Item 1.01 Entry into a Material Definitive Agreement.

On June 26, 2012, Village Bank and Trust Financial Corp. (the "Company") entered into a written agreement ("Written Agreement") with the Federal Reserve Bank of Richmond (the "Reserve Bank"). A copy of the Written Agreement is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference.

Under the terms of the Written Agreement, the Company has agreed to develop and submit to the Reserve Bank for approval within the time periods specified therein written plans to maintain sufficient capital and correct any violations of section 23A of the Federal Reserve Act and Regulation W. In addition, the Company will submit a written statement of its planned sources and uses of cash for debt service, operating expenses, and other purposes.

The Company also has agreed that it will not, without prior regulatory approval:

· pay or declare any dividends;

· take any other form of payment representing a reduction in Bank's capital;

· make any distributions of interest, principal or other sums on subordinated debentures or trust preferred securities;

· incur, increase or guarantee any debt;

· purchase or deem any shares of its stock.

The foregoing description of the Written Agreement is a summary and does not purport to be a complete description of all of the terms of such agreement and is qualified in its entirety by reference to the copy of the Written Agreement filed with this Current Report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description

10.1 Written Agreement by and between Village Bank and Trust Financial Corp. and the Federal Reserve Bank of Richmond, dated June 26, 2012.

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