Common use of CREDIT RISK RATINGS Clause in Contracts

CREDIT RISK RATINGS. (1) The Board shall submit within sixty (60) days of the date of this Agreement, to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program to ensure: 1) the risk associated with the Bank's loans and other assets is properly reflected and accounted for on the Bank's books and records, and 2) the Bank properly recognizes income, to include, at a minimum, provisions requiring that: (a) the loan grading system is consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller's Handbook and is based upon definitive objective and subjective criterion; (b) loans and other assets are graded based upon current facts and existing/reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantor; (c) loans and other assets are timely placed on nonaccrual by the lending officers in accordance with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating and accrual determination; (e) an enhanced, written formal analysis, including appropriate documentation, that is reviewed and approved by the Bank's chief credit officer, or in the absence of a permanent chief credit officer by the Bank's Loan Committee, is maintained in the credit files to support the current and previous risk rating and accrual determination for all credit relationships totaling seven hundred and fifty thousand dollars ($750,000) or more; (f) all executive officers involved in the Bank's lending function, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (e) of this Article; (g) the lending officers and senior management are assigned responsibility and held accountable for ensuring the Bank's loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual; (h) the program includes an independent validation of the risk rating process; and (i) management information systems periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately implement and thereafter ensure adherence to the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis. The Board shall ensure that the external loan review report required pursuant to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements of the OCC's letters dated August 3, 2012, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's Handbook. Prior to any change or termination of such consultant's services, the Bank must obtain a written determination of no supervisory objection from the Assistant Deputy Comptroller.

CREDIT RISK RATINGS. (1) The Board shall submit within sixty (60) days of the date of this Agreement, to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program to ensure: 1) the risk associated with the Bank's ’s loans and other assets is properly reflected and accounted for on the Bank's ’s books and records, and 2) the Bank properly recognizes income, to include, at a minimum, provisions requiring that: (a) the loan grading system is consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller's ’s Handbook and is based upon definitive objective and subjective criterion; (b) loans and other assets are graded based upon current facts and existing/reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantor; (c) loans and other assets are timely placed on nonaccrual by the lending officers in accordance with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating and accrual determination; (e) an enhanced, written formal analysis, including appropriate documentation, that is reviewed and approved by the Bank's ’s chief credit officer, or in the absence of a permanent chief credit officer by the Bank's ’s Loan Committee, is maintained in the credit files to support the current and previous risk rating and accrual determination for all credit relationships totaling seven hundred and fifty thousand dollars ($750,000) or more; (f) all executive officers involved in the Bank's ’s lending function, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (e) of this Article; (g) the lending officers and senior management are assigned responsibility and held accountable for ensuring the Bank's ’s loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual; (h) the program includes an independent validation of the risk rating process; and (i) management information systems periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately implement and thereafter ensure adherence to the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis. The Board shall ensure that the external loan review report required pursuant to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements of the OCC's ’s letters dated August 3, 2012, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's ’s Handbook. Prior to any change or termination of such consultant's ’s services, the Bank must obtain a written determination of no supervisory objection from the Assistant Deputy Comptroller.

CREDIT RISK RATINGS. (1) The Board shall submit within Within sixty (60) days of the date of this Agreement, to the Assistant Deputy Comptroller for Board shall develop a prior written determination of no supervisory objection, a program to ensure: 1) ensure that the risk associated with the Bank's ’s loans and other assets is properly reflected and accounted for on the Bank's ’s books and records, and 2) the Bank properly recognizes income, to include, at a minimum, provisions requiring that: (a) the Bank’s loans and other assets are appropriately and timely risk rated and charged off by the lending officers using a loan grading system that is based upon current facts, existing repayment terms and that is consistent with the guidelines set forth in “Rating Credit Risk,” A-RCR, of the Comptroller’s Handbook; (b) the lending staff receives sufficient training with respect to the application of Subparagraph (a) of this Article; (c) procedures to ensure loan officers are held accountable for failing to appropriately and timely risk rate and/or place loans on nonaccrual, including but not limited to, consideration of loan officer and staff failure to properly risk rate and/or place loans on nonaccrual in periodic performance reviews and compensation; (d) the Bank’s loans and other assets are timely placed on nonaccrual in accordance with the guidelines set forth in the Bank’s Call Report; and (e) appropriate analysis and documentation are maintained in the credit files to support the current and previous risk rating or accrual determination for all credit relationships totaling two-hundred fifty thousand dollars ($250,000) or more. (2) After the Board has developed the program required by this Article, the Board shall immediately implement, and shall thereafter ensure adherence to its terms. (3) As soon as practicable, but by no later than July 1, 2016, the Bank shall perform a portfolio-wide credit review including all loans and relationships with aggregate credit exposure over $250,000, to determine the current extent of risk. Factors that must be considered in this review are: (a) new appraised values or other updated valuations; (b) analysis of payment performance; (c) maturity dates; (d) appropriateness of current risk rating; and (e) current financial information regarding principals and guarantors. (4) The Board shall continue to employ a qualified consultant to perform independent reviews of the Bank’s loan portfolio at least semi-annually to assure the timely identification and categorization of problem credits. Prior to the Bank’s appointment of any new consultant to perform the review required by this Paragraph, the Board shall submit the name and qualifications of the consultant for a written determination of no supervisory objection from the ADC. (5) The scope of the engagement with the loan review consultant shall provide for a written report to be filed with the Board after each review 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 and is based upon definitive objective and subjective criterion; (b) loans and other assets are graded based upon current facts and existing/reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantor; (c) loans and other assets are timely placed on nonaccrual by the lending officers in accordance with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating and accrual determination; (e) an enhanced, written formal analysis, including appropriate documentation, that is reviewed and approved by the Bank's chief credit officer, or in the absence of a permanent chief credit officer by the Bank's Loan Committee, is maintained in the credit files to support the current and previous risk rating and accrual determination for all credit relationships totaling seven hundred and fifty thousand dollars ($750,000) or more; (f) all executive officers involved in the Bank's lending function, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (e) of this Article; (g) the lending officers and senior management are assigned responsibility and held accountable for ensuring the Bank's loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual; (h) the program includes an independent validation of the risk rating process; and (i) management information systems periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately implement and thereafter ensure adherence to the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis’s Handbook. The Board shall ensure that forward the external loan review report required pursuant by this Paragraph to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements ADC within thirty (30) days of the OCC's letters dated August 3, 2012, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's Handbook. Prior to any change or termination of such consultant's services, the Bank must obtain a written determination of no supervisory objection receiving it from the Assistant Deputy Comptrollerconsultant.

CREDIT RISK RATINGS. (1) The Board shall continue to adhere to and shall submit within sixty (60) days of the date of this Agreement, to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program to ensureensure that: 1) the risk associated with the Bank's ’s loans and other assets is properly reflected and accounted for on the Bank's ’s books and records, records and that 2) the Bank properly recognizes does not improperly recognize income, to include, at a minimum, provisions requiring that: (a) the loan grading system is consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller's ’s Handbook and is based upon definitive objective and subjective criterion; (b) loans and other assets are graded based upon current facts and existing/existing/ reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantor; (c) loans and other assets are timely placed on nonaccrual by the lending officers in accordance with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating rate and accrual determination; (e) an enhanced, written formal analysis, including appropriate documentation, that is reviewed analysis and approved by the Bank's chief credit officer, or in the absence of a permanent chief credit officer by the Bank's Loan Committee, is documentation are maintained in the credit files to support the current and previous risk rating and rate or accrual determination for all credit relationships totaling seven hundred and fifty thousand dollars ($750,000) or more; (f) all executive senior officers involved in the Bank's ’s lending function, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (e) of this Article; (g) the lending officers and senior management are assigned responsibility and held accountable for ensuring that the Bank's ’s loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual; (h) the program includes an independent validation of the risk rating process; and (i) management information systems that periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately implement and thereafter ensure adherence to the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis. The Board shall ensure that the external loan review report required pursuant to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements of the OCC's letters dated August 3, 2012, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's Handbook. Prior to any change or termination of such consultant's services, the Bank must obtain a written determination of no supervisory objection from the Assistant Deputy Comptroller.

CREDIT RISK RATINGS. (1) The Board shall submit within Within sixty (60) days of days, the date of this Agreement, to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, Board shall develop a program to ensure: 1) ensure that the risk associated with the Bank's ’s loans and other assets is properly reflected and accounted for on the Bank's ’s books and records, and 2) the Bank properly recognizes income, to include, at a minimum, provisions requiring that: (a) the Board adopts a loan grading system that is consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller's ’s Handbook and is based upon definitive objective and subjective criterion; (b) the Bank’s loans and other assets are graded based upon current facts and existing/reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-well- defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantor; (c) loans and other assets are timely placed on nonaccrual by the lending officers in accordance with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating and accrual determination; (ed) an enhanced, written formal analysis, including appropriate documentation, that is reviewed analysis and approved by the Bank's chief credit officer, or in the absence of a permanent chief credit officer by the Bank's Loan Committee, is documentation are maintained in the credit files to support the current and previous risk rating and or accrual determination for all credit relationships totaling seven five hundred and fifty thousand dollars ($750,000500,000) or more; (fe) all executive officers involved in the Bank's lending functionPresident, Senior Loan Officer, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (ed) of this Article; (gf) the lending officers and senior management are assigned responsibility and held accountable (to include, at a minimum, consideration in periodic performance reviews and compensation) for ensuring that the Bank's ’s loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual;; and (hg) the program includes an independent validation of the risk rating process; and (i) management information systems periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination The Board shall ensure that an external review of no supervisory objection from the Assistant Deputy Comptrollerloan portfolio is conducted, pursuant to the standards described in this Article, to determine the amount of risk in the loan portfolio. (3) After the Board shall immediately implement and thereafter ensure adherence to has developed the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis. The , the Board shall ensure that the external loan review report required pursuant to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements of the OCC's letters dated August 3, 2012immediately implement, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's Handbook. Prior shall thereafter ensure adherence to any change or termination of such consultant's services, the Bank must obtain a written determination of no supervisory objection from the Assistant Deputy Comptrollerits terms.

CREDIT RISK RATINGS. (1) The Board shall continue to adhere to and shall submit within sixty (60) days of the date of this Agreement, to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program to ensureensure that: 1) the risk associated with the Bank's ’s loans and other assets is properly reflected and accounted for on the Bank's ’s books and records, records and that 2) the Bank properly recognizes does not improperly recognize income, to include, at a minimum, provisions requiring that: (a) the loan grading system is consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller's ’s Handbook and is based upon definitive objective and subjective criterion; (b) loans and other assets are graded based upon current facts and existing/existing/ reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-well- defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantor; (c) loans and other assets are timely placed on nonaccrual by the lending officers in accordance with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating rate and accrual determination; (e) an enhanced, written formal analysis, including appropriate documentation, that is reviewed analysis and approved by the Bank's chief credit officer, or in the absence of a permanent chief credit officer by the Bank's Loan Committee, is documentation are maintained in the credit files to support the current and previous risk rating and rate or accrual determination for all credit relationships totaling seven hundred and fifty thousand dollars ($750,000) or more; (f) all executive senior officers involved in the Bank's ’s lending function, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (e) of this Article; (g) the lending officers and senior management are assigned responsibility and held accountable for ensuring that the Bank's ’s loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual; (h) the program includes an independent validation of the risk rating process; and (i) management information systems that periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately implement and thereafter ensure adherence to the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis. The Board shall ensure that the external loan review report required pursuant to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements of the OCC's letters dated August 3, 2012, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's Handbook. Prior to any change or termination of such consultant's services, the Bank must obtain a written determination of no supervisory objection from the Assistant Deputy Comptroller.

CREDIT RISK RATINGS. (1) The Board As soon as practicable, but by no later than June 30, 2011, the Bank shall submit within perform a portfolio-wide credit review, with a focus on real estate secured loans, to determine the current extent of risk. Factors that must be considered in this review are: (a) new appraised values or other updated valuations; (b) project performance; (c) payment performance; (d) maturity dates; (e) remaining interest reserves; and (f) current financial information regarding principals and guarantors. (2) Within sixty (60) days of the date of this Agreement, to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, Board shall develop a program to ensure: 1) ensure that the risk associated with the Bank's ’s loans and other assets is properly reflected and accounted for on the Bank's ’s books and records, and 2) the Bank properly recognizes income, to include, at a minimum, provisions requiring that: (a) the Bank’s loans and other assets are appropriately and timely risk rated and charged-off by the lending officers using a loan grading system that is based upon current facts, existing repayment terms and that is consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller's Handbook and is based upon definitive objective and subjective criterion’s Handbook; (b) loans the Bank’s internal loan review system provides meaningful, detailed reports to the Board on portfolio quality, risks, and other assets are graded based upon current facts and existing/reasonable (considering the loan purpose) repayment terms with a focus upon whether the primary repayment source is threatened by a well-defined weakness and whether the credit relies heavily upon secondary repayment sources, especially illiquid collateral or an unsubstantiated guarantortrends; (c) loans loan officers are accountable for failing to appropriately and other assets are timely placed on nonaccrual by risk rate loans; and (d) the lending officers Bank does not over emphasize improvement in accordance interim financial statements or upgrade credits before sustained financial improvement is demonstrated; (3) Within ninety (90) days of this Agreement, the Board shall employ a qualified consultant to perform semi-annual asset quality reviews of the Bank’s loan portfolio. The scope of the external loan review shall provide for a written report to be filed with the Board after each review and shall use a loan and lease grading system consistent with the guidelines set forth in the Call Report; (d) lending officers conduct periodic, formal reviews for determining the appropriate risk rating and accrual determination; (e) an enhanced, written formal analysis, including appropriate documentation, that is reviewed and approved by the Bank's chief credit officer, or in the absence of a permanent chief credit officer by the Bank's Loan Committee, is maintained in the credit files to support the current and previous risk rating and accrual determination for all credit relationships totaling seven hundred and fifty thousand dollars ($750,000) or more; (f) all executive officers involved in the Bank's lending function, and all lending officers receive immediate training with respect to the application of Subparagraphs (a) through (e) of this Article; (g) the lending officers and senior management are assigned responsibility and held accountable for ensuring the Bank's loans and other assets are appropriately and timely risk rated, charged off and/or placed on nonaccrual; (h) the program includes an independent validation of the risk rating process; and (i) management information systems periodically provide feedback about the effectiveness of the program by senior management and the individual lending officers. (2) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately implement and thereafter ensure adherence to the program required by this Article. (3) The Bank shall engage a qualified external loan review consultant to perform independent semi-annual loan reviews with aggregate loan coverage of at least sixty five (65) percent on an annual basis. The Board shall ensure that the external loan review report required pursuant to the August 3, 2012, letter is provided to the OCC no later than December 31, 2012. All future semi-annual loan review reports shall be consistent with the requirements of the OCC's letters dated August 3, 2012, and September 4, 2012 and consistent with the loan and lease grading system guidelines set forth in the Rating Credit Risk, A-RCR, of the Comptroller's ’s Handbook. . (a) Such reports shall, at a minimum, include comments and conclusions regarding: (i) the identification, type, rating, and amount of problem loans and leases; (ii) the identification and amount of delinquent and nonaccrual loans; (iii) the identification/status of credit related violations of law or regulation; (iv) loans not in conformance with the Bank’s lending policies; (v) credit underwriting and documentation exceptions; (vi) credit analysis and documentation of such; (vii) accuracy of internal risk ratings; (viii) overall credit administration practices; and (ix) completeness and effectiveness of problem loan workout plans. (b) Prior to the appointment or employment of any change individual as loan review consultant or termination of such entering into any contract with any consultant's services, the Board shall submit the name and qualifications of the proposed consultant and the proposed scope and terms of employment to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection. After the OCC has advised the Bank must obtain that it does not take supervisory objection to the loan review consultant or the scope of the review, the Board shall immediately engage the loan review consultant pursuant to the proposed terms of the engagement. (c) The Board or a designated committee shall review the independent loan review reports and ensure that, if appropriate, immediate, adequate, and continuing remedial action, is taken upon the findings noted in the reports. (d) A copy of the reports submitted to the Board, as well as documentation of the action taken by the Bank to collect or strengthen assets identified as problem credits, shall be maintained in the books and records of the Bank; and (e) The Bank shall not terminate the consultant’s asset quality review services without a prior written determination of no supervisory objection from the Assistant Deputy Comptroller.