Common use of CREDIT RISK RATING Clause in Contracts

CREDIT RISK RATING. (1) Within sixty (60) days of this Agreement, the Board shall develop a program to ensure that the risk associated with the Bank’s loans and other assets is properly reflected and accounted for on the Bank’s books and records, to include, at a minimum, provisions to: (a) develop a risk rating system that accurately identifies and stratifies risk. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance; (b) ensure that the Bank’s loans and other assets are appropriately and timely risk rated and charged off by management using a safe and sound loan grading system that is based upon current facts, and existing repayment terms. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance; (c) provide for credit risk ratings to be reviewed and updated whenever relevant new information is received, but no less than annually, and include procedures for timely risk rating downgrades when conditions warrant without compromise or delays based on unfounded reliance on guarantors, payment history, borrower character or potential future events; (d) adopt annual training by a qualified party for loan officers on risk rating definitions and the importance of accurate and timely risk ratings; (e) ensure accountability of loan officers and management for failing to appropriately and timely risk rate and/or place loans on nonaccrual; (f) require that appropriate analysis and documentation is maintained in the credit files to support the current and previous risk rating and accrual determination for each credit relationship; and (g) incorporate management information systems that periodically provide feedback to the Board about the effectiveness of the program from senior management and individual lending officers. (2) The Board shall ensure that all credit relationships equaling two hundred fifty thousand ($250,000) or above are reviewed and accurately risk rated. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance. Such review shall be completed on a timely basis. (3) Upon completion, a copy of the written program developed pursuant to this Article shall be promptly forwarded to the Assistant Deputy Comptroller for a written determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately adopt, implement, and ensure adherence to the written program.

CREDIT RISK RATING. (1) Within sixty (60) days of this Agreement, the Board shall develop a program to ensure that the risk associated with the Bank’s loans and other assets is properly reflected and accounted for on the Bank’s books and records, to include, at a minimum, provisions to: (a) develop a risk rating system that accurately identifies is consistent with safe and stratifies risksound banking practices. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance; (b) ensure that the Bank’s loans and other assets are appropriately and timely risk rated and charged off by management using a safe and sound loan grading system that is based upon current facts, and existing repayment terms. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance; (c) provide for credit risk ratings to be reviewed and updated whenever relevant new information is received, but no less than annually, and include procedures for timely risk rating downgrades when conditions warrant without compromise or delays based on unfounded reliance on guarantors, payment history, borrower character or potential future events; (d) adopt annual training by a qualified party for loan officers on risk rating definitions and the importance of accurate and timely risk ratings; (e) ensure accountability of loan officers and management for failing to appropriately and timely risk rate and/or place loans on nonaccrual; (f) require that appropriate analysis and documentation is maintained in the credit files to support the current and previous risk rating and accrual determination for each credit relationship; and (g) incorporate management information systems that periodically provide feedback to the Board about the effectiveness of the program from senior management and individual lending officers. (2) The Within sixty (60) days of this Agreement the Board shall take the necessary steps to ensure that all credit relationships equaling two one hundred fifty thousand ($250,000150,000) or above are reviewed and accurately risk rated. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance. Such review shall be completed on a timely basis. (3) Upon completion, a copy of the written program developed pursuant to this Article shall be promptly forwarded to the Assistant Deputy Comptroller for a written determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately adopt, implement, and thereafter, ensure adherence to the written program.

CREDIT RISK RATING. (1) Within sixty thirty (6030) days of this Agreementdays, and on an ongoing basis thereafter, the Board shall develop a program review and revise its processes and controls to ensure that the Bank’s internal risk associated ratings of commercial credit relationships in excess of $250,000 (“Covered Relationship”), as assigned by responsible loan officers and by internal loan review, are timely, accurate, and consistent with the Bankregulatory credit classification criteria set forth in the Rating Credit Risk Booklet, A-RCR, of the Comptroller’s loans and other assets is properly reflected and accounted for on the Bank’s books and records, to include, at Handbook. At a minimum, provisions tothe Board must ensure, on an ongoing basis, that with respect to the assessment of credit risk of any Covered Relationship: (a) develop a risk rating system that accurately identifies and stratifies risk. Refer to the “Rating Credit Risk” booklet primary consideration is the strength of the Comptrollerborrower’s Handbook for guidanceprimary source of repayment (i.e., the probability of default rather than the risk of loss); (b) ensure that if the Bankprimary source of repayment is cash flow from the borrower’s loans operations, the strength of the borrower’s cash flow is determined through analysis of the borrower’s historical and other assets are appropriately and timely risk rated and charged off by management using a safe and sound loan grading system that is based upon current factsprojected financial statements, past performance, and existing repayment terms. Refer to the “Rating Credit Risk” booklet future prospects in light of the Comptroller’s Handbook for guidanceconditions that have occurred; (c) provide for collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased; (d) collateral values should reflect a current assessment of value based on actual market conditions and project status; (e) credit risk ratings to be are reviewed and updated whenever relevant new information is received, but bur no less frequently than annually, and include procedures for timely risk rating downgrades when conditions warrant without compromise or delays based on unfounded reliance on guarantors, payment history, borrower character or potential future events; (d) adopt annual training by a qualified party for loan officers on risk rating definitions and the importance of accurate and timely risk ratings; (e) ensure accountability of loan officers and management for failing to appropriately and timely risk rate and/or place loans on nonaccrual;; and (f) require that appropriate analysis and documentation is maintained in the credit files to support the current and previous risk rating analysis is documented and accrual determination available for each credit relationship; and (g) incorporate management information systems that periodically provide feedback to review by the Board about and the effectiveness of the program from senior management and individual lending officersOCC upon request. (2) On an ongoing basis, the Board shall ensure that any Covered Relationship with a high probability of payment default or other well-defined weakness is rated no better than Substandard, unless the debt is secured by marketable securities or cash. (3) The Board shall ensure that all credit relationships equaling two hundred fifty thousand ($250,000) or above are reviewed the Bank has processes, personnel, and accurately risk rated. Refer control systems to ensure implementation of and adherence to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance. Such review shall be completed on a timely basis. (3) Upon completion, a copy of the written program developed pursuant to this Article shall be promptly forwarded to the Assistant Deputy Comptroller for a written determination of no supervisory objection. Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately adopt, implement, and ensure adherence to the written programArticle.