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

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”). The 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) (“Interagency Statement”) and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment); (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency Statement; (c) procedures for validating the ALLL methodology; and (d) a process for summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLL. (2) Within forty-five (45) days 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.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, the Board shall adopt, implement, and thereafter ensure adherence to updated written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”)) in accordance with GAAP. The Board shall ensure that the 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 2006-4747 (December 13, 2006) (“Interagency Statement”) ), “ALLL Methodologies and Documentation” OCC Bulletin 2001-37 (July 20, 2001), and any subsequent guidance which supersedes or supplements this guidance in the future, and shall at a minimum includeminimum: (a) revise the calculation of the historical loss factors to include specific valuation allowances established in lieu of charge-offs, and; (i) ensure qualitative factors and adjustments to factors are documented and well-supported; and (ii) provide a detailed narrative showing trends and financial data to support the reasonableness of assigned percentages for each factor; and (b) include procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) GAAP (including FASB ASC 310-10310­-10, Receivables - Overall - Subsequent Measurement – Impairment); (bc) include procedures for segmenting annual independent validation of the ALLL model and methodology, which shall include: (i) testing the accuracy of source documents and assumptions being used in developing the ALLL; and (ii) any changes or adjustments to the ALLL methodology must be well documented and supported; and (iii) ensures the ALLL methodology’s reasonableness and effectiveness to estimate potential losses in the loan portfolio and estimating loss on groups of loans that are consistent compliance with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency Statement; (c) procedures for validating the ALLL methodology; and (d) a process for summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLLregulatory guidance. (2) Within forty-five (45) days the 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 difference between the 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 Call Reports. (3) Prior to adoption by the Board, the Board shall submit a copy of the ALLL policies and procedures required by this Article to the Assistant Deputy Comptroller for written determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall adopt and the Bank shall immediately implement and adhere to the ALLL program required by this Article.

Allowance for Loan and Lease Losses. (1) Within forty-five thirty (4530) days but no later than September 30, 2008, the Board shall make a provision to the Bank’s Allowance for Loan and Lease Losses (“ALLL” or “Allowance”) in the amount detailed in the Report of Examination (“XXX”) dated March 31, 2008. (2) Within ninety (90) days, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”)) in accordance with generally accepted accounting principles. The 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 2006-2006- 47) (“Interagency Statement”) ), and shall at a minimum include: (a) procedures for determining whether a maintaining directional consistency of ALLL level relative to credit risk inherent in the loan is impaired portfolio measured by but not limited to the following factors: (i) registered and measuring the amount forecasted loan growth; (ii) level and trend of impairment, consistent with generally accepted accounting principles delinquent loans; (“GAAP”iii) level and trend of non-performing assets; (including FASB ASC 310iv) level and trend of classified assets; (v) level and trend of criticized loans and loans internally rated as pass-10, Receivables - Overall - Subsequent Measurement – Impairment)watch; (vi) level and trend of policy exceptions; (vii) impact on credit risk management systems from staff changes (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank's internal loan review; (c) procedures for validating results of the ALLL methodologyBank's external loan review; (d) an estimate of inherent loss exposure on each significant credit consistent with the Financial Accounting Standards Board (FASB) 114 impairment analysis; (e) an estimate of inherent loss on homogenous loan pools with similar risk characteristics consistent with FASB 5; (f) loan loss experience; (g) concentrations of credit in the Bank consistent with the segmentation and analysis required in Article V, Concentrations of Credit; (h) present and prospective economic conditions; and (di) periodic validation of the ALLL methodology. (3) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (24) Within forty-five 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. (455) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies and procedures the program developed pursuant 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 submittedthis Article.

Allowance for Loan and Lease Losses. (1) Within forty-five ninety (4590) days, the Board shall adoptadopt or revise, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“"ALLL”") in accordance with U.S. generally accepted accounting principles ("GAAP"). The ALLL policies and procedures shall be consistent with the guidance set forth in the Federal Financial Institutions Examination Council’s “'s "Interagency Policy Statement on the Allowance for Loan and Lease Losses” " dated December 13, 2006 2006, (OCC Bulletin 2006-47) (“"Interagency Statement”") and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) GAAP (including FASB ASC 310-100, Receivables - Overall - Receivables- Overall- Subsequent Measurement – Impairment); (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to incorporate annualized year-to-date credit losses into each quarterly analysis and document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency Statement; (c) procedures for validating the ALLL methodology; and (d) a process for summarizing and documenting, for the Board’s 's prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLL. (2) Within forty-five (45) days the The Board shall adoptadopt or revise, 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.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, the Board shall adopt, implement, 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 (“ALLL”). The ALLL 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), with the “Allowance for Loan and Lease Losses,” dated December 13booklet A-ALLL of the Comptroller’s Handbook, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) and current GAAP standards, and shall incorporate, at a minimum includeminimum, the following: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank's external loan review; (c) criteria for determining which loans will be reviewed under Financial Accounting Standard (“FAS”) 114 (now ASC 310-10), how impairment will be determined, and procedures to ensure that the analysis of loans complies with ASC 310-10 requirements; (d) criteria for validating determining FAS 5 (now ASC 450-20) loan pools and an analysis of those loan pools; (e) loan loss experience; (f) trends of delinquent and nonaccrual loans; (g) concentrations of credit in the ALLL methodologyBank; and (h) 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; and (e) incorporates requirements for periodic independent validation of the Bank’s ALLL methodology, and revises the methodology when appropriate. (3) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (24) Within forty-five (45) days A copy of the Board Board's program shall adoptbe 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, 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 shall implement and adhere to the date that such reports are submittedprogram.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, 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 (“ALLLAllowance”)) and shall establish a program for the maintenance of an adequate Allowance. The ALLL 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) (“Interagency Statement”) 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 generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank’s external loan review; (c) procedures an estimate of inherent loss exposure on each significant credit using the risk rating system; (d) stratifying the FAS 5 pools by loan type and classification; (e) application of qualitative and environmental adjustments separately to each FAS 5 pool; (f) evaluating qualitative and environmental adjustments for validating reasonableness; (g) ensuring industry historical loss data is reflective of current economic conditions and that adjustments are only made through qualitative factors; (h) accurately risk rating loans and ensuring proper identification of non- accrual loans and Troubled Debt Restructures (TDRs), with impairment analyses performed where appropriate; (i) concentrations of credit in the ALLL methodologyBank; and (dj) present and prospective economic conditions. (2) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-forty five (45) days 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 of this Agreement, 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 such reports are submittedthe Bank has processes, personnel, and control systems to ensure implementation of and adherence to the program developed pursuant to this Article.

Allowance for Loan and Lease Losses. (1) Within forty-five thirty (4530) days, the Board shall adopt, implement, 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 (“ALLL”). The ALLL 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 13booklet A-ALLL of the Comptroller’s Handbook, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) and shall incorporate, at a minimum includeminimum, the following: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank's external loan review; (c) 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 validating determining FAS 5 loan pools and an analysis of those loan pools; (e) loan loss experience; (f) trends of delinquent and nonaccrual loans; (g) concentrations of credit in the ALLL methodologyBank; and (h) 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) incorporates requirements for periodic independent validation of the Bank’s ALLL methodology, and revises the methodology when appropriate. (3) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLL. (2) Within forty-five (45) days factors considered and conclusions reached by the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures to ensure that all official and regulatory reports filed by in determining the Bank accurately reflect an adequate ALLL balance as adequacy of the date that such reports are submittedAllowance.

Allowance for Loan and Lease Losses. (1) Within forty-five ninety (4590) daysdays from the date of this Agreement, the Board shall adoptrevise, implement, and thereafter ensure adherence to the Bank’s written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”) in accordance with U.S. generally accepted accounting principles (“GAAP”). The 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” Losses Methodologies and Documentation for Banks and Savings Associations, dated July 20, 2011 (OCC Bulletin 2001- 37), and the Interagency Guidance and Frequently Asked Questions (FAQs) on the ALLL, dated December 13, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) ), and shall at a minimum include: (a) procedures for identifying and determining whether a loan is impaired and impaired; (b) procedures for measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) GAAP (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment); (bc) procedures for segmenting the loan portfolio and accurately estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of how the nine qualitative factors set forth in OCC Bulletin 2006-47 resulted in any adjustments to estimated credit losses for each segment of the Interagency Statementloan portfolio analyzed; (cd) procedures for internally validating the ALLL methodologymethodology on a quarterly basis and independently validating the ALLL methodology on at least an annual basis; and (de) a process for summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLL. (2) Within forty-five (45) days The program shall provide for a review of the ALLL by the Board at least once each calendar quarter. Any deficiency in the ALLL shall adoptbe remedied in the quarter it is discovered, implementprior to the filing of the Consolidated Reports of Condition and Income, by additional provisions from earnings. Written documentation shall be maintained indicating the factors considered and thereafter ensure adherence to written policies and procedures to ensure that all official and regulatory reports filed conclusions reached by the Bank accurately reflect an adequate ALLL balance as Board in determining the adequacy of the date that such reports are submittedALLL.

Allowance for Loan and Lease Losses. (1) Within forty-five sixty (4560) daysof 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 (“ALLLAllowance”) and shall establish a program for the maintenance of an adequate Allowance. This review and program shall be designed in light of (i) the 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”). The ALLL policies and procedures shall be consistent with the guidance set forth in ; (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) (“Interagency Statement”) ); and the instructions for reporting the Allowance on the Call Report. The program, and any revisions thereto, shall at a minimum includefocus particular attention on the following: (a) procedures loans rated special mention or substandard, but not impaired, must be further segmented into their own pools within each lending category for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles Accounting Standards Codification (“GAAPASC”) (including FASB ASC 310450-10, Receivables - Overall - Subsequent Measurement – Impairment)20 analysis; (b) procedures for segmenting the loan portfolio loans designated as Troubled Debt Restructurings (“TDRs”), including special mention and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20pass, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency Statementmust receive an impairment analysis; (c) procedures discounts applied to collateral values during impairment analyses must be well supported and documented; (d) reasonable documentation to support qualitative factor adjustments to ASC 450-20 loan pools to include: (i) description of each qualitative factor; (ii) management’s analysis of each factor’s change over time; (iii) narrative detailing loss rate adjustments to each loan pool; (iv) amount by which loss estimates have been adjusted for validating changes in conditions; (v) explanation of method used to estimate the ALLL methodologyimpact; and (dvi) other available data that supports the reasonableness of the adjustments; (e) loan balances used in the ASC 450-20 analysis must be net of previous charge-offs; and (f) 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 documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-five The Bank shall implement and adhere to the program. (454) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies and procedures the program developed pursuant 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 submittedthis Article.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, the Board shall adopt, implement, and thereafter ensure adherence to updated written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”)) in accordance with GAAP. The Board shall ensure that the 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 2006-4747 (December 13, 2006) (“Interagency Statement”) ), “ALLL Methodologies and Documentation” OCC Bulletin 2001-37 (July 20, 2001), and any subsequent guidance which supersedes or supplements this guidance in the future, and shall at a minimum includeminimum: (a) revise the calculation of the historical loss factors to include specific valuation allowances established in lieu of charge-offs, and; (i) ensure qualitative factors and adjustments to factors are documented and well-supported; and (ii) provide a detailed narrative showing trends and financial data to support the reasonableness of assigned percentages for each factor; and (b) include procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) GAAP (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment); (bc) include procedures for segmenting annual independent validation of the ALLL model and methodology, which shall include: (i) testing the accuracy of source documents and assumptions being used in developing the ALLL; and (ii) any changes or adjustments to the ALLL methodology must be well documented and supported; and (iii) ensures the ALLL methodology’s reasonableness and effectiveness to estimate potential losses in the loan portfolio and estimating loss on groups of loans that are consistent compliance with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency Statement; (c) procedures for validating the ALLL methodology; and (d) a process for summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLLregulatory guidance. (2) Within forty-five (45) days the 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 difference between the 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 Call Reports. (3) Prior to adoption by the Board, the Board shall submit a copy of the ALLL policies and procedures required by this Article to the Assistant Deputy Comptroller for written determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall adopt and the Bank shall immediately implement and adhere to the ALLL program required by this Article.

Allowance for Loan and Lease Losses. (1) Within forty-five thirty (4530) days but no later than September 30, 2008, the Board shall make a provision to the Bank’s Allowance for Loan and Lease Losses (“ALLL” or “Allowance”) in the amount detailed in the Report of Examination (“XXX”) dated March 31, 2008. (2) Within ninety (90) days, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”)) in accordance with generally accepted accounting principles. The 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) (“Interagency Statement”) ), and shall at a minimum include: (a) procedures for determining whether a maintaining directional consistency of ALLL level relative to credit risk inherent in the loan is impaired portfolio measured by but not limited to the following factors: (i) registered and measuring the amount forecasted loan growth; (ii) level and trend of impairment, consistent with generally accepted accounting principles delinquent loans; (“GAAP”iii) level and trend of non-performing assets; (including FASB ASC 310iv) level and trend of classified assets; (v) level and trend of criticized loans and loans internally rated as pass-10, Receivables - Overall - Subsequent Measurement – Impairment)watch; (vi) level and trend of policy exceptions; (vii) impact on credit risk management systems from staff changes (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank’s internal loan review; (c) procedures for validating results of the ALLL methodologyBank’s external loan review; (d) an estimate of inherent loss exposure on each significant credit consistent with the Financial Accounting Standards Board (FASB) 114 impairment analysis; (e) an estimate of inherent loss on homogenous loan pools with similar risk characteristics consistent with FASB 5; (f) loan loss experience; (g) concentrations of credit in the Bank consistent with the segmentation and analysis required in Article V, Concentrations of Credit; (h) present and prospective economic conditions; and (di) periodic validation of the ALLL methodology. (3) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (24) Within forty-five 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. (455) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies and procedures the program developed pursuant 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 submittedthis Article.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, the Board shall adopt, implement, and thereafter ensure adherence to written policies and procedures for maintaining an adequate Allowance for Loan and Lease Losses (“ALLL”). The 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) (“Interagency Statement”) and shall at a minimum include: (a) procedures for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – - Impairment); (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency Statement; (c) procedures for validating the ALLL methodology; and (d) a process for summarizing and documenting, for the Board’s prior review and approval, the amount to be reported in the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLL. (2) Within forty-five (45) days 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.

Allowance for Loan and Lease Losses. (1) Within forty-five sixty (4560) days, the Board shall adoptreview, implementrevise, and thereafter ensure Bank adherence to its written policies and procedures for maintaining program to ensure the maintenance of an adequate Allowance for Loan and Lease Losses (“ALLLAllowance”). The ALLL 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) (“Interagency Statement”) booklet of the Comptroller’s Handbook and shall at a minimum include:focus particular attention on the (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank's external loan review; (c) procedures for validating an estimate of inherent loss exposure on each credit in excess of two hundred and fifty thousand dollars ($250,000); (d) loan loss experience; (e) trends of delinquent and nonaccrual loans; (f) concentrations of credit in the ALLL methodologyBank; (g) present and prospective economic conditions; (h) appropriate treatment of classified loans pursuant to OCC Bulletin 2006- 47 – Allowance Guidance and Frequently Asked Questions on the ALLL; (i) applicable requirements of the Accounting Standards Codification, include, ASC 450 and 310 (formerly FAS 5 and 114); and (dj) any Allowance related deficiencies noted in the current or any future XXX. (2) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-five Upon revision, a copy of the program shall promptly be submitted to the Assistant Deputy Comptroller. (454) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter ensure adherence to written policies and procedures control systems to ensure that all official implementation of and regulatory reports filed by adherence this Article and the Bank accurately reflect an adequate ALLL balance as of the date that such reports are submittedprograms developed pursuant to it.

Allowance for Loan and Lease Losses. (1) Within forty-five The Board shall require, and within thirty (4530) daysdays 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 (“ALLL”). The ALLL 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 13booklet A-ALLL of the Comptroller’s Handbook, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) 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 generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) criteria for determining which loans will be reviewed under Financial Accounting Standard (“FAS”) 114, how impairment will be determined, and procedures for segmenting to ensure that the loan portfolio and estimating loss on groups analysis of loans that are consistent complies with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis of the nine qualitative factors set forth in the Interagency StatementFAS 114 requirements; (c) procedures criteria for validating determining FAS 5 loan pools and an analysis of those loan pools; (d) loan loss experience; (e) trends of delinquent and nonaccrual loans; (f) concentrations of credit in the ALLL methodologyBank; and (g) 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 ALLL methodology, and revises the methodology when appropriate. (3) The program shall provide for a process for summarizing and documentingreview of the ALLL by the Board at least once each calendar quarter. Any deficiency in the ALLL shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for 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 ALLL. (24) Within forty-five (45) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies and procedures the program developed pursuant 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 submittedthis Article.

Allowance for Loan and Lease Losses. (1) Within forty-five sixty (4560) days, the Board shall adoptreview, implementrevise, and thereafter ensure Bank adherence to its written policies and procedures for maintaining program to ensure the maintenance of an adequate Allowance for Loan and Lease Losses (“ALLLAllowance”). The ALLL 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) (“Interagency Statement”) 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 generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank's external loan review; (c) procedures for validating the ALLL methodology; andan estimate of inherent loss exposure on each credit in excess of two hundred and fifty thousand dollars ($250,000); (d) loan loss experience; (e) trends of delinquent and nonaccrual loans; (f) concentrations of credit in the Bank; (g) present and prospective economic conditions; (h) appropriate treatment of classified loans pursuant to OCC Bulletin 2006- 47 – Allowance Guidance and Frequently Asked Questions on the ALLL; (i) applicable requirements of the Accounting Standards Codification, include, ASC 450 and 310 (formerly FAS 5 and 114) and (j) correction of any Allowance related deficiencies noted in the current or any future XXX. (2) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-five Upon revision, a copy of the program shall promptly be submitted to the Assistant Deputy Comptroller. (454) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies this Article and procedures the programs developed pursuant 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 submittedit.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, 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 (“ALLLAllowance”)) and shall establish a program for the maintenance of an adequate Allowance. The ALLL 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 OCC Bulletin 2006-47, Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) and shall at a minimum includefocus particular attention on the following factors: (a) procedures Documented processes for determining whether a loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB impairment evaluation. Management must specify through policy which loans will be evaluated for impairment under ASC 310-1010 (formerly FAS 114). Loans within the scope of ASC 310-10 that are determined to be impaired or are considered troubled debt restructured loans, Receivables - Overall - Subsequent Measurement – Impairmentmust be individually reviewed under ASC 310-10 guidelines, on a quarterly basis, using the three available methods when determining specific reserve allocations: (i) Present value of expected future cash flows discounted at the loans effective interest rate; (ii) Observable market price; or (iii) Fair value of collateral. Required method if the loan is collateral dependent (e.g., repayment is solely contingent on underlying collateral);. (b) procedures Incorporating the analysis and support for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB existing unallocated reserve calculation to within the ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis 20 (formerly FAS 5) component of the nine qualitative factors set forth methodology. (2) The program shall provide for a review of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Interagency Statement; (c) procedures for validating Allowance shall be remedied in the ALLL methodology; and (d) a process for summarizing and documentingquarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-five (45) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies and procedures the program developed pursuant 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 submittedthis Article.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, the Board shall adopt, implement, 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 (“ALLL”). The ALLL 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), with the “Allowance for Loan and Lease Losses,” dated December 13booklet A-ALLL of the Comptroller’s Handbook, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) and current GAAP standards, and shall incorporate, at a minimum includeminimum, the following: (a) procedures for determining whether a results of the Bank’s internal loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank’s external loan review; (c) criteria for determining which loans will be reviewed under Financial Accounting Standard (“FAS”) 114 (now ASC 310-10), how impairment will be determined, and procedures to ensure that the analysis of loans complies with ASC 310-10 requirements; (d) criteria for validating determining FAS 5 (now ASC 450-20) loan pools and an analysis of those loan pools; (e) loan loss experience; (f) trends of delinquent and nonaccrual loans; (g) concentrations of credit in the ALLL methodologyBank; and (h) 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; and (e) incorporates requirements for periodic independent validation of the Bank’s ALLL methodology, and revises the methodology when appropriate. (3) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (24) Within forty-five (45) days A copy of the Board Board’s program shall adoptbe 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, 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 shall implement and adhere to the date that such reports are submittedprogram.

Allowance for Loan and Lease Losses. (1) Within forty-five sixty (4560) daysdays 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 (“ALLLAllowance”)) and shall establish a program for the maintenance of an adequate Allowance. The ALLL 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 the Interagency Policy Statement on the Allowance for Loan and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) ; and shall at a minimum includefocus particular attention on the following factors: (a) procedures for determining whether a loan ensure the ALLL balance is impaired replenished and measuring maintained at adequate levels to support the amount high level of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)credit risk and estimated credit losses; (b) develop written ALLL policy and procedures to detail: (i) the types of impairment analyses and when each type should be used; (ii) requirements for segmenting the loan portfolio collateral dependent and estimating loss on groups of impaired loans that are consistent with GAAP need current appraisals or evaluations for impairment analysis; (including FASB iii) the need to assess appropriate reserves for unsecured, impaired Loans; and (iv) documentation requirements for calculating loan loss reserves and qualitative factor adjustments for the ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis 20 portions of the nine qualitative factors set forth in the Interagency Statement;ALLL. (c) procedures for validating ensure the ALLL methodology; andmethodology addresses the requirements outlined in the Interagency Policy Statement on the Allowance for Loan and Lease Losses particularly for documentation requirements. The allowance estimates must be based on comprehensive, well documented, and consistently applied analysis. The methodology and quarterly ALLL memorandum must incorporate the following action items: (i) “arbitrary loss ratios” used for the construction 1-4 family owner- occupied, construction non-residential, and land loan segments must be supported by a documented current analysis of peer data or by an estimate from a third party, that has the expertise and ability to support its estimates and judgments. If peer data is used, data should be from peers with similar loan portfolio, underwriting, and environmental characteristics; (ii) historical loss rates used for the special mention and substandard ASC 450-20 pools must be supported by a detailed analysis; (iii) qualitative factors and quarterly changes to the qualitative factors must be supported by a detailed analysis and narrative discussion; (iv) differences in the qualitative factor adjustments used for pass rated loans versus classified loans must be well supported and documented. (d) ensure an independent party periodically validates the ALLL methodology. (2) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-five (45) days the Board shall adoptUpon adoption, 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 a copy of the date that such reports are submittedBoard's program shall be submitted to the Assistant Deputy Comptroller.

Allowance for Loan and Lease Losses. (1) Within forty-five (45) days, 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 (“ALLLAllowance”)) and shall establish a program for the maintenance of an adequate Allowance. The ALLL 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) (“Interagency Statement”) and shall at a minimum includefocus particular attention on the following factors: (a) Revision and development of the Bank’s procedures for determining whether a loan is impaired to improve the Allowance process and measuring methodology, including the amount use of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)external factors that could impact the Allowance; (b) procedures Creation of FAS 5 homogeneous pools: (i) Reserve allocation for segmenting FAS 5 pools should be based on the loan portfolio bank’s historical loss experience with similar risk characteristic groups, adjusted for changes in trends, conditions and estimating loss on groups of loans other relevant factors that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis affect repayment of the nine qualitative factors set forth in loan; (ii) Loan pools should be created for all non-impaired loans and further segmented into appropriate categories necessary to capture the Interagency Statementsimilar risk characteristics of each pool; (c) procedures Documentation of impairment evaluation process, such that: (i) Unimpaired loans are grouped with loans with similar characteristics and evaluated under FAS 5 (including overdrafts). Impaired loans, or those considered troubled debt restructure loans under FAS 15, should be reviewed under FAS 114 guidelines; (ii) Documentation to support the FAS 5 analysis factors is maintained and updated; (iii) Documentation regarding the final reserve allocation factor for validating each FAS 5 pool is supported with detail; (d) Recurring independent validation of Allowance methodology; (e) An estimate of inherent loss exposure on each significant credit; (f) loan loss experience; (g) Trends of delinquent and nonaccrual loans; (h) concentrations of credit in the ALLL methodologyBank; and (di) Present and prospective economic conditions. (2) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for Income, by additional provisions from earnings. Written documentation shall be maintained indicating the ALLLfactors considered and conclusions reached by the Board in determining the adequacy of the Allowance. (23) Within forty-five 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. (454) days the The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and adherence to written policies and procedures the program developed pursuant 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 submittedthis Article.

Allowance for Loan and Lease Losses. (1) Within forty-five sixty (4560) days, the Board shall adopt, implement, 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 (“ALLL”). The ALLL 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 13booklet A-ALLL of the Comptroller’s Handbook, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) and shall incorporate, at a minimum includeminimum, the following: (a) procedures for determining whether a results of the Bank's internal loan is impaired and measuring the amount of impairment, consistent with generally accepted accounting principles (“GAAP”) (including FASB ASC 310-10, Receivables - Overall - Subsequent Measurement – Impairment)review; (b) procedures for segmenting the loan portfolio and estimating loss on groups of loans that are consistent with GAAP (including FASB ASC 450-20, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses and its analysis results of the nine qualitative factors set forth in the Interagency StatementBank's external loan review; (c) 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 validating determining FAS 5 loan pools and an analysis of those loan pools; (e) loan loss experience; (f) trends of delinquent and nonaccrual loans; (g) concentrations of credit in the ALLL methodologyBank; and (h) 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) incorporates requirements for periodic independent validation of the Bank’s ALLL methodology, and revises the methodology when appropriate. (3) The program shall provide for a process for summarizing and documentingreview of the Allowance by the Board at least once each calendar quarter. Any deficiency in the Allowance shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for the ALLL. (2) Within forty-five (45) days the Board Income, by additional provisions from earnings. Written documentation 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.be maintained indicating the

Allowance for Loan and Lease Losses. (1) Within forty-five ninety (4590) daysdays of the date of this Agreement, the Board shall adopt, implement, must ensure that management effectively implements and thereafter ensure adherence adheres to written policies and procedures for maintaining an adequate its Allowance for Loan and Lease Losses (“ALLL”). The ALLL policies ) Policy and procedures shall be methodology, consistent 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). At a minimum, 2006 (OCC Bulletin 2006-47) (“Interagency Statement”) and shall at a minimum includethe Board must ensure that: (a) procedures the Allowance for determining whether a loan Loan and Lease Losses (“ALLL”) is impaired and measuring the amount of impairment, consistent prepared in accordance with generally accepted accounting principles Generally Accepted Accounting Principles (“GAAP”) and interagency guidance, including OCC Bulletin 2006-47 (including FASB ASC Interagency Policy Statement on the Allowance for Loan and Lease Losses) that includes analysis under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 450-20 and 310-10, Receivables - Overall - Subsequent Measurement – Impairment); (b) procedures for segmenting the an effective loan portfolio review systems and estimating loss on groups of loans that controls, including an effective loan classification or credit grading system, are consistent with GAAP (including FASB ASC 450-20in place to identify, Loss Contingencies). These procedures shall require the Bank to document its estimation of credit losses monitor, and its analysis of the nine qualitative factors set forth address asset quality problems in the Interagency Statementan accurate and timely manner; (c) procedures for validating adequate data capture and reporting systems provide information necessary to support and document estimation of an appropriate ALLL; (d) information provides various matrices to identify and trend various risk factors; (e) there is a timely and accurate valuation program so that loans, or portions of loans, are promptly charged off when available information confirms them to be uncollectible; (f) ALLL methodology is, at a minimum, annually validated by a party, such as the internal audit staff, the Bank’s risk management unit, or an external auditor, subject to applicable auditor independence standards, who is independent of the institution’s (1) credit approval and ALLL estimation processes and (2) ALLL methodology and its application in order to confirm the effectiveness of the methodology; and (dg) the individual responsible for preparing the quarterly ALLL methodology is knowledgeable about the ALLL Policy, related GAAP and interagency guidance, and their implementation. (2) The ALLL Policy shall provide for a process for summarizing and documentingreview of the ALLL by the Board at least once each calendar quarter. Any deficiency in the ALLL shall be remedied in the quarter it is discovered, for prior to the Board’s prior review and approval, the amount to be reported in filing of the Consolidated Reports of Condition and Income (“Call Reports”) for 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 ALLL. (23) Within forty-five A copy of the Board approved ALLL Policy shall be submitted to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection within ten (4510) days of Board approval. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the ALLL Policy. (4) The Board shall adoptensure that the Bank has processes, implementpersonnel, and thereafter control systems to ensure implementation of and 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 submittedthis Article.