8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 30, 2015

FOUR OAKS FINCORP, INC.

(Exact name of registrant as specified in its charter)

North Carolina	000-22787	56-2028446
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

6114 U.S. 301 South
Four Oaks, North Carolina	27524
(Address of principal executive offices)	(Zip Code)

(919) 963-2177

Registrant's telephone number, including area code

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On August 4, 2015, Four Oaks Fincorp, Inc. (OTCQX: FOFN) (the “Company”) and its wholly owned subsidiary Four Oaks Bank & Trust Company (the “Bank”) announced the termination of the written agreement (the “2011 Written Agreement”) dated May 24, 2011 by and among the Company, the Bank, the Federal Reserve Bank of Richmond (the “FRB”) and the State of North Carolina Office of the Commissioner of Banks.  The termination of the 2011 Written Agreement was effective on July 30, 2015.

In connection with the termination of the 2011 Written Agreement, the Bank entered into a new, more narrow written agreement on July 30, 2015 (the “2015 Written Agreement”) with the FRB, which is unrelated to the Bank’s financial condition. Under the terms of the 2015 Written Agreement, the Bank has agreed to develop and submit for approval within the time periods specified therein:

● a written plan to assure ongoing board oversight of the Bank’s management and operations;

● a written program for the review of new products, services, or business lines acceptable to the FRB; and

● an enhanced written program for conducting appropriate levels of customer due diligence by the Bank acceptable to the FRB.

In addition, the Bank has agreed that it will:

● within 30 days after the end of each calendar quarter following the date of the 2015 Written Agreement, submit to FRB written progress reports detailing the form and manner of all actions taken to secure compliance with the 2015 Written Agreement and the results thereof; and

● within 10 days of approval by FRB, adopt the approved programs specified in the second and third bullets, above.

A summary of the material terms of the 2011 Written Agreement was disclosed in the Company’s Current Report on Form 8-K on May 26, 2011, which summary is incorporated by reference herein. The 2015 Written Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. The foregoing summary of the 2015 Written Agreement is subject to, and qualified in its entirety by, such document, which is incorporated herein by reference. A copy of the press release announcing the termination of the 2011 Written Agreement and the adoption of the 2015 Written Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 1.02 Termination of a Material Written Agreement.

The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the termination of the 2011 Written Agreement is incorporated by reference in this Item 1.02.

Item 9.01 Financial Statements; Exhibits.

(d)	Exhibits.
	Exhibit No.	Description of Exhibit
	10.1	Written Agreement, effective July 30, 2015, by and among Four Oaks Bank & Trust Company and the Federal Reserve Bank of Richmond
	99.1	Press Release issued on August 4, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FOUR OAKS FINCORP, INC.

By:  /s/ Nancy S. Wise

Nancy S. Wise

Executive Vice President,

Chief Financial Officer

Date:  August 4, 2015

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1	Written Agreement, effective July 30, 2015, by and among Four Oaks Bank & Trust Company and the Federal Reserve Bank of Richmond
99.1	Press Release issued on August 4, 2015

EX-10.1

Exhibit 10.1

UNITED STATES OF AMERICA
BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.

Written Agreement by and between   FOUR OAKS BANK & TRUST COMPANY Four Oaks, North Carolina   and   FEDERAL RESERVE BANK OF RICHMOND
Richmond, Virginia Docket No. 14-030-WA/RB-SM 

WHEREAS, in recognition of their common goal to maintain the financial soundness of Four Oaks Bank & Trust Company, Four Oaks, North Carolina (the “Bank”), a state-chartered bank that is a member of the Federal Reserve System, the Bank and the Federal Reserve Bank of Richmond (the “Reserve Bank”) have mutually agreed to enter into this Written Agreement (the “Agreement”); and

WHEREAS, on   July 27  , 2015, the board of directors of the Bank, at a duly constituted meeting, adopted a resolution authorizing and directing Ayden R. Lee, Jr. to enter into this Agreement on behalf of the Bank, and consenting to compliance with each and every provision of this Agreement by the Bank.

NOW, THEREFORE, the Bank and the Reserve Bank agree as follows:

Board Oversight

1.           Within 60 days of this Agreement, the board of directors of the Bank shall submit a written plan to the Reserve Bank to assure ongoing board oversight of management and operations of the Bank.  The plan shall, at a minimum, address, consider, and include:

(a)           adequate oversight of new products, services, or business lines offered by the Bank and the expansion of the marketing of current Bank products, services, or business lines to new customer bases;

(b)           measures to ensure Bank management’s adherence to approved compliance policies, procedures, and standards;

(c)           the requirement that Bank management document exceptions to approved

Bank policies and procedure; and

(d)           steps to improve the information and reports that will be regularly reviewed by the board of directors or its applicable committees in their oversight of the operations and management of the Bank, including, but not limited to, new products, services, or business lines and changes to the routine and usual nature or business of existing customers.

New Product Review Program

2.         Within 60 days of this Agreement, the Bank shall submit a written program for the review of new products, services, or business lines acceptable to the Reserve Bank.  The program shall, at a minimum, include:

(a)           policies and procedures for the assessment of potential risks, including, but not limited to, compliance, reputational, fraud, and credit risks associated with proposed new products, services, or business lines;

(b)           clearly defined roles, responsibilities, and accountability for the assessment of new products, services, or business lines;

(c)           a requirement that all new products, services, or business lines receive the written approval of the board of directors prior to implementation, distribution, or marketing;

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(d)           policies for the implementation of appropriate risk management procedures and controls for new products, services, or business lines;

(e)           provisions to determine the appropriate customer base to whom new products, services, or business lines should be marketed to, and ensure that the products, services, or business lines are marketed only to these customer bases; and

(f)           measures to ensure that the assessments of adopted products, services, or business lines are updated on an ongoing basis as necessary to incorporate changes to the products, services, or business lines, or changes to the risk factors associated with the products, services, or business lines, and that marketing and management of the products, services, or business lines are adjusted based on the results of the updates.

Customer Due Diligence

3.         Within 60 days of this Agreement, the Bank shall submit an enhanced written program for conducting appropriate levels of customer due diligence by the Bank acceptable to the Reserve Bank.  At a minimum, the enhanced program shall include:

(a)           policies, procedures, and controls to ensure that the Bank collects, analyzes, and retains complete and accurate customer information for all customer accounts, including, generally, information such as name, principal business activity, geographic location, and transaction volume of indirect customers, in order to better understand these relationships;

(b)           a plan, with timelines, to remediate deficient due diligence for existing customer accounts;

(c)           a methodology for assigning risk ratings to account holders that considers factors such as type of customer, a customer’s business, type of products and services, and geographic location;

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(d)           a risk-focused assessment of the Bank’s customer base to:

(i)           identify the categories of customers whose transactions and banking activities are routine and usual; and

(ii)           determine the appropriate level of enhanced due diligence necessary for those categories of customers that pose a heightened risk of conducting potentially illicit activities at or through the Bank; and

(e)           procedures to ensure periodic reviews and evaluations are conducted and documented for account holders to determine whether there have been changes to customer profiles, including, but not limited to, changes in customers’ business models or indirect customer base.

Compliance with the Agreement

4.           Within 30 days after the end of each calendar quarter following the date of this Agreement, the board of directors of the Bank shall submit to the Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with this Agreement and the results thereof.

Approval and Implementation of Programs

5.         (a)           The Bank shall submit to the Reserve Bank the written programs that are acceptable to the Reserve Bank within the time periods set forth in paragraphs 2 and 3 of this Agreement.  Each program shall contain a timeline for full implementation of the program with specific deadlines for the completion of each component of the program.

(b)           Within 10 days of approval by the Reserve Bank, the Bank shall adopt the approved programs.  Upon adoption, the Bank shall promptly implement the approved programs, and thereafter fully comply with them.

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(c)           During the term of this Agreement, the approved programs shall not be amended or rescinded without the prior written approval of the Reserve Bank.

Communications

6.         All communications regarding this Agreement shall be sent to:

(a)	Ms. Joan T. Garton Vice President Federal Reserve Bank of Richmond P.O. Box 27622 Richmond, Virginia 27622
(b)	Mr. David H. Rupp President and Chief Executive Officer Four Oaks Bank & Trust Company P. O. Box 309 Four Oaks, North Carolina 27524-0309

Miscellaneous

7.         Notwithstanding any provision of this Agreement to the contrary, the Reserve Bank may, in its sole discretion, grant written extensions of time to the Bank to comply with this Agreement.

8.         The provisions of this Agreement shall be binding upon the Bank and each of its institution-affiliated parties, as defined in section 3(u) of the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u)), in their capacities as such, and their successors and assigns.

9.         Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

10.       The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency from taking any other action affecting the Bank, any subsidiary thereof, or any of their current or former institution-affiliated parties and their successors and assigns.

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11.       Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the 30th    of    July     , 2015.

FOUR OAKS BANK & TRUST COMPANY		FEDERAL RESERVE BANK OF RICHMOND
By:	/s/ Ayden R. Lee, Jr.	By:	/s/ Joan T. Garton
	Ayden R. Lee, Jr.		Joan T. Garton
	Chairman		Vice President

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EX-99.1

Exhibit 99.1

Four Oaks Fincorp, Inc. Announces Release from 2011 Written Agreement

FOUR OAKS, N.C.--(BUSINESS WIRE)--August 4, 2015--Four Oaks Fincorp, Inc. (OTCQX: FOFN) (the “Company”), the holding company for Four Oaks Bank & Trust Company (the “Bank”), today announced that the Company and Bank have been released from the Written Agreement dated May 24, 2011 with the Federal Reserve Bank of Richmond and the North Carolina Office of the Commissioner of Banks.

Working closely with its regulatory partners, the Company has been able to demonstrate substantial business and risk management progress and was deemed in compliance with the twenty point Written Agreement. The Company’s 2014 capital raise, continued asset quality improvements, and implementation of the asset resolution plan were critical to the Bank’s ability to demonstrate the required compliance. At the same time, the Bank has entered into a more narrow, three point Written Agreement only with the Federal Reserve Bank of Richmond that is unrelated to the Bank’s financial condition. This agreement covers the preparation and implementation of programs related to board oversight, review of new products and services, and ongoing customer monitoring. The Bank has already made strides in improving these areas and believes that it will be able to demonstrate full compliance with this agreement in the future.

President and Chief Executive Officer David H. Rupp stated, “This has been an important quarter for our Bank. Following the announcement of record earnings, we were able to reach agreement with our regulatory partners to lift the Written Agreement from 2011. This action reflects improvements in our capital position, asset quality, and governance. We will continue to work diligently to improve the Bank across all areas. We are very thankful for the support of our customers, our communities and our fine team members who have remained loyal to the Bank as we have worked through these changes.”

With $722 million in total assets as of June 30, 2015 the Company, through its wholly-owned subsidiary, Four Oaks Bank & Trust Company, offers a broad range of financial services through its sixteen offices in Four Oaks, Clayton, Smithfield, Garner, Benson, Fuquay-Varina, Wallace, Holly Springs, Harrells, Zebulon, Dunn, Raleigh (LPO), Apex (LPO) and Southern Pines (LPO), North Carolina. Four Oaks Fincorp, Inc. trades through its market makers under the symbol of FOFN.

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the Company’s current beliefs and assumptions and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond the Company’s control, and which may cause results to differ materially from expectations. For a discussion of the most significant risks and uncertainties associated with the Company’s business, please review the Company's filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. The Company does not undertake a duty to update any forward-looking statements in this press release.

CONTACT:

Four Oaks Fincorp, Inc.

David H. Rupp, President and Chief Executive Officer, or

Nancy S. Wise, Executive Vice President and Chief Financial Officer

919-963-2177