Common use of Allowance for Loan and Lease Losses Clause in Contracts

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this AgreementOn or before March 31, 2005, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (the “Allowance”) in accordance with Generally Accepted Accounting Principlesfor assets on the books of the Bank, and shall establish and implement prior to submission of the March 31, 2005 Report of Condition and Income (“Call Report”) a program for the Bank’s maintenance of an adequate allowance at all times (“Allowance Program”). The This review and Allowance policies and procedures Program shall be designed to be consistent with the guidance set forth comments on maintaining a proper allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses booklet of the Comptroller’s Handbook, OCC Advisory Letter 96-8 dated August 6, 1997, entitled “Allowance for Loans and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), ”. The Bank’s analysis shall be well documented and shall at a minimum include, but not be limited to, the following factors: (a) procedures for determining whether a the results of the Bank’s internal and external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreviews; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencieseach significant credit; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; and (f) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Allowance Program shall provide for monthly provisions and a review of the Allowance by the Board at least once each calendar quarter. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures Allowance Program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an adequate Allowance. This review and program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) suitable policies and procedures for determining whether a loan is impaired and measuring that communicate the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a LoanALLL process internally to all applicable personnel; (b) procedures clear explanations and documentation for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for ContingenciesALLL analysis; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation results of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (iid) results of the Bank’s external loan review; (iiie) an estimate of loss exposure on each impaired credit; (f) loan loss experience; (g) trends of delinquent and nonaccrual loans; (h) concentrations of credit in the Bank; (i) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (j) changes in the nature and volume of the portfolio; (k) changes in lending management and staff; (l) changes in the loan review system; and (m) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47)Losses booklet of the Comptroller's Handbook, and July 20, 2001 (OCC Bulletin 2001-37), and ---------------------- shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; and (g) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Director for Special Supervision/Fraud for review. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to revise the Bank’s written policies and procedures for maintaining and documenting an adequate appropriate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesPrinciples (“GAAP”). The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)other applicable supervisory guidance, and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan;Codification 310-10; and (b) procedures for segmenting estimating losses for various segments of the loan portfolio and estimating loss on groups of loansportfolio, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staffCodification 450-20. (2) Within sixty (60) days of this Agreement, the Board shall ensure the Bank’s program for maintenance of an appropriate Allowance includes guidelines for obtaining and utilizing current collateral valuations on impaired loans. (3) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Consolidated Reports of Condition and Income (“Call ReportReports”), by additional provisions from earnings, as needed. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (34) The Board Upon adoption of the Board's Allowance program, a copy shall ensure that be submitted to the Assistant Deputy Comptroller and the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies program. (a) a focus on the following factors: (a) results of the Bank's loan review program; (b) loan loss experience; (c) trends of delinquent and procedures developed pursuant to this Articlenonaccrual loans; (d) concentrations of credit in the Bank; and (e) present and prospective economic conditions and other significant environmental factors.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days Immediately following the signing of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an adequate Allowance. This program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; (h) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (i) changes in nature and volume of the portfolio; (j) changes in lending management and staff; (k) changes in the loan review system; and (ivl) applicable experience historical and industry average loss that should be applied to each category of the Bank’s lending staffloans. (2) The program shall provide for a process for summarizing review of the Allowance by the Board at least once each calendar quarter. Clear explanations and documenting, documentation for the Board’s review and approval, the amount to Allowance analysis should be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowancemaintained. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesPrinciples (“GAAP”). The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Call Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Association's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated Losses (December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Association's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Association's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative in excess of one hundred and environmental factors, with particular focus on the following:fifty thousand dollars ($150,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, Association; (h) present and prospective economic conditions; and (ivi) applicable experience appropriate treatment of classified loans pursuant to the Bank’s lending staffInteragency Policy Statement on the Allowance for Loan and Lease Losses (December 2006), ASC 450-20 (FAS 5), and ASC 310-10 (FAS 114). (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportThrift Financial Report or Consolidated Report of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank Association has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination CouncilXXX, the Comptroller’s “Interagency Policy Statement on the Handbook - Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37), Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions, and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, (FASB) 114 – Accounting by Creditors for Impairment the (a) results of a Loanthe Bank's internal and external loan review; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencieseach significant credit; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; and (ivg) applicable experience of the Bank’s lending staffparticipations purchased from other financial institutions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adoptrevise, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“AllowanceALLL”) in accordance with Generally Accepted Accounting Principles. The Allowance ALLL policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20shall include, 2001 (OCC Bulletin 2001-37), and shall at a minimum includebut not be limited to: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance ALLL methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review, conducted pursuant to Article IX of this Agreement; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Call Reports of Condition and Income (“Call Reports”) for the AllowanceALLL. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adopt, implement, strengthen its methodology for assessing the adequacy of the Allowance for Loan and thereafter ensure adherence to Lease Losses by adopting and implementing written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) ALLL in accordance with Generally Accepted Accounting Principlesgenerally accepted accounting principles. The Allowance ALLL policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum shall include: (a) procedures detailing the process for determining whether a loan is identifying loans considered impaired and measuring how the amount of impairmentimpairment for those loans will be measured, consistent with FASB Statement of Financial Accounting Standards No. Number 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. Number 5, Accounting for Contingencies;; and (c) procedures for validating the Allowance ALLL methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program revised policies and procedures shall address specific actions needed to improve the methodology outlined in the Matters Requiring Board Attention on page 7 of the December 31, 2007 Report of Examination and in any subsequent Report of Examination. (3) The revised policies and procedures shall provide for a process for summarizing and documenting, for the Board’s review and approval, approval of the amount to be reported in Allowance by the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (34) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall revise, adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate appropriate Allowance for Loan and Lease Losses (“"Allowance”") in accordance with Generally Accepted Accounting PrinciplesGAAP. The Allowance policies and procedures shall be consistent with the guidance set forth in in: (a) the Federal Financial Institutions Examination Council’s “'s "Interagency Policy Statement on the Allowance for Loan and Lease Losses” " dated December 13, 2006 (OCC Bulletin 2006OTS CEO Memorandum No. 250); (b) OTS' Examination Handbook, Section 261, "Adequacy of Valuation Allowances;" (c) OTS CEO Memorandum No. 304 (ALLL-47Observed Thrift Practices Including Sound Practices), dated May 22, 2009; or (d) any applicable successor regulation and July 20guidance as specified by the Comptroller. (2) The Allowance policies and procedures required under paragraph (1) of this Article shall include, 2001 (OCC Bulletin 2001-37), and shall at a minimum includeminimum: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with Accounting Standards Codification 310-10 (formerly known as FASB Statement of Financial Accounting Standards No. , 114, Accounting by Creditors for Impairment of a Loan); (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with Accounting Standards Codification 310-10 and 450-20 (formerly known as FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures Contingencies);procedures for validating the Allowance methodology;; and (dc) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s 's internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s 's lending staff. (23) The program shall provide for a process for summarizing and documenting, for the Board’s 's review and approval, the amount to be reported in the Consolidated Thrift Financial Reports of Condition and Income (“or Call Reports”) Report, as applicable, for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Thrift Financial Report or Call Report, as applicable, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Association’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand its program for the maintenance of an adequate Allowance. The This review and program shall comport to the comments on maintaining a proper Allowance policies and procedures shall be consistent with the guidance set forth found in the Federal Financial Institutions Examination Council’s Council (“FFIEC”) Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions (July 6, 2001), and the Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated Losses (December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Association’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Association’s external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit if determined to be impaired; (d) procedures an estimate of inherent loss exposure on each credit, if determined to ensure that the estimation be impaired, in excess of credit losses considers the relevant qualitative two hundred and environmental factors, with particular focus on the following:fifty thousand dollars ($250,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, Association; (h) present and prospective economic conditions; and (ivi) applicable experience appropriate treatment of classified loans pursuant to the Bank’s lending staffInteragency Policy Statement on the Allowance for Loan and Lease Losses (December 2006), ASC 450-20 (FAS 5), and ASC 310-10 (FAS 114). (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportThrift Financial Report or Consolidated Report of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank Association has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty forty-five (6045) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance” or “ALLL”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of (i) the guidance set forth comments on maintaining a proper Allowance found in the “Allowance for Loan and Lease Losses” booklet of the Comptroller’s Handbook; (ii) U.S. generally accepted accounting principles (“GAAP”); (iii) the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47); and the instructions for reporting the Allowance on the Call Report. The program, and July 20any revisions thereto, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following: (a) procedures for determining whether a loan is impaired and measuring an appropriate outline of the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanqualitative factors included in the ALLL methodology; (b) procedures for segmenting a requirement that the loan portfolio narrative accompanying the ALLL report to properly support the qualitative factors and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesexplain why and how management uses each factor; (c) procedures for validating the Allowance ALLL methodology;; and (d) procedures to ensure that the estimation of credit ALLL methodology properly reflects losses considers and recoveries year-to-date and the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staffbalance remains sufficient. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Bank shall refile the December 31, 2014 Call Report to reflect correct losses and recoveries year-to-date. (4) Upon adoption, the Board shall submit a copy of the policies and procedures required by this Article, or any subsequent amendments or changes to those policies and procedures, to the Assistant Deputy Comptroller for determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall implement and thereafter ensure Bank adherence to the policies and procedures. (5) The Board shall ensure that the Bank has the processes, personnel, and control systems to ensure implementation of and adherence to the policies policies, programs, and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall, within ninety (90) days, establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (A-ALLL, of the Comptroller’s Handbook and OCC Bulletin 2006-47), and July 20, 2001 (OCC Banking Bulletin 2001-37)37 “Policy Statement on Allowance for Loan and Lease Losses Methodologies”, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal and/or external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups each problem credit in excess of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for ContingenciesFifty Thousand dollars ($50,000); (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and approval. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of two hundred fifty thousand dollars ($250,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; and, (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies and procedures developed pursuant to this Articleprogram.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence continue to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall continue to maintain a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be maintained consistent with the guidance set forth comments on maintaining a proper Allowance found in OCC Bulletin 2006-47: Allowance for Loan and Lease Losses (ALLL) (dated Dec. 13, 2006) and the Federal Financial Institutions Examination Council’s attached “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)“Questions and Answers on Accounting for Loan and Lease Losses”, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; and (g) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an appropriate Allowance. This review and program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (iib) results of the Bank’s external loan review; (iiic) an estimate of inherent loss exposure as well as the Bank’s expected and historical loan loss experience; (d) concentrations of credit in the Bank, present and prospective economic conditions; and (ive) applicable experience of the Bank’s lending staff (with particular emphasis on the CRE lending staff). (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining the Bank maintains an adequate appropriate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesGAAP. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (db) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) changes in the nature and volume of the Bank’s loan portfolio(s); (iii) the Bank’s historical risk rating accuracy; (iv) results of the Bank’s external loan review; (iiiv) concentrations of credit in the Bank, present and prospective economic conditions; (vi) the sufficiency of current financial and operating information; and (ivvii) applicable experience experience, performance and sufficiency of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure independently review and attest that the Bank has processes, personnel, and control systems to ensure implementation of and adherence Allowance sufficiency is performed prior to the policies and procedures developed pursuant to this Articlefiling of each Call Report beginning with the quarter ending June 30, 2012.

Allowance for Loan and Lease Losses. (1) Within sixty thirty (6030) days of this Agreement, the Board shall adopt, implement, and thereafter take the necessary steps to ensure adherence to written policies and procedures for maintaining the Bank maintains an adequate appropriate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesGAAP. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of assessing loans for impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, as it applies to each pool, with particular a focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent loans and nonaccrual loans; (ii) the Bank’s historical risk rating accuracy; (iii) results of the Bank’s external loan review; (iiiiv) concentrations of credit in the Bank, and present and prospective economic conditions; (v) the sufficiency of current financial and operating information; and (ivvi) applicable experience experience, performance and sufficiency of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall take the necessary steps to ensure that an independent review and test of the Bank has processes, personnel, and control systems to ensure implementation of and adherence Allowance sufficiency is performed prior to the policies and procedures developed pursuant to this Articlefiling of each Call Report.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13booklet of the Comptroller’s Handbook, 2006 (OCC Bulletin 2006-47), as well as the guidance provided by FAS 5 and July 20, 2001 (OCC Bulletin 2001-37), and FAS 114. The Allowance analysis process shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired and measuring the amount an estimate of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loaninherent loss exposure on each significant credit; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesexperience; (c) procedures for validating the Allowance methodologytrends of delinquent, nonaccrual, and other problem loans; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, ; (e) present and prospective economic conditions; ; (f) FAS 114 impairment decisioning and analysis, and (ivg) applicable experience of the Bank’s lending staffmaintaining appropriate supporting documentation for (a) through (f). (2) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter, for beginning with the Board’s review and approvalDecember 31, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowance2008 quarter. Any deficiency For any deficiencies in the Allowance occurring after the date of this Agreement, they shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. For any deficiencies in the Allowance noted that occurred prior to the date of this Agreement that are also subsequent to filing the Consolidated Reports of Condition, those reports shall be amended to reflect the appropriate provisions and Allowance balances. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days Immediately following the signing of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an adequate Allowance. This program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; (h) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (i) changes in nature and volume of the portfolio; (j) changes in lending management and staff; (k) changes in the loan review system; (l) historical and industry average loss that should be applied to each category of loans and on non guaranteed portions of loans; (m) maintain a separate liability account for off balance sheet items; and (ivn) applicable experience maintain documentation of the Bank’s lending staffanalysis of any impaired loans including the amount of the impairment. (2) The program shall provide for a process for summarizing review of the Allowance by the Board at least once each calendar quarter. Clear explanations and documenting, documentation for the Board’s review and approval, the amount to Allowance analysis should be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowancemaintained. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implementimmediately require, and the Bank shall implement and thereafter ensure adherence adhere to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“AllowanceALLL”) in accordance with Generally Accepted Accounting Principles). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with “Allowance for Loan and Lease Losses,” dated December 13, 2006 (OCC Bulletin 2006booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller’s Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external independent loan review; (iiic) criteria for determining which loans will be reviewed under Financial Accounting Standard (“FAS”) 114, how impairment will be determined, and procedures to ensure that the analysis of loans complies with FAS 114 requirements; (d) criteria for determining FAS 5 loan pools 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, present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending staffpresent and projected economic and market conditions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing Consolidated Reports of the Call ReportCondition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by National Bank Examiners. (3) The Board shall ensure that A copy of the Bank has processes, personnelBoard’s ALLL program, and control systems to ensure implementation of and adherence any subsequent revisions to the policies and procedures developed pursuant program, shall be submitted to this Articlethe Assistant Deputy Comptroller for review.

Allowance for Loan and Lease Losses. (1) Within sixty The Board shall, within ninety (6090) days days, review the adequacy of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of five thousand dollars ($5,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; and, (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the ADC for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the ADC, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 booklet of the Comptroller’s Handbook and the FFIEC’s Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), ) and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; and (ivh) applicable experience validation procedures to ensure the effectiveness and reasonableness of the Bank’s lending staff.ALLL methodology (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an appropriate Allowance. This review and program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles (“GAAP”) and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) suitable policies and procedures for determining whether a loan is impaired and measuring that communicate the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a LoanAllowance process internally to all applicable personnel; (b) procedures clear explanations and documentation for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for ContingenciesAllowance analysis; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation results of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (iid) results of the Bank’s external loan review; (iiie) an estimate of loss exposure on each impaired credit; (f) loan loss experience; (g) trends of delinquent and nonaccrual loans; (h) concentrations of credit in the Bank; (i) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (j) changes in the nature and volume of the portfolio; (k) changes in lending management and staff; (l) changes in the loan review system; and (m) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that conduct a review of the Bank has processes, personnelBank’s Allowance methodology at least annually to determine, and control systems if necessary, update, the Bank’s Allowance methodology to ensure implementation of it complies with GAAP and adherence to the policies and procedures developed pursuant to this Articleregulatory guidance.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired and measuring results of the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a LoanBank's internal risk identification; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation level of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:unsecured loans in all categories; (ie) the large size of the individual loans relative to the ALLL and capital; (f) loans with structural weaknesses as identified in the XXX; (g) loan loss experience; (h) trends in the Bank’s internal risk ratingsof classified, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiii) concentrations of credit in the Bank, ; (j) projected loan growth; and (k) present and prospective economic conditions; and (iv) applicable experience of , particularly the Bank’s lending stafflocal real estate market. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be submitted to the policies Assistant Deputy Comptroller for review and procedures developed pursuant to this Articleapproval.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, immediately require and the Bank shall implement and thereafter ensure adherence adhere to a written policies and procedures program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“AllowanceALLL”) in accordance with Generally Accepted Accounting Principles). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with “Allowance for Loan and Lease Losses,” dated December 13, 2006 (OCC Bulletin 2006booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller’s Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external independent loan review; (iiic) trends of delinquent and non-accrual loans; (d) criteria for determining which loans will be reviewed under Financial Accounting Standard (“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; (e) criteria for determining loan pools under ASC 450 (Pre-codification reference: FAS Statement No. 5) and an analysis of those loan pools; (f) recognition of non-accrual loans in conformance with generally accepted accounting principles (“GAAP”) and regulatory guidance; (g) loan loss experience; (h) concentrations of credit in the Bank, present and prospective economic conditionscredit; and (ivi) applicable experience of the Bank’s lending staffpresent and projected economic and market conditions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any The Board shall ensure that any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing of the Call Reportcall report, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by National Bank Examiners. (3) The Board shall ensure that Upon completion, a copy of the Bank has processes, personnelBoard’s ALLL program and quarterly analysis, and control systems to ensure implementation of and adherence any subsequent revisions to the policies program and procedures developed pursuant analyses, shall be submitted to this Articlethe Director.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“"Allowance”") in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in OCC Bulletin 2001-37 and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)" booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; and (g) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that be responsible for the Bank has having the processes, personnel, and control systems in place necessary to ensure implementation of implement and adherence adhere to the policies program and procedures systems developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) 60 days of this Agreementthe employment of a Senior Loan Officer, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) and shall establish a program for the maintenance of an adequate Allowance and correct each deficiency cited in accordance with Generally Accepted Accounting Principlesthe February 26, 2001 Report of Examination or any subsequent Report of Examination. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” Losses booklet, dated December 13June 1996, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors not currently part of management’s Allowance methodology: (a) procedures for determining whether a loan an estimate of inherent loss exposure on each significant credit, which must include an analysis of related debt to determine if repayment is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanin any way negatively impacted; (b) procedures for segmenting the loan portfolio and estimating loss on groups experience, which must include a separate analysis of subprime consumer loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodologytrends of delinquent and nonaccrual loans, which must include a separate analysis of subprime consumer loans; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative compliance with OCC Bulletin 2000-20, Retail Classification and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loansAccount analysis; (iie) results of an analysis of qualitative factors to include the Bank’s external loan review; (iii) concentrations of credit issues identified in the Bank, present most recent Report of Examination and prospective economic conditionstheir effect on each factor considered; and (ivf) applicable historical loss experience of classified and criticized loans analyzed separately to determine a historical loss factor for each category, which should include a reasonable documented explanation for any deviation from the Bank’s lending staffresults of this analysis. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be submitted to the policies Assistant Deputy Comptroller for review and procedures developed pursuant to this Articleapproval.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of two hundred fifty thousand dollars ($250,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; and, (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies and procedures developed pursuant to this Articleprogram.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated booklet of the Comptroller’s Handbook, and shall focus particular attention on the following factors: (a) Compliance with the Interagency Policy Statement on the Allowance – December 13, 2006 (OCC Bulletin 2006SR 06-4717), and July 20, 2001 GAAP Guidance: (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, FAS 114 – Accounting by Creditors for Impairment of a Loan) and (FAS 5 – Accounting for Contingencies); (b) procedures for segmenting results of the Bank's internal loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating results of the Allowance methodologyBank's external loan review; (d) procedures to ensure that the estimation an estimate of credit losses considers the relevant qualitative and environmental factors, with particular focus inherent loss exposure on the following:each significant credit; (ie) segmentation of loan pools grouped and analyzed by loss potential, according to similar characteristics; (f) trends in the Bank’s internal risk ratingsof delinquent, delinquent non-performing, and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending stafftheir impact on segmented loan pools. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this AgreementBy March 31, 2020, the Board shall adopt, implement, prepare and thereafter ensure adherence submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection revised policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) ALLL in accordance with Generally Accepted the Federal Accounting PrinciplesStandards Advisory Board’s (“FASB”) generally accepted accounting principles (“GAAP”). The Allowance policies and procedures shall be consistent with the guidance set forth in Refer to the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 2006, (OCC Bulletin 2006-2006- 47), for guidance. The ALLL policies and July 20procedures shall, 2001 (OCC Bulletin 2001-37), and shall at a minimum includeminimum, include the following: (a) criteria and procedures for determining whether a loan is impaired and measuring the amount of impairment, impairment consistent with FASB Statement of Financial Accounting Standards No. 114GAAP including FASB’s ASC 310-35, Accounting by Creditors for Impairment of a LoanReceivables - Overall - Subsequent Measurement – Impairment; (b) criteria and procedures for segmenting the loan portfolio and estimating loss on groups of loans, loans that are consistent with FASB Statement GAAP including FASB’s ASC 450-20, Loss Contingencies. These procedures shall require the Bank to document its estimation of Financial Accounting Standards No. 5, Accounting for Contingenciescredit losses and its analysis of the nine qualitative factors set forth in OCC Bulletin 2006-47; (c) procedures for validating the Allowance ALLL methodology; (d) procedures to ensure ensuring that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, ratings as well as in delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s lending staff.; (2e) loans designated as TDRs, including “special mention” and “pass,” receive an impairment analysis; (f) reviewing on at least a quarterly basis, to determine the adequacy of the ALLL. The program Board shall provide for a process for maintain written documentation indicating the factors considered and conclusions reached in its determination of the adequacy of the ALLL; and (g) summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Bank’s Call Reports”) Report for the AllowanceALLL. (2) The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures to ensure that all official and regulatory reports filed by the Bank accurately reflect an adequate ALLL balance as of the date that such reports are submitted. Any deficiency in material difference between the Allowance ALLL balance as determined by the analysis required by this Article and the Bank’s actual ALLL balance shall be remedied through appropriate account adjustments in the quarter it is discovered, prior to the filing of the Bank’s Call Report, by additional provisions from earningsReports. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL. (3) The Within thirty (30) days of receipt of the Assistant Deputy Comptroller’s written determination of no supervisory objection, the Board shall adopt and Bank management, subject to Board review and ongoing monitoring, shall immediately implement and thereafter ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the Bank’s revised policies and procedures developed pursuant to this Articlefor maintaining an adequate ALLL and any amendments or revisions thereto.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) calendar days of the effective date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a written program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed to conform to the guidance set forth pertaining to the maintenance of a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 Losses (which may be found attached to OCC Bulletin 2006-47), to such guidance found in the “Allowance for Loan and July 20, 2001 (OCC Bulletin 2001-37)Lease Losses” booklet of the Comptroller’s Handbook, and to other applicable guidance, if any, regarding maintenance of adequate Allowance that the Comptroller may have issued by such time. The program shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; and (g) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the ADC for review and a prior written determination of no supervisory objection. Upon receiving a prior written determination of no supervisory objection from the ADC, the Bank shall implement and adhere to the program. If the ADC provides a written notice of supervisory objection to the submitted program, the Board shall promptly amend it as necessary in order appropriately to address the basis of such supervisory objection, thereafter implement it, and ensure Bank adherence to it. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days Immediately following the signing of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an adequate Allowance. This program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; (h) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (i) changes in nature and volume of the portfolio; (j) changes in lending management and staff; (k) changes in the loan review system; and (ivl) applicable experience historical and industry average loss that should be applied to each category of the Bank’s lending staffloans. (2) The program shall provide for a process for summarizing review of the Allowance by the Board at least once each calendar quarter. Clear explanations and documenting, documentation for the Board’s review and approval, the amount Allowance analysis should be maintained. The methodology to be reported determine ALLL adequacy must sufficiently account for weakness in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowancequalitative factors. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, immediately require and the Bank shall implement and thereafter ensure adherence adhere to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles"ALLL"). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006," booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller's Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting results of the Bank's independent loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) criteria for determining which loans will be reviewed under Financial Accounting Standard ("FAS") 114, how impairment will be determined, and procedures for validating to ensure that the Allowance methodologyanalysis of loans complies with FAS 114 requirements; (d) procedures to ensure that the estimation criteria for determining FAS 5 loan pools and an analysis of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:those loan pools; (ie) recognition of non-accrual loans in conformance with generally accepted accounting principles (“GAAP”) and regulatory guidance; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual non-accrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending staffpresent and projected economic and market conditions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing Consolidated Reports of the Call ReportCondition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by Bank Examiners. (3) The Board shall ensure that A copy of the Bank has processes, personnelBoard's ALLL program, and control systems to ensure implementation of and adherence any subsequent revisions to the policies and procedures developed pursuant program, shall be submitted to this Articlethe Director for review.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; and (ivg) applicable experience appropriate treatment of classified loans pursuant to OCC Bulletin 2006- 47 - Allowance Guidance and Frequently Asked Questions on the Bank’s lending staffALLL, Financial Accounting Standard (FAS) 5 – Accounting for Contingencies, and FAS 114 – Accounting by Creditors for Impairment of a Loan. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiic) an estimate of inherent loss exposure on each significant credit; (d) an estimate of inherent loss exposure on each credit in excess of two hundred and fifty thousand dollars ($250,000); (e) loan loss experience; (f) trends of delinquent and nonaccrual loans; (g) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board’s program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty The Board shall, within ninety (6090) days days, review the adequacy of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council“Allowance for Loan and Lease Losses” booklet of the Comptroller’s “Handbook dated June 1996 (Narrative) and May 1998 (Procedures) and OCC Bulletin 2006-47, Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures Documented processes for determining whether a loan is impairment evaluation. Management must specify through policy which loans will be evaluated for impairment under FAS 114. Loans within the scope of FAS 114 that are determined to be impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of or are considered troubled debt restructured loans, consistent with FASB Statement of Financial Accounting Standards No. 5must be individually reviewed under FAS 114 guidelines, Accounting for Contingencies; (c) procedures for validating on a quarterly basis, using the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the followingthree available methods when determining specific reserve allocations: (i) trends in Present value of expected future cash flows discounted at the Bankloan’s internal risk ratings, delinquent and nonaccrual loanseffective interest rate; (ii) results of the Bank’s external loan review;Observable market price; or (iii) concentrations Fair value of credit in collateral. Required method if the Bankloan is collateral dependent (e.g., present and prospective economic conditions; andrepayment is solely contingent on underlying collateral). (ivb) applicable experience Incorporating the analysis and support for the existing unallocated reserve calculation to within the FAS 5 component of the Bank’s lending staffmethodology. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an adequate Allowance. This review and program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with focus particular focus attention on the following: (ia) trends in suitable policies and procedures that communicate the ALLL process internally to all applicable personnel; (b) clear explanations and documentation for the ALLL analysis; (c) results of the Bank’s internal risk ratings, delinquent and nonaccrual loans; (iid) results of the Bank’s external loan review; (iiie) an estimate of loss exposure on each impaired credit; (f) loan loss experience; (g) trends of delinquent and nonaccrual loans; (h) concentrations of credit in the Bank; (i) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (j) changes in the nature and volume of the portfolio; (k) changes in lending management and staff; (l) changes in the loan review system; and (m) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board’s program shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be submitted to the policies Assistant Deputy Comptroller for review and procedures developed pursuant to this Articleapproval.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this AgreementBy December 31, 2007, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) and shall establish a program for the maintenance of an adequate Allowance in accordance with Generally Accepted Accounting Principles. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iiib) concentrations an estimate of inherent loss exposure for each impaired credit in over $50,000, including estimated disposal costs; (c) ensuring timely recognition of problem credits; (d) analyzing loan loss experience, including segmenting the Bankportfolio by common groups of loans and apply historical loss factors to the segmented portfolio (e.g. commercial, present and prospective economic conditions; commercial real estate, consumer real estate, consumer installment), and (ive) applicable experience documentation of the Bank’s lending staffenvironmental considerations that may have an impact on future loss factors, such as: local and national economic trends and conditions, levels and trends in past due and nonperforming loans, effects of risk selection, credit concentrations, and management experience. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiic) an estimate of inherent loss exposure on each credit classified "substandard," or "doubtful" in excess of fifty thousand dollars ($50,000); (d) an estimate of inherent loss exposure on all other significant credits that are analyzed individually (if no allocation can be determined for such credits on an individual basis, they shall be provided for as part of an appropriate pool of loans); (e) loan loss experience; (f) trends of delinquent and nonaccrual loans; (g) concentrations of credit in the Bank, ; and (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Bank’s quarterly Allowance reviews shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be provided to the policies and procedures developed pursuant to this ArticleAssistant Deputy Comptroller.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall continue its program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includecontinue to focus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iiic) concentrations an estimate of credit inherent loss exposure on each problem loan greater than three hundred thousand dollars ($300,000), including documented support for the specific allocation; (d) documented support for historical loss rates; (e) an analysis as required by the Statement of Financial Accounting Standards 114 on impaired loans; (f) documented support for amounts or percentages assigned for concentrations, off-balance sheet, policy/procedures/staff, economy, and portfolio and delinquency trends; (g) loans not reviewed in detail by management and the potential risk those loans pose should be addressed in the Bank, present and prospective economic conditionsmethodology; and, (ivh) applicable experience of the Bank’s lending staffa Peer Bank comparison should be performed. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article. (1) Although the Board has agreed to submit certain programs and reports to the Assistant Deputy Comptroller for review or approval, the Board has the ultimate responsibility for proper and sound management of the Bank. (2) 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 Agreement shall in any way inhibit, estop, bar, or otherwise prevent the Comptroller from so doing. (3) Any time limitations imposed by this Agreement shall begin to run from the effective date of this Agreement. Such time requirements may be extended in writing by the Assistant Deputy Comptroller for good cause upon written application by the Board. (4) The provisions of this Agreement shall be effective upon execution by the parties hereto and its provisions shall continue in full force and effect unless or until such provisions are amended in writing by mutual consent of the parties to the Agreement or excepted, waived, or terminated in writing by the Comptroller. (5) The Agreement by and between City National Bank of West Virginia, Charleston, West Virginia, and the Office of the Comptroller of the Currency dated July 11, 2000, is hereby terminated. (6) This Agreement is intended, and shall be construed to be a supervisory “written agreement entered into with the agency” as contemplated by 12 U.S.C. § 1818(b)(1), and expressly does not form, and may not be construed to form, a contract binding on the OCC or the United States. Notwithstanding the absence of mutuality of obligation, or of consideration, or of a contract, the OCC may enforce any of the commitments or obligations herein undertaken by

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include:of the (a) procedures for determining whether a Internal problem loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanidentification; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iiic) an estimate of inherent loss exposure on each significant credit in excess of $250,000. (d) Changes in lending policies and procedures, including underwriting, collection, charge-off, and recovery policies; (e) Changes in national and local economic and business conditions, including individual market and industry segments; (f) Changes in the nature and volume of the loan portfolio; (g) Changes in the experience, ability, and depth of lending management staff; (h) Changes in the volume and severity of past due and classified loans and in the volume of nonaccruals, troubled debt restructures, and other loan modifications; (i) Changes in the quality of the bank’s loan review system and the degree of oversight by the bank’s Board of Directors; (j) The existence and effect of any concentrations of credit and changes in the Bank, present and prospective economic conditionslevel of such concentrations; and, (ivk) applicable experience The effect of external factors, such as competition and legal and regulatory requirements on the Banklevel of estimated credit losses in the bank’s lending staffcurrent portfolio. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be submitted to the policies ADC for review and procedures developed pursuant to this Articleprior determination of no supervisory objection.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, establish and thereafter ensure adherence to written policies and procedures implement an improved methodology for maintaining the Bank's maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”"ALLL") in accordance with Generally Accepted Accounting Principlesat all times for on- balance sheet assets. The Allowance policies This review and procedures methodology shall be designed to be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses booklet of the Comptroller's Handbook, OCC Advisory Letter 97-8 dated August 6, 1997, entitled "Allowance for Loans and Lease Losses” dated December 13," and with the guidance prescribed by the FFIEC Expanded Guidance for Subprime Lending Programs, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)6. The Bank's methodology shall include, and shall at a minimum includebut not be limited to, the following factors: (a) procedures reserving for determining whether a twelve (12) months of expected losses for all principal loan is impaired and measuring the amount balances, including non-delinquent accounts, regardless of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a LoanFICO scores; (b) procedures reserving for segmenting the loan portfolio twelve (12) months of expected losses of accrued interest and estimating loss fees on groups all outstanding accounts, including non-delinquent accounts, regardless of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for ContingenciesFICO scores; (c) procedures applying specific allocations for validating the Allowance methodologyBank's various Debt Forbearance Programs; (d) procedures applying a specific allocation of reserves to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loansaccounts which are over limit by more than 10%; (iie) results an estimate of inherent loss exposure on each pool of credit accounts originated or purchased by the Bank’s external loan review, including inherent loss that may not be captured in the roll rate methodology; (iiif) loan loss experience; (g) trends of delinquent, nonaccrual and charged-off credit accounts; (h) concentrations of credit in the Bank, ; and (i) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program methodology shall provide for the following: (a) a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the calendar quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earningsearnings or capital. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL; (b) adjustments to the ALLL methodology, including roll rate adjustments based on recent trends, shall not be made unless the Board has approved the adjustment. The Bank shall clearly document the reasons for the adjustments, including the Board's prior approval; and (c) the roll rate analysis reconciles with other management information system and financial reports. (3) The Bank shall document loss estimates and the ALLL methodology in writing, including the Bank's liquidation and roll rate methodology, and the derivation of key drivers, including payment rate curves and roll rates. (4) Upon completion, the Bank's ALLL methodology shall be submitted to the Director for prior determination of supervisory non-objection. Such determination will be made within thirty (30) days of receipt of the written ALLL methodology. Immediately upon receiving a determination of supervisory non-objection from the Director, the Bank shall implement and shall thereafter adhere to the ALLL methodology. (5) The Board shall ensure adopt policies establishing that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures ALLL methodology developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Association's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Council (FFIEC) Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions (July 6, 2001), and the Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated Losses (December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Association's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Association's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative in excess of one hundred and environmental factors, with particular focus on the following:fifty thousand dollars ($150,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, Association; (h) present and prospective economic conditions; and (ivi) applicable experience appropriate treatment of classified loans pursuant to the Bank’s lending staffInteragency Policy Statement on the Allowance for Loan and Lease Losses (December 2006), ASC 450-20 (FAS 5), and ASC 310-10 (FAS 114). (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportThrift Financial Report or Consolidated Report of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank Association has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implementimmediately require, and the Bank shall implement and thereafter ensure adherence adhere to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles"ALLL"). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006," booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller's Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting results of the Bank's independent loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) criteria for determining which loans will be reviewed under Financial Accounting Standard ("FAS") 114, how impairment will be determined, and procedures for validating to ensure that the Allowance methodologyanalysis of loans complies with FAS 114 requirements; (d) procedures to ensure that the estimation criteria for determining FAS 5 loan pools and an analysis of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:those loan pools; (ie) recognition of non-accrual loans in conformance with generally accepted accounting principles (“GAAP”) and regulatory guidance; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual non-accrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending staffpresent and projected economic and market conditions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing Consolidated Reports of the Call ReportCondition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by National Bank Examiners. (3) The Board shall ensure that A copy of the Bank has processes, personnelBoard's ALLL program, and control systems to ensure implementation of and adherence any subsequent revisions to the policies and procedures developed pursuant program, shall be submitted to this Articlethe Assistant Deputy Comptroller for review.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, immediately require and the Bank shall implement and thereafter ensure adherence adhere to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles"ALLL"). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with the "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006," booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller's Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired utilization of the Bank’s risk rating levels and measuring trends in the amount qualitative analysis, including management’s discussion of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanqualitative factors; (b) procedures criteria for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of determining Financial Accounting Standards No. 5, Accounting for ContingenciesStandard ("FAS") 5 loan pools and an analysis of those loan pools; (c) procedures criteria for validating the Allowance methodology; (d) determining which loans will be reviewed under FAS 114, how impairment will be determined, and procedures to ensure that the estimation analysis of credit losses considers the relevant qualitative and environmental factors, loans complies with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditionsFAS 114 requirements; and (ivd) applicable experience qualitative factors which include an analysis of the Bank’s concentration of large loans in relation to the legal lending stafflimit and the growth rate of the portfolio. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceAllowance and shall be available for review by National Bank Examiners. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, immediately require and the Bank shall implement and thereafter ensure adherence adhere to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles"ALLL"). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006," booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller's Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting results of the Bank's independent loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) criteria for determining which loans will be reviewed under Financial Accounting Standard ("FAS") 114, how impairment will be determined, and procedures for validating to ensure that the Allowance methodologyanalysis of loans complies with FAS 114 requirements; (d) procedures to ensure that the estimation criteria for determining FAS 5 loan pools and an analysis of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:those loan pools; (ie) recognition of non-accrual loans in conformance with generally accepted accounting principles (“GAAP”) and regulatory guidance; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual non-accrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending staffpresent and projected economic and market conditions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing Consolidated Reports of the Call ReportCondition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by National Bank Examiners. (3) The Board shall ensure that A copy of the Bank has processes, personnelBoard's ALLL program, and control systems to ensure implementation of and adherence any subsequent revisions to the policies and procedures developed pursuant program, shall be submitted to this Articlethe Assistant Deputy Comptroller for review.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures an estimate of inherent loss exposure for validating the Allowance methodologyeach credit in excess of one hundred thousand dollars ($100,000); (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factorsloan loss experience, with particular focus on the following:especially experience for problem credits; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; , including evaluation of whether recent loss trends for non-problem credits are representative of historic norms, and (ivh) applicable experience the effect of the Bank’s lending staffcredit administration and underwriting standards on loss exposure. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportReport of Condition, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and approval. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, immediately require and the Bank shall implement and thereafter ensure adherence adhere to a written policies and procedures program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles"ALLL"). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)," booklet A- ALLL of the Comptroller's Handbook, and shall at a minimum includeincorporate the following: (a) procedures internal risk ratings of loans; (b) results of the Bank's independent loan review; (c) trends of delinquent and non-accrual loans; (d) criteria for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB which loans will be reviewed under Financial Accounting Standard ("FASB") Accounting Standards Codification ("ASC") Topic 310 Receivables (Pre-codification reference: Statement of Financial Accounting Standards ("FAS") Statement No. 114), Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio how impairment will be determined, and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation analysis of credit losses considers the relevant qualitative loans complies with ASC 310 requirements; (e) criteria for determining loan pools under ASC 450 (Pre-codification reference: FAS Statement No. 5) and environmental factors, an analysis of those loan pools; (f) recognition of non-accrual loans in conformance with particular focus on the following:generally accepted accounting principles ("GAAP") and regulatory guidance; (g) loan loss experience; (h) concentrations of credit; and (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective projected economic and market conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any The Board shall ensure that any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing of the Call Reportcall report, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by National Bank Examiners. (3) The Board shall ensure that Upon completion, a copy of the Bank has processes, personnelBoard's ALLL program and quarterly analysis, and control systems to ensure implementation of and adherence any subsequent revisions to the policies program and procedures developed pursuant analyses, shall be submitted to this Articlethe Director.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, review the adequacy of the Bank’s Allowance and thereafter ensure adherence to written policies and procedures shall establish a program for maintaining the maintenance of an adequate Allowance for Loan Allowance. This review and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles. The Allowance policies and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk rating of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting results of the Bank’s independent loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) criteria for determining which loans will be reviewed under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 310 Receivables, how impairment will be determined, and procedures for validating to ensure the Allowance methodologyanalysis of loans complies with ASC 310 requirements; (d) procedures to ensure that the estimation criteria for determining loan pools under ASC 450 and an analysis of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:those loan pools; (ie) recognition of non-accrual loans in conformance with generally accepted accounting principles and regulatory guidance; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, ; and (i) present and prospective economic and market conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Reportcall report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty The Board shall require, and within thirty (6030) days of the Effective Date of this Agreement, the Board Bank shall adopt, implement, implement and thereafter ensure adherence adhere to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“AllowanceALLL”) in accordance with Generally Accepted Accounting Principles). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with the “Allowance for Loan and Lease Losses,” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet A- ALLL of the Comptroller’s Handbook, and shall incorporate, at a minimum includeminimum, the following: (a) procedures for determining whether a results of the Bank’s loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures criteria for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of determining which loans will be reviewed under Financial Accounting Standards No. 5Standard (“FAS”) 114, Accounting for Contingencieshow impairment will be determined, and procedures to ensure that the analysis of loans complies with FAS 114 requirements; (c) procedures criteria for validating the Allowance methodologydetermining FAS 5 loan pools and an analysis of those loan pools; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, present and prospective economic conditions; and (ivg) applicable experience present and projected economic and market conditions. (2) The Board shall ensure that the Bank, in implementing the program required under paragraph (1), does the following: (a) reviews and revises the rationale and methodology for developing historical loss rates, ensuring the rationale is appropriately supported and consistently applied; (b) stratifies loan types to more accurately assess risk; (c) develops and provides additional support for qualitative factors used in the ALLL analysis and ensures that the directional movement of the allocation for each factor is clearly supported; (d) documents updated evaluations and appraisals for impaired loans; (e) utilizes more robust tools, such as migration analysis and stress testing, to assess historical losses and better project future losses; (f) incorporates requirements for periodic independent validation of the Bank’s lending staffALLL methodology, and revises the methodology when appropriate. (23) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL. (34) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at establish a minimum include:program for the (a) procedures for determining whether a results of the Bank’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiic) an estimate of inherent loss exposure on each significant credit; loan loss experience; (d) trends of delinquent and nonaccrual loans; (e) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; and; (ivg) applicable present and prospective external factors strengthening support of FAS 114 impairment analysis for individual large classified loans to support how values were determined; (h) documentation of support identified in subparagraph (h); (i) processes to improve analysis for the qualitative and environmental factors: (i) thorough description and documented support for the percentages assigned to each factor. (ii) support and documentation of why percentages used for each factor have changed over time. (iii) further segmenting the FAS 5 loan pools for loans with similar risk characteristics (small business loans, owner vs. non-owner occupied commercial real estate loans) by indicating historic loss experience for loans in that group (or using industry data if necessary). (l) Clarify support for the final calculation of the Bank’s lending staffAllowance compared to the actual balance. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board’s program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adoptreview, implementrevise, and thereafter ensure Bank adherence to its written policies and procedures for maintaining program designed to ensure the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles). The Allowance policies and procedures An acceptable program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), booklet of the Comptroller’s Handbook and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each credit in excess of one million dollars ($1,000,000); (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; and (ivh) applicable experience appropriate treatment of classified loans pursuant to OCC Bulletin 2006-47 – Allowance Guidance and Frequently Asked Questions on the Bank’s lending staffALLL, Financial Accounting Standard (FAS) 5 – Accounting for Contingencies, and FAS 114 – Accounting by Creditors for Impairment of a Loan. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) Upon revision, a copy of the program shall promptly be submitted to the Assistant Deputy Comptroller. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) days of this Agreementdays, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall review and revise, as necessary, its program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “OCC Bulletin 2006-47: Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), Losses and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan timely and accurate identification of “impaired” loans as that term is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, defined in ASC 310-10 Accounting by Creditors for Impairment of a LoanLoan (formerly FAS 114); (b) procedures for segmenting accurate measurement of the amount of impairment at the time a loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesis determined to be impaired; (c) procedures for validating impaired collateral dependent loans secured by real estate, the Allowance methodologyuse of reliable real estate appraisals or evaluations, adjusted for selling costs, to determine the fair value of the collateral; (d) procedures to ensure that timely recognition of losses, including the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results recognition of the Bank’s external loan review; (iii) concentrations impaired portion of credit in the Bank, present and prospective economic conditionscollateral dependent loans as loss; and (ive) applicable experience of analytical support for historic loss factors, including the Bank’s lending staff.qualitative adjustments to the historical loss factors (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a Internal problem loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanidentification; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iiic) an estimate of inherent loss exposure on each significant credit in excess of $250,000. (d) Changes in lending policies and procedures, including underwriting, collection, charge-off, and recovery policies; (e) Changes in national and local economic and business conditions, including individual market and industry segments; (f) Changes in the nature and volume of the loan portfolio; (g) Changes in the experience, ability, and depth of lending management staff; (h) Changes in the volume and severity of past due and classified loans and in the volume of nonaccruals, troubled debt restructures, and other loan modifications; (i) Changes in the quality of the bank’s loan review system and the degree of oversight by the bank’s Board of Directors; (j) The existence and effect of any concentrations of credit and changes in the Bank, present and prospective economic conditionslevel of such concentrations; and, (ivk) applicable experience The effect of external factors, such as competition and legal and regulatory requirements on the Banklevel of estimated credit losses in the bank’s lending staffcurrent portfolio. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the ADC for review and prior determination of no supervisory objection. (1) Within forty-five (45) days, the Board shall establish, or confirm that the Bank already has, an effective, independent and on-going loan review program to review, at least quarterly, the Bank's loan and lease portfolios to assure the timely identification and categorization of problem credits. The Board may, if it chooses, engage an outside vendor to provide this service to the Bank. If the Board chooses to engage an outside vendor, the Bank’s engagement letter to the vendor must be submitted to the ADC, and the Bank must receive prior written approval of the ADC before contracting with a vendor. The program shall provide for a written report to be filed with the Board after each review, at least quarterly, and shall use a loan and lease grading system consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller’s Handbook. Such reports shall, at a minimum, include 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) A written description of the program called for in this Article shall be forwarded to the ADC upon implementation. (3) 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). (4) A copy of the reports submitted to the Board, as well as documentation of the action taken by the Bank has processesto collect or strengthen assets identified as problem credits, personnel, and control systems to ensure implementation of and adherence shall be promptly forwarded to the policies and procedures developed pursuant to this ArticleADC.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated contained in OCC Bulletin 2006- 47 (December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includeincorporate the following: (a) procedures internal risk ratings of loans; (b) results of the Bank's internal loan review; (c) results of the Bank's independent loan review; (d) criteria for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB which loans will be reviewed under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 310 Receivables (Pre-codification reference: Statement of Financial Accounting Standards ("FAS") Statement No. 114), Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio how impairment will be determined, and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation analysis of credit losses considers the relevant qualitative and environmental factors, loans complies with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditionsASC 310 requirements; and (ive) applicable experience criteria for determining loan pools under ASC 310 (Pre-codification reference: FAS Statement No. 5) and an analysis of the Bank’s lending staffthose loan pools. (2) The program shall provide for a process for summarizing and documenting, for an independent review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's review of the adequacy of the Allowance shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be forwarded to the policies and procedures Assistant Deputy Comptroller on a quarterly basis. (4) A copy of the Board's program developed pursuant to this ArticleArticle shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures revise the Bank’s program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles). The Allowance policies and procedures revisions shall be consistent with designed in light of (i) the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council“Allowance for Loan and Lease Losses” booklet of the Comptroller’s Handbook; (ii) U.S. generally accepted accounting principles (“GAAP”); (iii) OCC Bulletin 2006-47, Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated Losses (December 13, 2006 2006); and (OCC Bulletin 2006-47)iii) the instructions for reporting the Allowance on the Call Report. The program, and July 20any revisions thereto, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with focus particular focus attention on the following: (ia) trends in historical loss period must reflect the Bank’s internal risk ratings, delinquent current economic environment and nonaccrual loansincorporate guidance for selecting an appropriate historical loss period; (b) discounts applied to collateral values during impairment analyses must be well-supported and documented; (c) reasonable documentation to support qualitative factor adjustments to ASC 450-20 loan pools to include: (i) description of each qualitative factor; (ii) results management’s analysis of the Bankeach factor’s external loan reviewchange over time; (iii) concentrations narrative detailing loss rate adjustments to each loan pool; (iv) amount by which loss estimates have been adjusted for changes in conditions; (v) explanation of credit in method used to estimate the Bank, present and prospective economic conditionsimpact; and (ivvi) applicable experience other available data that supports the reasonableness of the Bank’s lending staffadjustments; and (d) credit losses on off balance sheet credit exposures must be estimated in accordance with ASC 450-20 and reported as an “Other Liability” account. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, establish and thereafter ensure adherence to written policies and procedures implement an improved methodology for maintaining the Bank's maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”"ALLL") in accordance with Generally Accepted Accounting Principlesat all times for on-balance sheet assets. The Allowance policies This review and procedures methodology shall be designed to be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses booklet of the Comptroller's Handbook, OCC Advisory Letter 97-8 dated August 6, 1997, entitled "Allowance for Loans and Lease Losses” dated December 13," and with the guidance prescribed by the FFIEC Expanded Guidance for Subprime Lending Programs, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)6. The Bank's methodology shall include, and shall at a minimum includebut not be limited to, the following factors: (a) procedures reserving for determining whether a twelve (12) months of expected losses for all principal loan is impaired and measuring the amount balances, including non-delinquent accounts, regardless of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; FICO scores; (b) procedures reserving for segmenting the loan portfolio twelve (12) months of expected losses of accrued interest and estimating loss fees on groups all outstanding accounts, including non-delinquent accounts, regardless of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; FICO scores; (c) procedures applying specific allocations for validating the Allowance methodology; Bank's various Debt Forbearance Programs; (d) procedures applying a specific allocation of reserves to ensure that the estimation accounts which are over limit by more than 10%; (e) an estimate of inherent loss exposure on each pool of credit losses considers accounts originated or purchased by the relevant qualitative and environmental factorsBank, with particular focus on including inherent loss that may not be captured in the following: roll rate methodology; (if) loan loss experience; (g) trends in the Bank’s internal risk ratingsof delinquent, delinquent nonaccrual and nonaccrual loans; charged-off credit accounts; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, ; and (i) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program methodology shall provide for the following: (a) a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the calendar quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earningsearnings or capital. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL; (b) adjustments to the ALLL methodology, including roll rate adjustments based on recent trends, shall not be made unless the Board has approved the adjustment. The Bank shall clearly document the reasons for the adjustments, including the Board's prior approval; and (c) the roll rate analysis reconciles with other management information system and financial reports. (3) The Bank shall document loss estimates and the ALLL methodology in writing, including the Bank's liquidation and roll rate methodology, and the derivation of key drivers, including payment rate curves and roll rates. (4) Upon completion, the Bank's ALLL methodology shall be submitted to the Director for prior determination of supervisory non-objection. Such determination will be made within thirty (30) days of receipt of the written ALLL methodology. Immediately upon receiving a determination of supervisory non-objection from the Director, the Bank shall implement and shall thereafter adhere to the ALLL methodology. (5) The Board shall ensure adopt policies establishing that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures ALLL methodology developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adoptdevelop and submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, implement, and thereafter ensure adherence to a written policies and procedures program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesALLL). The Allowance policies Following receipt of this written determination, the Board shall implement, and procedures thereafter ensure Bank adherence to this program. This program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), booklet of the Comptroller’s Handbook and July 20, 2001 (in OCC Bulletin 2001-37), 37 Policy statement on ALLL Methodologies and shall at a minimum include: (a) procedures Documentation for determining whether a loan is impaired Banks and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staffSavings Institutions”. (2) The program shall focus particular attention on the following factors: (a) Amending the ALLL policy to describe loans requiring impairment analyses; line officer/line management responsibilities for developing impairment calculations; and requirements for documentation supporting the basis of the impairment analyses. (b) Including qualitative factors impacting the bank’s credit quality and ALLL adequacy in the ALLL policy. (c) Ensuring that the bank’s ALLL methodology complies with Generally Accepted Accounting Principles (GAAP). More specifically, the ALLL must be well documented and contain clear explanations of the supporting analyses and rationale. (d) Under GAAP, the methodology must also be periodically validated. (3) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (34) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on XXX, the Comptroller's Handbook - Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37), Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions, and Statement of Financial Accounting Standards (FASB) 114 - Accounting by Creditors for the Impairment of a Loan, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal and external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencieseach significant credit; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; and (ivg) applicable experience of the Bank’s lending staffparticipations purchased from other financial institutions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“"Allowance”") in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in OCC Bulletin 2001-37 and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)" booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures an estimate of inherent loss exposure on each significant credit; 3 Refer to the Comptroller’s Handbook for validating the Allowance methodology;Loan Portfolio Management (April 1998). (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; and (g) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence require the Bank to written policies and procedures for maintaining an adequate review the adequacy of the Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall adopt a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s OCC Bulletin 2006-47, “Interagency Policy Statement on the Allowance for Loan and Lease Losses”, and shall focus particular attention on the following factors: (a) timely and accurate recognition of risk measurement in the Bank’s loan portfolio; (b) an estimate of inherent loss exposure for groups of loans with similar risk characteristics; (c) realistic and logical loan loss calculations based on the inherent risk for the pool; (d) qualitative factors that are representative of the increased risk that is not captured in the historical loss calculation; and (e) specific allocations that are determined and calculated consistent with the guidance. Loans that are identified as “impaired” dated December 13, 2006 (must meet the criteria outlined in OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each criticized credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of two hundred fifty thousand dollars ($250,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; and, (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies and procedures developed pursuant to this Articleprogram.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iiic) an estimate of inherent loss exposure on each significant credit; (d) an estimate of inherent loss exposure on each credit in excess of fifty thousand dollars ($50,000); (e) loan loss experience; (f) changes in the trend of the volume and severity of past due and classified loans; and trends in the volume of nonaccrual loans, troubled debt restructurings, and other loan modifications; (g) changes in lending policies and procedures, including underwriting standards and collection, charge off, and recovery practices; (h) concentrations of credit in the Bank, ; (i) present and prospective economic conditions; and, (ivj) applicable experience changes in the experience, ability, and depth of the Bank’s lending management and staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that be submitted to the ADC for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the ADC, the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies and procedures developed pursuant to this Articleprogram.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Association's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council“Allowance for Loan and Lease Losses” booklet of the Comptroller’s “Handbook, and shall focus particular attention on the following factors: (a) results of the Association's internal loan review; (b) results of the Association's external loan review; (c) an estimate of inherent loss exposure on each criticized asset or criticized portion thereof; (d) loan loss experience; (e) trends of delinquent and nonaccrual loans; (f) concentrations of credit in the Association; (g) present and prospective economic conditions; and (h) appropriate treatment of classified loans pursuant to the Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated Losses (December 132006), 2006 ASC 450-20 (OCC Bulletin 2006-47FAS 5), and July 20, 2001 ASC 310-10 (OCC Bulletin 2001-37FAS 114), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Consolidated Report of Condition and Income (Call Report), by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank Association has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated booklet of the Comptroller’s Handbook, and shall focus particular attention on the following factors: (a) Compliance with the Interagency Policy Statement on the Allowance — December 13, 2006 (OCC Bulletin 2006XX 00-4700), and July 20, 2001 XXXX Guidance: (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, FAS 114 — Accounting by Creditors for Impairment of a Loan) and (FAS 5 — Accounting for Contingencies); (b) procedures for segmenting results of the Bank’s internal loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiid) an estimate of inherent loss exposure on each significant credit; (e) segmentation of loan pools grouped and analyzed by loss potential, according to similar characteristics; (f) trends of delinquent, non-performing, and nonaccrual loans; (g) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending stafftheir impact on segmented loan pools. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board’s program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles"ALLL"). The Allowance policies and procedures program shall be consistent with the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 (December 13, 2006) and with "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006," booklet A-47), and July 20, 2001 (OCC Bulletin 2001-37)ALLL of the Comptroller's Handbook, and shall at a minimum includeincorporate the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting results of the Bank's independent loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) criteria for determining which loans will be reviewed under Financial Accounting Standard ("FAS") 114, how impairment will be determined, and procedures for validating to ensure that the Allowance methodologyanalysis of loans complies with FAS 114 requirements; (d) procedures to ensure that the estimation criteria for determining FAS 5 loan pools and an analysis of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:those loan pools; (ie) recognition of non-accrual loans in conformance with generally accepted accounting principles (“GAAP”) and regulatory guidance; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual non-accrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending staffpresent and projected economic and market conditions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to filing the filing Consolidated Reports of the Call ReportCondition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating of the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL and made available for review by National Bank Examiners. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this AgreementBy no later than January 31, 2010, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesPrinciples (“GAAP”). The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology;; and (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Call Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent designed in light of the comments on maintaining a proper Allowance that complies with the guidance set forth in the Federal Financial Institutions Examination Council’s “OCC Bulletin 2006-47, Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting review performed by Creditors for Impairment of a Loanaccount officers; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of loss exposure on each credit deemed impaired in accordance with FAS 114 requirements; (d) procedures to ensure historical loan loss experience that the estimation of credit losses considers the relevant qualitative complies with FAS 5 requirements, including pools established for loans rated special mention and environmental factors, with particular focus on the following:substandard; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencieseach credit; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; and (f) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount Board prior to be reported in the Consolidated Reports end of Condition and Income (“Call Reports”) for the Allowanceeach calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) Within five (5) days of its completion, a copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Association’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Council (FFIEC) Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions (July 6, 2001), and the Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated Losses (December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Association’s internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Association’s external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative in excess of one hundred and environmental factors, with particular focus on the following:fifty thousand dollars ($150,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, Association; (h) present and prospective economic conditions; and (ivi) applicable experience appropriate treatment of classified loans pursuant to the Bank’s lending staffInteragency Policy Statement on the Allowance for Loan and Lease Losses (December 2006), ASC 450-20 (FAS 5), and ASC 310-10 (FAS 114). (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportThrift Financial Report or Consolidated Report of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank Association has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on RXX, the Comptroller's Handbook - Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37), Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions, and Statement of Financial Accounting Standards (FASB) 114 - Accounting by Creditors for the Impairment of a Loan, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal and external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencieseach significant credit; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; and (ivg) applicable experience of the Bank’s lending staffparticipations purchased from other financial institutions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence make a minimum provision to written policies and procedures for maintaining an adequate the Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesof six hundred fifty thousand dollars ($650,000) as of March 31, 2002. (2) The Board shall review the adequacy of the Bank's Allowance for Loan and Lease Losses (Allowance) and shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal and external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreviews; (b) procedures for segmenting the loan portfolio and estimating an estimate of inherent loss exposure on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencieseach significant credit; (c) procedures for validating the Allowance methodologyloan loss experience; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiie) concentrations of credit in the Bank, ; (f) present and prospective economic conditions; (g) capabilities of and changes in the lending staff; (h) changes in loan volume and/or mix; (i) the volume of out-of-area lending; and (ivj) applicable experience estimates of the Bank’s lending staffloss potential for individual credits based on net realizable liquidation values of collateral. (23) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (34) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior determination of no supervisory objection. (5) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to the Bank has appropriate written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesGAAP. The Allowance policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan 12 C.F.R. § 160.160 and Lease Losses” dated applicable regulatory guidance, including, but not limited to, and Xxxxx Xxxxxx, December 13, 2006 (OCC Bulletin 2006-47), ; and July 20, 2001 (OCC Bulletin 2001-37): Policy Statement on Allowance for 2001, and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (db) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent delinquent, and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) the quality of credit risk management, including trends of credit and collateral exceptions; (iv) concentrations of credit in the Bank, ; (v) present and prospective economic conditions; and, (ivvi) applicable experience of the Bank’s lending staff; (c) procedures to ensure the overall balance of the Allowance remains directionally consistent with the direction of credit risk in the overall loan portfolio; and (d) procedures to ensure that all calculations and decisions affecting the Bank’s Allowance determination are supported by documentation. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount of the Allowance to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each credit classified “substandard,” or “doubtful” in excess of fifty thousand dollars ($50,000); (d) procedures to ensure an estimate of inherent loss exposure on all other significant credits that the estimation are analyzed individually (if no allocation can be determined for such credits on an individual basis, they shall be provided for as part of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:an appropriate pool of loans); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; and (h) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's quarterly Allowance reviews shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence be provided to the policies and procedures developed pursuant to this ArticleAssistant Deputy Comptroller.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of the date of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with and shall establish a program for the maintenance of an appropriate Allowance. This review and program shall be designed to meet Generally Accepted Accounting Principles. The Allowance policies Principles and procedures shall be consistent with the regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC Bulletin 2006-47, and the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) suitable policies and procedures for determining whether a loan is impaired and measuring that communicate the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a LoanAllowance process internally to all applicable personnel; (b) procedures clear explanations and documentation for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for ContingenciesAllowance analysis; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation results of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (iid) results of the Bank’s external loan review; (iiie) an estimate of loss exposure on each impaired credit; (f) loan loss experience; (g) trends of delinquent and nonaccrual loans; (h) concentrations of credit in the Bank; (i) lending policies and procedures, including underwriting and collection, charge off and recovery practices; (j) changes in the nature and volume of the portfolio; (k) changes in lending management and staff; (l) changes in the loan review system; and (m) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) days of this Agreement, the Board shall revise, adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate appropriate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting PrinciplesGAAP. The Allowance policies and procedures shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall include, at a minimum includeminimum: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with Accounting Standards Codification 310-10 (formerly known as FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan); (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with Accounting Standards Codification 310-10 and 450-20 (formerly known as FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies); (c) procedures for validating the Allowance methodology;; and (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for the Board’s review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) Report for the Allowance. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call Report, Report by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this AgreementOn or before March 31, 2005, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (the “Allowance”) in accordance with Generally Accepted Accounting Principlesfor assets on the books of the Bank, and shall establish and implement prior to submission of the March 31, 2005 Report of Condition and Income (“Call Report”) a program for the Bank’s maintenance of an adequate allowance at all times (“Allowance Program”). The This review and Allowance policies and procedures Program shall be designed to be consistent with the guidance set forth comments on maintaining a proper allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses booklet of the Comptroller’s Handbook, OCC Advisory Letter 96-8 dated August 6, 1997, entitled “Allowance for Loans and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), ”. The Bank’s analysis shall be well documented and shall at a minimum include, but not be limited to, the following factors: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s internal and external loan review; reviews; (iiib) an estimate of inherent loss exposure on each significant credit; (c) loan loss experience; (d) trends of delinquent and nonaccrual loans; (e) concentrations of credit in the Bank, ; and (f) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Allowance Program shall provide for monthly provisions and a review of the Allowance by the Board at least once each calendar quarter. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures Allowance Program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty ninety (6090) days of this Agreement, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“AllowanceALLL”) in accordance with Generally Accepted the Federal Accounting PrinciplesStandards Board’s (“FASB”) GAAP. The Allowance policies and procedures shall be consistent with the guidance set forth in Refer to the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), for guidance. The ALLL policies and July 20, 2001 (OCC Bulletin 2001-37), and procedures shall at a minimum includeinclude procedures for the following: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial GAAP (including FASB’s Accounting Standards No. 114Codification (“ASC”) 310-10, Accounting by Creditors for Impairment of a LoanReceivables - Overall - Subsequent Measurement – Impairment); (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, loans that are consistent with FASB Statement of Financial Accounting Standards No. 5GAAP (including FASB’s ASC 450-20, Accounting for Loss Contingencies); (c) procedures for validating the Allowance methodology; (d) procedures to ensure ensuring that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, ratings as well as in delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iii) concentrations of credit in the Bank, ; (iv) present and prospective economic conditions; and (ivv) applicable experience of the Bank’s lending staff.; (2d) providing training for all staff preparing the ALLL; (e) consideration of FASB’s Accounting Standards Update No. 2016-13, Topic 325, Financial Instruments – Credit Losses. Refer to OCC Bulletin 2019-17, “Current Expected Credit Losses” (April 3, 2019), for guidance; (f) reviewing, on at least a quarterly basis, the adequacy of the ALLL. The program Board shall provide for a process for maintain written documentation indicating the factors considered and conclusions reached in its determination of the adequacy of the ALLL; and (g) summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Bank’s Call Reports”) Report for the AllowanceALLL. (2) The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures to ensure that all official and regulatory reports filed by the Bank accurately reflect an adequate ALLL balance as of the date that such reports are submitted. Any deficiency in difference between the Allowance ALLL balance as determined by the analysis required by this Article and the Bank’s actual ALLL balance shall be remedied through appropriate account adjustments in the quarter it is discovered, prior to the filing of the Bank’s Call Report, by additional provisions from earningsReports. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL. (3) The Upon adoption, the Board shall submit a copy of the policies and procedures required by this Article to the Assistant Deputy Comptroller for a written determination of no supervisory objection. (4) Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall implement and thereafter ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Articleprocedures.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in OCC Bulletin 2006-47, “Allowance for Loan and Lease Losses: Guidance and Frequently Asked Question” including the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses,” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiib) an estimate of inherent loss exposure on each significant credit consistent with FAS 114; (c) loan loss experience consistent with FAS 5; (d) trends of delinquent and nonaccrual loans; (e) concentrations of credit in the Bank, ; and (f) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staffconditions and other qualitative factors. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board’s program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency OCC Bulletin 2001-37, "Policy Statement on Allowance for Loan and Lease Losses Methodology and Documentation for Banks and Savings Institutions", and the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal problem loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanidentification; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each criticized or nonperforming credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of fifty dollars ($50,000); (ie) loan loss experience by type of loan, based on a reasonable period of historical performance; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; (i) changes in loan underwriting and management personnel; and (ivj) applicable experience a comprehensive evaluation of the Bankbank’s lending staffindirect loan portfolio. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for a written determination of no supervisory objection. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreementdays, the Board shall adoptreview, implementrevise, and thereafter ensure Bank adherence to its written policies and procedures for maintaining program designed to ensure the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principles). The Allowance policies and procedures An acceptable program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37), booklet of the Comptroller’s Handbook and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each credit in excess of one million dollars ($1,000,000); (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiif) concentrations of credit in the Bank, ; (g) present and prospective economic conditions; and (ivh) applicable experience appropriate treatment of classified loans pursuant to OCC Bulletin 2006- 47 – Allowance Guidance and Frequently Asked Questions on the Bank’s lending staffALLL, Financial Accounting Standard (FAS) 5 – Accounting for Contingencies, and FAS 114 – Accounting by Creditors for Impairment of a Loan. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) Upon revision, a copy of the program shall promptly be submitted to the Assistant Deputy Comptroller. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit, which shall include separation of credits with different risk characteristics into different pools; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:loan loss experience; (ie) historical loss comparisons that take into account appropriate timeframes and asset quality indicators and ensure any customized peer groups selected for peer historical loss comparisons reflect the current lending environment; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; and (ivi) applicable experience of the Bank’s lending staffcurrent appraisals for loans tested for impairment. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board's program shall ensure that be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies and procedures developed pursuant to this Articleprogram.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13Losses booklet, 2006 (OCC Bulletin 2006A-47)ALLL, and July 20, 2001 (OCC Bulletin 2001-37)of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is impaired the guidance and measuring the amount requirements of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; (b) procedures for segmenting results of the Bank's internal loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating results of the Allowance methodologyBank's external loan review; (d) procedures to ensure that the estimation an estimate of credit losses considers the relevant qualitative and environmental factors, with particular focus inherent loss exposure on the following:each significant credit; (ie) an estimate of inherent loss exposure on each credit in excess of fifty thousand dollars ($50,000) based on an analysis of pools of loans for all types of loans except commercial time and demand notes outstanding as of the effective date of this Agreement, which shall be reviewed individually for estimates of inherent loss; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, ; (i) present and prospective economic conditions; and (ivj) applicable experience of the Bank’s lending staffsupport for specific allocations. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance discovered by the Board shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior determination of no supervisory objection. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall refine the current program for the maintenance of an adequate Allowance within ninety (90) days. The Allowance policies This review and procedures program shall be consistent with designed in light of the comments on maintaining a proper Allowance found in regulatory guidance set forth in (including but not limited to the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (booklet of the Comptroller’s Handbook and OCC Bulletin 2006-4747 (December 13, 2006), ) and July 20, 2001 (OCC Bulletin 2001-37)in Accounting Standards Codification 310 and 450, and shall at a minimum includefocus particular attention on the following factors: (a) procedures results of the Bank's internal loan review; (b) results of the Bank's external loan review; (c) criteria for determining whether a loan is impaired and measuring the amount of impairment, consistent with FASB which loans will be reviewed under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 310 Receivables (Pre-codification reference: Statement of Financial Accounting Standards ("FAS") Statement No. 114), Accounting by Creditors for Impairment how impairment will be determined, and procedures to ensure that the analysis of a Loan; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent loans complies with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodologyASC 310 requirements; (d) procedures to ensure that the estimation criteria for determining loan pools under ASC 450 (Pre-codification reference: FAS Statement No. 5) and an analysis of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:those loan pools. (ie) an estimate of inherent loss exposure on each significant credit; (f) loan loss experience; (g) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiih) concentrations of credit in the Bank, ; and (i) present and prospective economic conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of dollars ($100,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; and (ivi) applicable experience improvement of the Bank’s lending staffimpairment analysis as required by ASC 310. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an appropriate Allowance balance. The Allowance policies This review and procedures program shall be consistent designed in light of the comments on maintaining the Allowance in conformance with the guidance set forth in the Federal Financial Institutions Examination Council’s OCC Bulletin #2006-47 – “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 Losses (OCC Bulletin 2006-47), ALLL): Guidance and July 20, 2001 (OCC Bulletin 2001-37)Frequently Asked Questions on the ALLL”, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan is a. loans considered to be impaired and measuring the amount of impairment, consistent with FASB under Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment Standard (FAS) #114 including an analysis of a Loaneach loan with documentation of the impairment; (b) procedures b. identification of homogenous pools of loans for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. analysis under FAS #5, Accounting for Contingencies; (c) procedures for validating the Allowance methodologyc. loan loss experience; (d) procedures to ensure that the estimation d. trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results e. concentrations of the Bank’s external loan reviewcredit; (iii) concentrations of credit in the Bank, f. present and prospective economic conditions; and (iv) applicable experience g. staffing levels, adequacy of policies, and any other factor impacting the Bank’s lending stafflevel of credit risk in the loan portfolio. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Bank's quarterly Allowance shall be submitted to the Assistant Deputy Comptroller. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this ArticleArticle XII.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank's Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an appropriate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting results of the Bank's external loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesreview; (c) procedures for validating the Allowance methodologyan estimate of inherent loss exposure on each significant credit; (d) procedures to ensure that the estimation an estimate of inherent loss exposure on each credit losses considers the relevant qualitative and environmental factors, with particular focus on the following:in excess of dollars ($100,000); (ie) loan loss experience; (f) trends in the Bank’s internal risk ratings, of delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiig) concentrations of credit in the Bank, ; (h) present and prospective economic conditions; and (ivi) applicable experience experience, ability, and depth of the Bank’s management; (j) effects of changes in lending staffpolicies; (k) trends and volumes of credit/collateral exceptions; and (l) trends and nature of loan policy exceptions. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) A copy of the Board's program shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence require the Bank to written policies and procedures maintain a program for maintaining the maintenance of an adequate Allowance for Loan and Lease Losses (“Allowance”"ALLL") that is designed in accordance with Generally Accepted Accounting Principles. The Allowance policies and procedures shall be consistent with light of the guidance set forth comments on maintaining a proper ALLL found in the Federal Financial Institutions Examination Council’s “FFIEC Interagency Policy Statement on the ALLL contained in OCC 2006-47 dated December 13, 2006, and the "Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)" booklet of the Comptroller's Handbook, and shall at a minimum includeaddress the following: (a) procedures for determining whether a loan is impaired and measuring the amount internal risk ratings of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanloans; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s 's external loan review; (iiic) criteria for determining which loans will be reviewed under Financial Accounting Standard ("FAS") 114, how impairment will be determined, and procedures to ensure that the analysis of loans complies with FAS 114 requirements; (d) criteria for determining FAS 5 loan pools and an analysis of those loan pools; (e) recognition of non-accrual loans in conformance with GAAP and FFIEC policy; (f) loan loss experience; (g) trends of delinquent and non-accrual loans; (h) concentrations of credit in the Bank, ; and (i) present and prospective economic and market conditions; and (iv) applicable experience of the Bank’s lending staff. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, ALLL by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance ALLL shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the AllowanceALLL. (3) A copy of the Board's program, and any subsequent revisions to the program, shall be submitted to the Director for review. (4) The Board shall ensure that the Bank has sufficient processes, personnel, and control systems to ensure implementation of effectively implement and adherence adhere to the policies and procedures program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within sixty (60) days of this Agreement, the The Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate review the adequacy of the Bank’s Allowance for Loan and Lease Losses (“Allowance”) in accordance with Generally Accepted Accounting Principlesand shall establish a program for the maintenance of an adequate Allowance. The Allowance policies This review and procedures program shall be consistent with designed in light of the guidance set forth comments on maintaining a proper Allowance found in the Federal Financial Institutions Examination Council’s “Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37)booklet of the Comptroller’s Handbook, and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a results of the Bank’s internal and external loan is impaired and measuring the amount of impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loanreview; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans, consistent with FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingenciesexperience; (c) procedures for validating the Allowance methodology; (d) procedures to ensure that the estimation trends of credit losses considers the relevant qualitative and environmental factors, with particular focus on the following: (i) trends in the Bank’s internal risk ratings, delinquent and nonaccrual loans; (ii) results of the Bank’s external loan review; (iiid) concentrations of credit in the Bank, ; (e) present and prospective economic conditions; and; (ivf) applicable experience periodic review of and adjustments to the Bank’s lending staffqualitative allocations for classified and special mention assets and the Bank’s significant loan pools consistent with Statement of Financial Accounting Standards Number 5, “Accounting for Contingencies” (“FAS 5”), codified by the Financial Standards Accounting Board as Accounting Standards Codification Topic Number 450, “Contingencies” (“ASC 450”); (g) directional consistency of the Allowance with respect to the factors considered in items (1)(a) through (1)(g) of this Article. (2) The program shall provide for a process for summarizing and documenting, for review of the Board’s review and approval, Allowance by the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the AllowanceBoard at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, prior to the filing of the Call ReportConsolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (3) The Board A copy of the Board’s program shall ensure that be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank has processes, personnel, shall implement and control systems to ensure implementation of and adherence adhere to the policies and procedures developed pursuant to this Articleprogram.