) The Bank may not initiate any action that deviates significantly from the Board-approved
Strategic Plan without a written determination of no supervisory objection from the Director. The
Board must give the Director 30 days advance, written notice of its intent to deviate significantly
from the Strategic Plan, along with an assessment of the impact of such change on the Bank’s
condition, including a profitability analysis and an evaluation of the adequacy of the Bank’s
organizational structure, staffing, management information systems, internal controls, and written
policies and procedures to identify, measure, monitor, and control the risks associated with the
change in the Strategic Plan.

     (7) For the purposes of this Article, changes that may constitute a significant deviation from
the Strategic Plan include, but are not limited to, a change in the Bank’s marketing strategies,
products and services, marketing partners, underwriting practices and standards, credit
administration, account management, collection strategies or operations, fee structure or pricing,
accounting processes and practices, or funding strategy, any of which, alone or in the aggregate,
may have a material impact on the Bank’s operations or financial performance; or any other changes
in personnel, operations, or external factors that may have a material impact on the Bank’s
operations or financial performance.

ARTICLE III

CAPITAL PLAN AND HIGHER MINIMUMS

     (1) The Bank shall achieve within ninety (90) days of the date of this Order and
thereafter maintain the following capital levels (as defined in 12 C.F.R. Part 3):

	 	(a)	 	Total risk-based capital at least equal to twelve percent (12%) of
risk-weighted assets; and

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	 	(b)	 	Tier 1 capital at least equal to eight percent (8%) of adjusted total
assets,.1

     (2) The requirement in this Order to meet and maintain a specific capital level means that the
Bank may not be deemed to be “well capitalized” for purposes of 12 U.S.C. § 1831o and 12 C.F.R.
Part 6 pursuant to 12 C.F.R. § 6.4(b)(1)(iv).

     (3) Within ninety (90) days of the date of this Order, the Board shall develop and forward to
the Director for his review, pursuant to paragraph (5) of this Article, a written a three year
Capital Plan. The Capital Plan shall be consistent with the Strategic Plan and include:

	 	(a)	 	specific plans for the maintenance of adequate capital that may in no event be
less than the requirements of paragraph (1);
	 
	 	(b)	 	projections for growth and capital requirements based upon a detailed analysis
of the Bank’s assets, liabilities, earnings, fixed assets, and off-balance sheet
activities;
	 
	 	(c)	 	quarterly financial projections of the sources and timing of additional capital
to meet the Bank’s current and future needs;
	 
	 	(d)	 	identification of the primary source(s) from which the Bank will strengthen and
maintain its capital structure to meet the Bank’s needs;
	 
	 	(e)	 	contingency plans that identify alternative methods should the primary
source(s) under (d) above not be available

     (4) The Bank may declare or pay a dividend or make a capital distribution only:

 

			
	1	 	Adjusted total assets is defined in 12 C.F.R. § 3.2(a) as the average total assets figure required to be computed
for and stated in a bank’s most recent quarterly Consolidated Report of
Condition and Income minus end-of-quarter intangible assets, deferred tax
assets, and credit-enhancing interest-only strips, that are deducted from Tier 1 capital, and minus nonfinancial equity investments for which a Tier 1 capital
deduction is required pursuant to section 2(c)(5) of appendix A of 12 C.F.R. § Part 3.

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	 	a)	 	when the Bank is in compliance with its approved Capital Plan
and would remain in compliance with its approved Capital Plan immediately
following the declaration or payment of any dividend;
	 
	 	b)	 	when the Bank is in compliance with 12 U.S.C. §§ 56 and 60;
	 
	 	c)	 	when the Bank is in compliance with the minimum capital ratios
set forth in paragraph (1) of this article; and
	 
	 	d)	 	with the prior written determination of no supervisory
objection by the Director of Special Supervision.

     (5) Prior to the adoption by the Board, a copy of the Bank’s Capital Plan shall be submitted
to the Director for a prior written determination of no supervisory objection. The Board shall
review and update the Bank’s Capital Plan at least annually and more frequently if necessary or if
required by the Director in writing. Revisions to the Bank’s Capital Plan shall be submitted to
the Director for a prior written determination of no supervisory objection. At the next Board
meeting following receipt of the Director’s written determination of no supervisory objection, the
Board shall adopt and the Bank, subject to Board review and ongoing monitoring, shall implement and
thereafter ensure adherence to the Capital Plan and any amendments or revisions thereto.

     (6) If the Bank fails to maintain the level of capital required by paragraph (1) of this
Article, violates paragraph (2), or fails to implement a Capital Plan that the Director has
provided no supervisory objection, then the Bank shall be deemed undercapitalized for purposes of
this Agreement, and the Bank shall take such corrective measures as the OCC may direct from among
the provisions applicable to undercapitalized depository institutions under 12 U.S.C. § 1831o(e)
and 12 C.F.R. Part 6. For purposes of this requirement, an action “necessary to carry

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out the purpose of this section” under 12 U.S.C. § 1831o(e)(5) shall include restoration of
the Bank’s Tier 1 capital to the minimum levels required by this Agreement, and any other action
deemed advisable by the OCC to address the Bank’s capital deficiency or the safety and soundness of
its operations.

ARTICLE IV

LOAN PORTFOLIO MANAGEMENT

     (1) The Board shall, within sixty (60) days of the date of this Order, develop and
thereafter, ensure Bank adherence to a written program to improve the Bank’s loan portfolio
management. The program shall be in writing and include, but not be limited to:

	 	(a)	 	procedures to ensure satisfactory and perfected collateral documentation;
	 
	 	(b)	 	procedures to ensure that extensions of credit are granted, by renewal or
otherwise, to any borrower only after obtaining and analyzing current and satisfactory
credit information;
	 
	 	(c)	 	procedures to ensure conformance with loan approval requirements;
	 
	 	(d)	 	a system to track and analyze exceptions;
	 
	 	(e)	 	procedures to ensure conformance with Call Report instructions;
	 
	 	(f)	 	procedures to ensure the accuracy of internal management information systems;
	 
	 	(g)	 	a performance appraisal process, including performance appraisals, job
descriptions, and incentive programs for loan officers, which adequately consider their
performance relative to policy compliance, documentation standards, accuracy in credit
grading, and other loan administration matters; and

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	 	(h)	 	procedures to track and analyze concentrations of credit, significant economic
factors, and general conditions and their impact on the credit quality of the Bank’s
loan and lease portfolios.

     (2) The Board shall review and update the program on an annual basis, or more frequently if
necessary, or if requested by the Director in writing.

     (3) Within sixty (60 ) days of the date of this Order, the Board shall develop, implement, and
thereafter ensure Bank adherence to systems which provide for effective monitoring of:

	 	(a)	 	early problem loan identification to assure the timely identification and
accurate rating of loans and leases based on lending officer submissions;
	 
	 	(b)	 	statistical records that will serve as a basis for identifying sources of
problem loans and leases by industry, size, collateral, division, group, indirect
dealer, and individual lending officer;
	 
	 	(c)	 	previously charged-off assets and their recovery potential;
	 
	 	(d)	 	compliance with the Bank’s lending policies and laws, rules, and regulations
pertaining to the Bank’s lending function;
	 
	 	(e)	 	adequacy of credit and collateral documentation; and
	 
	 	(f)	 	concentrations of credit.

     (4) Beginning as of September 30, 2011, on a monthly basis, management will provide the Board
with written reports including, at a minimum, the following information:

	 	(a)	 	the identification, type, rating, and amount of problem loans and leases;
	 
	 	(b)	 	the identification and amount of delinquent loans and leases;
	 
	 	(c)	 	credit and collateral documentation exceptions;
	 
	 	(d)	 	the identification and status of credit related violations of law, rule or
regulation;

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	 	(e)	 	the identity of the loan officer who originated each loan reported in
accordance with subparagraphs (a) through (d) of this Article and Paragraph;
	 
	 	(f)	 	an analysis of concentrations of credit, significant economic factors, and
general conditions and their impact on the credit quality of the Bank’s loan and lease
portfolios;
	 
	 	(g)	 	the identification and amount of loans and leases to executive officers,
directors, principal shareholders (and their related interests) of the Bank; and
	 
	 	(h)	 	the identification of loans and leases not in conformance with the Bank’s
lending and leasing policies, and exceptions to the Bank’s lending and leasing
policies.

ARTICLE V

CRITICIZED ASSETS

     (1) The Bank shall take immediate and continuing action to protect its interest in those
assets criticized in the Report of Examination dated as of September 30, 2010, 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 thirty (30) days of the date of this Order, the Board shall adopt, implement, and
thereafter ensure Bank adherence to individual workout plans to protect the bank’s interest in or
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.” Each workout plan shall include, at a minimum:

	 	(a)	 	an identification of the expected sources of repayment;

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	 	(b)	 	the current 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 a global cash flow analysis of the guarantor’s repayment ability
where repayment is dependent in whole or in part on any guarantor; and
	 
	 	(d)	 	actions designed to eliminate the basis of criticism of or
protect the bank’s interest in the asset, including timeframes for implementing
and evaluating the effectiveness of those actions.

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

	 	(a)	 	the status of each criticized asset or criticized portion
thereof that equals or exceeds one hundred thousand dollars ($100,000);
	 
	 	(b)	 	management’s adherence to the workout plans adopted pursuant to
this Article;
	 
	 	(c)	 	the status and effectiveness of the plans; and
	 
	 	(d)	 	the need to revise the plans or take alternative action.

     (4) The Bank may extend credit, directly or indirectly, including renewals or extensions 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 one hundred thousand dollars ($100,000) only if a majority of the full Board (or
designated committee thereof) finds and documents in writing that each of the following conditions
is met:

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	 	(a)	 	the extension of additional credit is necessary to promote the
best interests of the Bank, and
	 
	 	(b)	 	a comparison to the plans adopted pursuant to this Article
shows that the Board’s formal plan to collect or strengthen the criticized
asset will not be compromised.

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

ARTICLE VI

LOAN RISK RATING SYSTEM

     (1) Within thirty (30) days of the date of this Order, and on an ongoing basis thereafter, the
Board shall ensure that the Bank’s internal ratings of credit relationships are timely, accurate,
and consistent with the regulatory credit classification criteria set forth in Rating Credit Risk,
A-RCR, of the Comptroller’s Handbook and the OCC’s Summary of Key Principles:
Construction & Development Lending, dated April 8, 2008, as well as OCC Bulletin 2000-20
Uniform Retail Credit Classification and Account Management Policy. At a minimum, the Board must
ensure, on an ongoing basis, that with respect to the Bank’s assessment of credit:

	 	(a)	 	The primary consideration is the strength of the borrower’s
primary source of repayment (i.e., the probability of default rather than the
risk of loss);
	 
	 	(b)	 	The strength of the borrower’s primary source of repayment is
determined through analysis of the borrower’s historical and projected
financial statements, past performance, and future prospects in light of
conditions that have occurred or may occur during the term of the loan;

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	 	(c)	 	Collateral, non-government guarantees, and other similar credit
risk mitigants that affect potential loss in the event of default (rather than
the probability of default) are taken into consideration only if the primary
source of repayment has weakened and the probability of default has increased;
	 
	 	(d)	 	Collateral values reflect a current assessment of value based
on actual market conditions and project status;
	 
	 	(e)	 	Credit risk ratings are reviewed and updated whenever relevant
new information is received; and
	 
	 	(f)	 	The credit risk rating analysis is documented and available for
review by the Board and the OCC upon request.

     (2) Within thirty (30) days of the date of this Order, the Board must ensure its credit risk
rating management information system includes a summary of loan portfolio data highlighting trends
in, and condition of, the quality of loans rated Pass.

ARTICLE VII

LOAN REVIEW

     (1) Within ninety (90) days of the date of this Order, the Board shall establish an
effective, independent and ongoing loan review system to review, at least semi-annually, the Bank’s
loan and lease portfolios to assure the timely identification and categorization of problem
credits. The system shall provide for a written report to be filed with the Board after each
review and shall use a loan and lease grading system consistent with the guidelines set forth in
the “Rating Credit Risk” and “Allowance for Loan and Lease Losses” booklets of the Comptroller’s

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Handbook, as well as OCC Bulletin 2000-20 Uniform Retail Credit Classification and
Account Management Policy. Such reports shall include, at a minimum, conclusions regarding:

	 	(a)	 	the overall quality of the loan and lease portfolios;
	 
	 	(b)	 	the identification, type, rating, and amount of problem loans and leases;
	 
	 	(c)	 	the identification and amount of delinquent loans and leases;
	 
	 	(d)	 	credit and collateral documentation exceptions;
	 
	 	(e)	 	the identification and status of credit related violations of law, rule or
regulation;
	 
	 	(f)	 	the identity of the loan officer who originated each loan reported in
accordance with subparagraphs (b) through (e) of the Article;
	 
	 	(g)	 	concentrations of credit;
	 
	 	(h)	 	loans and leases to executive officers, directors, principal shareholders (and
their related interests) of the Bank; and
	 
	 	(i)	 	loans and leases not in conformance with the Bank’s lending and leasing
policies, and exceptions to the Bank’s lending and leasing policies.

     (2) Within sixty (60) days of the date of this Order, the Board shall develop, implement, and
thereafter ensure Bank adherence to a written program providing for independent review of problem
loans and leases in the Bank’s loan and lease portfolios for the purpose of monitoring portfolio
trends, on at least a quarterly basis. The program shall require a quarterly report to the Board.
At a minimum the program shall provide for an independent reviewer’s assessment of the Bank’s:

	 	(a)	 	monitoring systems for early problem loan identification to assure the timely
identification and rating of loans and leases based on lending officer submissions;

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	 	(b)	 	statistical records that serve as a basis for identifying sources of problem
loans and leases by industry, size, collateral, division, group, indirect dealer, and
individual lending officer;
	 
	 	(c)	 	system for monitoring previously charged-off assets and their recovery
potential;
	 
	 	(d)	 	system for monitoring compliance with the Bank’s lending policies and laws,
rules, and regulations pertaining to the Bank’s lending function; and
	 
	 	(e)	 	system for monitoring the adequacy of credit and collateral documentation.

     (3) The Board shall review and update the program on an annual basis, or more frequently if
necessary, or if requested by the Director in writing.

     (4) The Board shall evaluate the internal loan and lease review report(s) and shall ensure
that immediate, adequate, and continuing remedial action, if appropriate, is taken upon all
findings noted in the report(s).

     (5) A copy of the reports submitted to the Board, as well as documentation of the action taken
by the Bank to collect or strengthen assets identified as problem credits, shall be preserved in
the Bank.

ARTICLE VIII

ALLOWANCE FOR LOAN AND LEASE LOSSES

     (1) The Board shall review and revise as appropriate and continue adhere to a program for
the maintenance of an adequate Allowance for Loan and Lease Losses (“ALLL”). The program shall
continue to be consistent with the comments on maintaining a proper ALLL found in the Interagency
Policy Statements on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006), OCC Bulletin
2004-13 (March 1, 2004), OCC Bulletin 2001-37 (July 20, 2001) and with the “Allowance

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for Loan and Lease Losses,” booklet A-ALLL of the Comptroller’s Handbook, and any subsequent
regulatory releases, and shall incorporate the following:

	 	(a)	 	internal risk ratings of loans;
	 
	 	(b)	 	results of the Bank’s independent loan review;
	 
	 	(c)	 	Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 310 Receivables (Pre-codification reference: Statement of Financial
Accounting Standards (“FAS”) Statement No. 114), how impairment will be determined, and
procedures to ensure that the analysis of loans complies with ASC 310 requirements;
	 
	 	(d)	 	criteria for determining loan pools under ASC 310 (Pre-codification reference:
FAS Statement No. 5) and an analysis of those loan pools;
	 
	 	(e)	 	recognition of non-accrual loans in conformance with generally accepted
accounting principles (“GAAP”) and regulatory guidance;
	 
	 	(f)	 	loan loss experience;
	 
	 	(g)	 	trends of delinquent and non-accrual loans;
	 
	 	(h)	 	concentrations of credit in the Bank; and
	 
	 	(i)	 	present and projected economic and market conditions.

     (2) The program shall provide for a review of the ALLL by the Board at least once each
calendar quarter. Any deficiency in the ALLL shall be remedied in the quarter it is discovered,
prior to filing the Consolidated Reports of Condition and Income, by additional provisions from
earnings. Written documentation shall be maintained of the factors considered and conclusions
reached by the Board in determining the adequacy of the ALLL and made available for review by Bank Examiners.

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     (3) The Board shall review and update the program on an annual basis, or more frequently if
necessary, or if requested by the Director in writing.

ARTICLE IX

LIQUIDITY

     (1) The Board shall immediately ensure the liquidity of the Bank is maintained to a level
that is sufficient to sustain the Bank’s current operations and to withstand any anticipated or
extraordinary demand against its funding base.

     (2) The Board shall review the Bank’s liquidity on a monthly basis. Such reviews shall
consider:

	 	(a)	 	a maturity schedule of certificates of deposit, including large uninsured
deposits;
	 
	 	(b)	 	the volatility of demand deposits including any escrow deposits;
	 
	 	(c)	 	the amount and type of loan commitments and standby letters of credit;
	 
	 	(d)	 	an analysis of the continuing availability and volatility of present funding
sources;
	 
	 	(e)	 	an analysis of the impact of decreased cash flow from the Bank’s loan portfolio
resulting from delinquent and non-performing loans; and
	 
	 	(f)	 	an analysis of the impact of decreased cash flow from the sale of loans or loan
participations.

     (3) The Board shall develop a contingency funding plan and take appropriate action to ensure
adequate sources of liquidity in relation to the Bank’s needs. Such actions may include, but are
not necessarily limited to:

	 	(a)	 	selling assets;

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	 	(b)	 	obtaining lines of credit from the Federal Reserve Bank;
	 
	 	(c)	 	obtaining lines of credit from correspondent banks;
	 
	 	(d)	 	recovering charged-off assets; and
	 
	 	(e)	 	injecting additional equity capital.

The Board shall ensure that the Bank prepares monthly reports setting forth the Bank’s liquidity
requirements and sources and establishing an adequate contingency funding plan. Copies of these
liquidity reports shall be forwarded to the Director on a monthly basis. The contingency funding
plan shall forecast funding needs, and funding sources under different stress scenarios, which
represent management’s best estimate of balance sheet changes that may result from a liquidity or
credit event. The contingency funding plan shall include:

	 	(a)	 	Specific plans detailing how the Bank will comply with restrictions or
requirements set forth in this Order, including restrictions against brokered deposits
in 12 U.S.C. § 337.6;
	 
	 	(b)	 	The preparations of reports that identify and quantify all sources of funding
and funding obligations under best case and worst case scenarios, including asset
funding, liability funding and off-balance sheet funding; and
	 
	 	(c)	 	procedures that ensure the Bank’s contingency funding practices are consistent
with the Board’s guidance and risk tolerances.

ARTICLE X

ADMINISTRATIVE APPEALS AND EXTENSIONS OF TIME

     (1) If the Bank requires an extension of any timeframe within this Order, the Board shall
submit a written request to the Director asking for relief. Any written requests submitted

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pursuant to this Article shall include a statement setting forth in detail the special
circumstances that require an extension of a timeframe within this Order.

     (2) All such requests shall be accompanied by relevant supporting documentation, and any other
facts upon which the Bank relies. The Director’s decision concerning a request is final and not
subject to further review.

ARTICLE XI

OTHER PROVISIONS

     (1) All reports or plans which the Bank or Board has agreed to submit to the Director
pursuant to this Order shall be forwarded, by overnight mail or via email, to the following:

	 	 	 
	Director for Special Supervision

	 	with a copy to:
	Comptroller of the Currency

250 E Street, SW

Mail Stop 7-4

Washington, DC 20219

	 	Assistant Deputy Comptroller

Peoria Field Office

211 Fulton Street, Suite 604

Peoria, IL

     (2) Although the Bank is required to submit certain proposed actions and programs for the
review or prior written determination of no supervisory objection of the Director, the Board has
the ultimate responsibility for proper and sound management of the Bank and the completeness and
accuracy of the Bank’s books and records.

     (3) 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 Order shall in any
way inhibit, estop, bar, or otherwise prevent the Comptroller from so doing.

     (4) Except as otherwise expressly provided herein, any time limitations imposed by this Order
shall begin to run from the effective date of this Order.

20

 

     (5) The provisions of this Order are effective upon issuance of this Order by the Comptroller,
through his authorized representative whose signature appears below, and shall remain effective and
enforceable, except to the extent that, and until such time as, any provisions of this Order shall
have been amended, suspended, waived, or terminated in writing by the Comptroller.

     (6) In each instance in this Order in which the Board or a Board committee is required to
ensure adherence to and undertake to perform certain obligations of the Bank, including the
obligation to implement plans, policies or other actions, it is intended to mean that the Board or
Board committee shall:

	 	(a)	 	ensure that the Bank has sufficient processes, management, personnel, and
control systems to effectively implement and adhere to all provisions of this Order,
and that Bank management and personnel have sufficient training and authority to
execute their duties and responsibilities under this Order;
	 
	 	(b)	 	authorize and adopt such actions on behalf of the Bank as may be necessary for
the Bank to perform its obligations and undertakings under the terms of this Order;
	 
	 	(c)	 	require the timely reporting by Bank management of such actions directed by the
Board to be taken under the terms of this Order;
	 
	 	(d)	 	follow-up on any non-compliance with such actions in a timely and appropriate
manner; and
	 
	 	(e)	 	require corrective action be taken in a timely manner on any non-compliance
with such actions.

All discussions and actions taken by the Board, or designated committee thereof, must be documented
and maintained in minutes that fully describe the discussions and actions taken.

21

 

     (7) This Order is intended to be, and shall be construed to be, a final order issued pursuant
to 12 U.S.C. § 1818, and expressly does not form, and may not be construed to form, a contract
binding on the Comptroller or the United States.

     (8) The Bank entered into a Formal Agreement dated March 15, 2010. This Order replaces the
Formal Agreement in its entirety and therefore, the Formal Agreement is hereby terminated.

     (9) The terms of this Order, 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.

IT IS SO ORDERED, this 20 day of September, 2011.

/s/ Henry Fleming

Henry Fleming

Director for Special Supervision

22

 

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

COMPTROLLER OF THE CURRENCY

 

										

	In the Matter of:
	 	 	)	 	 	AA-EC-10-XX	 
	Citizens First National Bank
	 	 	)	 	 	 	 	 	 
	Princeton, Illinois
	 	 	)	 	 	 	 	 	 

 

STIPULATION AND CONSENT TO THE ISSUANCE

OF A CONSENT ORDER

     WHEREAS, the Comptroller of the Currency of the United States of America (“Comptroller” or
“OCC”) intends to initiate cease and desist proceedings against Citizens First National Bank,
Princeton, Illinois (“Bank”), pursuant to 12 U.S.C. § 1818(b), through the issuance of a Notice of
Charges, for unsafe and unsound banking practices relating to, among other issues, asset quality,
credit administration, capital, liquidity and management; and noncompliance with the Formal
Agreement dated March 15, 2010;

     WHEREAS, the Bank, in the interest of compliance and cooperation, and without admitting or
denying any wrongdoing, consents to the issuance of a Consent Order, dated September 20,
2011 (“Order”) by executing this Stipulation and Consent to the
Issuance of a Consent Order;

     NOW THEREFORE, the Comptroller, through his authorized representative, and the Bank, through
its duly elected and acting Board of Directors, hereby stipulate and agree to the following:

ARTICLE I

JURISDICTION

     (1) The Bank is a national banking association chartered and examined by the Comptroller
pursuant to the National Bank Act of 1864, as amended, 12 U.S.C. § 1 et seq.

 

 

     (2) The Comptroller is “the appropriate Federal banking agency” regarding the Bank, pursuant
to 12 U.S.C. §§ 1813(q) and 1818(b).

     (3) The Bank is an “insured depository institution” within the meaning of 12 U.S.C. §
1818(b)(1).

ARTICLE II

ACKNOWLEDGMENTS

     (1) The Bank acknowledges that said Order shall be deemed an “order issued with the
consent of the depository institution,” as defined in 12 U.S.C. § 1818(h)(2), and consents and
acknowledges that said Order shall become effective upon its issuance and shall be fully
enforceable by the Comptroller under the provisions of 12 U.S.C. § 1818. 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, 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.

     (2) The Bank also expressly acknowledges that no officer or employee of the Comptroller 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.

2

 

ARTICLE III

WAIVERS

     (1) The Bank, by signing this Stipulation and Consent, hereby waives:

	 	(a)	 	the issuance of a Notice of Charges pursuant to 12 U.S.C. § 1818(b);
	 
	 	(b)	 	any and all procedural rights available in connection with the issuance of the
Order;
	 
	 	(c)	 	all rights to a hearing and a final agency decision pursuant to 12 U.S.C. §
1818(i) or 12 C.F.R. Part 19;
	 
	 	(d)	 	all rights to seek any type of administrative or judicial review of the Order;
and
	 
	 	(e)	 	any and all rights to challenge or contest the validity of the Order.

ARTICLE IV

CLOSING PROVISIONS

     (1) The provisions of this Stipulation and Consent shall not inhibit, estop, bar, or
otherwise prevent the Comptroller from taking any other action affecting the Bank if, at any time,
the Comptroller deems it appropriate to do so to fulfill the responsibilities placed upon him by
the several laws of the United States of America.

     IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller as his

Representative has hereunto set his hand on behalf of the Comptroller.

	 	 	 

	/s/ Henry Fleming

	 	9/20/11
	 

	 	 
	Henry Fleming

Director for Special Supervision

	 	Date

3

 

     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/Greta E. Bieber
 

Greta E. Bieber	 	
9/20/2011
 

Date	 
	/s/Gary C. Bruce
 

Gary C. Bruce	 	
9/20/2011
 

Date
	/s/Sharon L. Covert
 

Sharon L. Covert	 	
9/20/2011
 

Date
	/s/John R. Ernat
 

John R. Ernat	 	
9/20/2011
 

Date
	/s/Todd D. Fanning
 

Todd D. Fanning	 	
9/20/2011
 

Date
	/s/Mark Janko
 

Mark Janko	 	
9/20/2011
 

Date
	/s/Thomas D. Ogaard
 

Thomas D. Ogaard	 	
9/20/2011
 

Date
	/s/Stephen W. Samet
 

Stephen W. Samet	 	
9/20/2011
 

Date
	/s/Craig O. Wesner
 

Craig O. Wesner	 	
9/20/2011
 

Date

4exv10w1

Exhibit 10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

	 	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	In the Matter of

	 	 	)	 	 	 
	 

	 	 	)	 	 	STIPULATION
	 

	 	 	)	 	 	TO THE ISSUANCE OF A
	COMMUNITY FIRST BANK & TRUST

	 	 	)	 	 	CONSENT ORDER
	COLUMBIA, TENNESSEE

	 	 	)	 	 	 
	 

	 	 	)	 	 	FDIC-11-328b
	 

	 	 	)	 	 	 
	(Insured State Nonmember Bank)

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 

     Subject to the acceptance of this STIPULATION TO THE ISSUANCE OF A CONSENT ORDER
(“STIPULATION”) by the Federal Deposit Insurance Corporation (“FDIC”), it is hereby stipulated and
agreed by and between a representative of the Legal Division of the FDIC and Community First Bank &
Trust, Columbia, Tennessee (“Bank”), as follows:

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

     2. The Bank, solely for the purpose of this proceeding and without admitting or denying any of
the charges of unsafe or unsound banking practices and violations of law and/or regulations, hereby
consents and agrees to the issuance of a CONSENT ORDER (“ORDER”) by the FDIC. The Bank further
stipulates and agrees that such ORDER shall be deemed to be a final ORDER and that said ORDER shall
become effective upon its issuance by the FDIC and

1

 

shall be fully enforceable by the FDIC pursuant to the provisions of section 8(i) of the Act,
12 U.S.C. § 1818(i), subject only to the conditions set forth in paragraph 3 of this STIPULATION.

     3. In the event the FDIC accepts this STIPULATION and issues the ORDER, it is agreed that no
action will be taken by the FDIC to enforce said ORDER in a United States District Court unless the
Bank or any institution-affiliated party has violated or is about to violate any provision of the
ORDER.

     4. Solely for the purpose of this proceeding, the Bank hereby waives:

	 	(a)	 	The issuance and service of a NOTICE OF CHARGES AND OF HEARING;
	 
	 	(b)	 	All defenses to the alleged charges in the NOTICE OF CHARGES
AND OF HEARING;
	 
	 	(c)	 	A 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;
	 
	 	(f)	 	The filing of exceptions and briefs with respect to such
RECOMMENDED DECISION; and
	 
	 	(g)	 	Review of the ORDER by any Federal court.

2

 

     Dated this 12th day of September 2011.

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	FEDERAL DEPOSIT INSURANCE CORPORATION	 	COMMUNITY FIRST BANK & TRUST	 
	LEGAL DIVISION	 	COLUMBIA, TENNESSEE	 
	 
	 	 	 	 	 	 	 
	BY:

	 	/s/ LeRoy K. Carter
	 	BY:
	 	/s/ Bernard Childress	 
	 

	 	 
	 	 	 	 	 
	 

	 	LeRoy K. Carter
	 	 	 	Bernard Childress	 
	 

	 	Senior Attorney	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	  /s/ Eslick E. Daniel, M.D.
 	 
	 	 	 	 	 	 	Eslick E. Daniel, M.D. 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	  /s/ Vasant G. Hari 	 
	 	 	 	 	 	 	Vasant G. Hari 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ Louis E. Hollway
 	 
	 	 	 	 	 	 	Louis E. Hollway 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ Randy A. Maxwell
 	 
	 	 	 	 	 	 	Randy A. Maxwell 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ H. Allen Pressnell
 	 
	 	 	 	 	 	 	H. Allen Pressnell 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ Dinah C. Vire
 	 
	 	 	 	 	 	 	Dinah C. Vire 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ Stephen F. Walker
 	 
	 	 	 	 	 	 	Stephen F. Walker 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ Fred C. White
 	 
	 	 	 	 	 	 	Fred C. White 	 
	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BY: 	 	/s/ Roger Witherow
 	 
	 	 	 	 	 	 	Roger Witherow 	 
	 	 	 	 	 	 	 	 
	 	 	 	 

3

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