Oxford Bank Enters into Formal Agreement with Regulatory Agencies

OXFORD, Mich., June 30  /PRNewswire-FirstCall/ -- Oxford Bank, a subsidiary of Oxford Bank Corporation (OTC:OXBC) (BULLETIN BOARD: OXBC) , announced today that it has entered into a formal agreement with the Federal Deposit Insurance Corporation and the State of Michigan Office of Financial and Insurance Regulation.  The understanding went into effect on May 25, 2008.

The agreement was proposed by both regulatory agencies as a result of Oxford Bank's most recent supervisory examination in September of 2007. During the regulatory audit process, specific areas of concern were addressed by the Bank's management team and the examiners.  The concerns are primarily related to losses in the Bank's residential mortgage loan portfolio, which have been compounded by area workforce reductions and a decline in property values; negatively impacting it's earnings performance.  While some of these matters were already being attended to by management and the board prior to September, Oxford Bank is committed to implementing the actions outlined by the FDIC and OFIR to further strengthen the overall management and credit administration function of the organization.

As a condition of the understanding, the Bank has pledged to maintain a minimum tier-one capital adequacy ratio of eight-percent for the term of the agreement.  Historically, the Bank's ratio has never fallen below this threshold.  Currently, the Bank's ratio exceeds the aforementioned regulatory requirement and is well above the five-percent minimum used by examiners to define a well-capitalized bank.

Jeffrey M. Davidson, chairman, president and chief executive officer of the Corporation and the Bank, made the announcement and commented, "This agreement is a formal acknowledgement by Oxford Bank and represents the board and management's commitment to collectively work with the regulators to aggressively address any concerns about the organization.  The Bank's board of directors and senior management team has already implemented the majority of the recommendations presented by the FDIC and OFIR.  In addition, the Bank remains proactive in developing additional policies, procedures and plans with the goal of further reducing expenses and decreasing it's concentration of substandard assets, specifically as it relates to residential home foreclosures and the coverage of the Bank's loan loss reserve."

Davidson went on to say, "These efforts, coupled with the Bank's ongoing strategy to decrease its overall asset size and the continuation of its decision last year to suspend quarterly cash dividends, will assist Oxford Bank in maintaining sufficient liquidity and preserving the capital of the organization."

Davidson concluded, "As I stated in our May announcement of first quarter operating results; it will take time for the Bank to reduce its inventory of foreclosed homes, as any significant sales opportunities are largely reliant on a revitalized local housing market.  It is important to note that our capital position remains strong, and we have done a good job in controlling costs not related to loan losses.  Strategic changes in both deposit and loan pricing have resulted in solid gains to our net interest spread and net interest margin.  Overall, we are making positive strides in mitigating the effects of the local economy and look forward to working collaboratively with our regulators to return Oxford Bank to more traditional levels of profitability."

Oxford Bank is a subsidiary of Oxford Bank Corporation, a registered holding company.  It is the oldest commercial bank in Oakland County and operates eight full-service offices in Clarkston, Davison, Dryden, Goodrich, Lake Orion, Oakland Township, Ortonville and Oxford.  It also manages a consumer lending center in Oxford and a commercial banking office in Lake Orion.  The Bank has operated continuously under local ownership and management since it first opened for business in 1884.  For more information about Oxford Bank and its complete line of financial services, please visit http://www.oxfordbank.com/ .

Except for the historical information contained herein, the matters discussed in the Release may be deemed forward-looking statements that involve risk and uncertainties.  Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Factors which could cause actual results to differ, include, but are not limited to, fluctuations in interest rates, changes in economic conditions of the Bank's market area, changes in policies by regulatory agencies, the acceptance of new products, the impact of competitive products and pricing and the other risks detailed from time to time in the Bank's and Corporation's reports.  These forward-looking statements represent the Bank's judgment as of the date of this report.  The Bank, disclaims, however, any intent or obligation to update these forward-looking statements. 

DATASOURCE: Oxford Bank



CONTACT:  Anthony P. Lasher of Oxford Bank, [phone],

[phone] fax



Web site:  http://www.oxfordbank.com/ 

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