Freedom Bank Successfully Completes Negotiation of Regulatory Order with the Federal Deposit Insurance Corporation and Florida Office of Financial Regulation

BRADENTON, Fla., Sept. 7 /PRNewswire-FirstCall/ -- Dr. Howard Seider, Chairman of the Board of Directors of Freedom Bank (OTC Bulletin Board: FBBF) announced today the bank has successfully completed negotiations with the Federal Deposit Insurance Corporation (FDIC) and Florida Office of Financial Regulation and agreed to the entry of a regulatory order. Concurrently, the bank has summarized progress made towards compliance since the March 2008 FDIC on site examination, on which the regulatory order is based. Although Freedom Bank has taken an active role in working with both federal and state regulators in finalizing the order, Freedom Bank has not admitted to or denied any facts, any unsafe or unsound banking practices, or any legal or regulatory violations.

The regulatory order is a corrective action plan provided by the regulators calling for the bank to take defined measures in a number of areas, based on an in-depth, on-site examination conducted by the FDIC in March, 2008. On this point Seider specifically commented, "The issuance of this order is based on the findings of the FDIC during the March on-site exam, which was based on the financial results of the bank at December 31, 2007. Over the course of the nearly six months since the issuance of the report, the Board has aggressively taken a number of corrective steps, specifically addressing the findings of the March 2008 FDIC report." Seider continued, "As a result, we are pleased to report a number of the corrective actions outlined in the regulatory order have either been accomplished, or are far along in the process of being accomplished."

Freedom Bank will continue to serve its customers in all areas including making loans, establishing lines of credit, accepting deposits and processing banking transactions. All customer deposits are fully insured to the highest limits set by the FDIC, which are $100,000 for individually titled accounts and $250,000 for individually titled IRA accounts.

The FDIC order directs Freedom Bank to, among other things, take certain actions in the areas of maintaining capital ratios, board oversight, management planning and auditing, lending policies, loan loss allowance and loan portfolio review.

In his comments, Seider noted references to management. "Since the time of the FDIC exam on which the order is based, the Board has installed new, and highly qualified top management with the appointment of former chief banking regulator for the Commonwealth ofPennsylvania, David Zuern as President and Chief Executive Officer."

The bank has further strengthened the management team with the appointment of John Truelove as Senior Vice President and Senior Lending Officer. Truelove joined Freedom Bank in July, 2008 and his appointment as Senior Lending Officer has been approved by the Florida Office of Financial Regulation and the FDIC.

According to Freedom Bank President and CEO, David Zuern, "While we understand the regulator's obligation to craft this regulatory order specific to the findings of the March 2008 FDIC report, including criticisms of previous management, we are confident the management changes enacted since that time have, and will continue to meet with the approval of the regulatory agencies."

Since his appointment in April, 2008, Zuern has undertaken a number of initiatives to improve the performance of the bank and to remedy certain areas of the bank subject to regulatory criticism. Specifically, as these relate to areas cited by the recent regulatory order, these include:

-- Capital - The regulatory order calls for the bank to raise additional capital in order to increase the Tier One Capital Ratio to 8%. -- In July of 2008, the bank announced a capital plan resulting in securing a definitive agreement with Community Bank Investors of America (CBIA) as lead investor with a commitment for $5 million in new capital. This capital effort is continuing and CBIA has filed for regulatory approval to complete the investment.

-- Board of Directors - The regulatory order specifies increased oversight and involvement by the Board of Directors. -- In April 2008, upon joining the Bank and the Board, Zuern initiated a program calling for the internal review of Board responsibilities and committees and as a result there is an increased level of board involvement and improved distribution of expertise. As a part of the definitive agreement with CBIA, two highly regarded bank investors, Laurence Fentriss and Timothy Anonick will take seats on the Board of Directors upon completion of the capital raising program.

-- Management - The regulatory order calls for the bank to retain qualified management. The addition of David Zuern, John Truelove and Randall LaFlamme address the specific issues specified in the Regulatory Order.

-- Review of Concentrations of Credit - The regulatory order calls for the bank to reduce concentration risk. As a part of the ongoing process of managing non-performing loans, the lending department has initiated this effort.

-- Charge-Offs - The regulatory order sets certain milestones for addressing charge-offs. While not complete, this effort is a continuing part of the overall non-performing assets management program initiated by Zuern after joining the bank.

-- Allowance for Loan Losses - The regulatory order calls for the review of allowance for loan losses and the adequacy of the allowance. For the quarter ended June 30, 2008, the bank made a significant allowance for loan losses consistent with the criteria established in the March 2008 FDIC report.

-- Loan Interest Reserves - The regulatory order calls for the bank to establish a policy limiting the use of loan interest reserves. Since April 2008, the bank has modified its lending policies substantially limiting the use of interest reserves.

-- Adversely Classified Assets - The regulatory order calls for the bank to undertake a reporting and remedy program for adversely classified assets. The bank has implemented such a program and a number of adversely classified assets cited in the March 2008 FDIC report have already been remedied, either by bringing loans into compliance or through foreclosure and sale of the underlying collateral.

-- Special Mention Assets - The regulatory order cites special reporting for assets listed as special mention, and the bank can comply with this section as a part of the overall loan reporting plan.

-- Restrictions on Advances to Adversely Classified Borrowers - The bank's current loan practices, implemented after April 2008, limit such advances.

-- Loan Policy & Loan Review - The bank is already processing loans and undertaking loan reviews in accordance with the regulatory order.

-- Strategic Plan - The regulatory order calls for the preparation of a strategic plan outlining the long term goals of the bank and the strategies for achieving these goals. This plan will be finalized as a part of the capital plan, once a final determination is made regarding the full amount of new capital.

-- Budget - The regulatory order calls for the preparation of a comprehensive budget to accompany the strategic plan. The framework of this effort is already complete as a part of the capital program.

-- Liquidity - The regulatory order instructs the bank to prepare a liquidity, contingency funding and asset liability management plan. The bank has been operating under such a plan since April 2008.

-- Brokered Deposits - The regulatory order calls for the bank to not increase amount of brokered deposits as of September 5, 2008. The bank has not acquired any new brokered deposits since David Zuern joined the bank on April 28, 2008.

-- Department Audit and Progress Reports - The regulatory order calls for the bank to undertake regularly scheduled department audits, which have been underway and will continue to be conducted. The order also calls for regularly scheduled progress reports to the Supervisory Authorities. Certain progress reports have been provided weekly to the FDIC and OFR since May of 2008.

In commenting on the summary of tasks presented as a part of the Regulatory Order, Zuern commented, "Having reviewed the items outlined in the order, our board and management are confident the bank is already in compliance, or well on the way to compliance with the majority of these items." He continued, "The areas where we have not yet achieved compliance, such as our capital raising program, we have already developed a plan and are in the process of executing the plan. In this regard, we intend to continue to work together with the regulatory agencies to achieve compliance over time and emerge from this order as a stronger banking company than when the on-site exam was performed in March."

The bank cautions that certain statements contained in this press release are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995, which statements are made pursuant to the "safe harbor" provisions of such Act. These forward looking statements describe future plans or strategies and may include the Bank's expectations of future financial results. The words "believe", "expect", "anticipate," "estimate," "project'" and similar expressions identify forward-looking statements. The bank's ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes is inherently uncertain. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, changes in general market interest rates, changes in general economic conditions and those specific to the bank's market area, changes in the quality or composition of the bank's loan portfolios, legislative/regulatory changes, monetary and fiscal policies of the U.S. Treasury and the Federal Reserve, demand for loan products, changes in deposit flows, real estate values, and competition and other economic, competitive, governmental, regulatory and technological factors affecting the bank's operations, pricing, products and services. The bank makes periodic filings to the Federal Deposit Insurance Corporation which contain various bank financial information, copies of which are available from the bank without charge. The bank disclaims any obligation to update any such factors or to publicly announce the results of any revision to any forward-looking statements contained in this release to reflect future events or developments.

Further information regarding Freedom Bank may be obtained by contacting Frank S. Knautz at 941/929-9396, or 941/735-1213.

SOURCE Freedom Bank

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