CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date of this Agreement, the Board shall ensure that all lending officers comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties.
(2) Within ninety (90) days of this Agreement, the Board shall develop and submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program (including revisions to policies and procedures) designed to improve the Bank’s underwriting and credit risk management practices. The program shall include, at a minimum, provisions requiring policies and procedures to ensure that:
(a) the Bank does not grant, extend, renew, alter or restructure any loan or other extension of credit equal to or exceeding one hundred thousand dollars ($100,000), without:
(i) documenting the specific reason or purpose for the extension of credit;
(ii) identifying the expected source of repayment in writing;
(iii) structuring the repayment terms to coincide with the expected source of repayment and the useful life of the collateral;
(iv) obtaining current and satisfactory credit information, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources, including global cash flow analysis, to include all direct and indirect obligations and personal expenses;
(v) providing an accurate risk assessment grade and proper accrual status for each credit;
(vi) obtaining an appraisal or evaluation as appropriate;
(vii) documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank’s lien on it where applicable;
(viii) performing and documenting the review of real estate appraisals at the time of the underwriting process; and
(ix) obtaining the written approval of the Bank’s Loan Committee or Board;
(b) the Bank performs, for its agricultural land broker relationships, an initial and ongoing assessment of agricultural land inventory with detailed listings of origination date, loan amount, outstanding balance, date of purchase, date of sale, collateral description, value and source, amount of pay down, partial/full release, and other applicable information;
(c) the Bank aggregates, tracks and eliminates exceptions to the Loan Policy, underwriting guidelines, and supervisory loan to value limits, to include the following minimum procedures:
(i) monthly Board monitoring of policy exception reports that track aggrega...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date of this Agreement, the Board shall ensure that all lending officers comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties.
(2) Effective as of the date of this Agreement, the Bank may not grant, extend, renew, modify or restructure any loan or other extension of credit, or purchase any loan participation, equal to or exceeding $500,000 without:
(a) Documenting the specific reason or purpose for the extension of credit;
(b) Identifying the expected source of repayment in writing;
(c) Structuring the repayment terms to coincide with the expected source of repayment;
(d) Obtaining current and satisfactory credit information, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources;
(e) Determining and documenting whether the loan complies with the Bank’s Loan Policy and if it does not comply, providing identification of the exception and justification to support waiving the policy exception;
(f) Making and documenting the determinations made regarding the customer’s ability to repay the credit on the proposed repayment terms;
(g) Providing an accurate risk assessment grade and proper accrual status for each credit;
(h) Documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank’s lien on it where applicable; and
(i) Obtaining the written approval of the Bank’s Loan Committee or Board.
(3) Within sixty (60) days of this Agreement, the Board shall take the necessary steps to eliminate credit, collateral, and Bank Loan Policy exceptions, to include, at a minimum, the development of a program that makes loan officers accountable for such exceptions and considers such exceptions in the periodic performance reviews and compensation of such loan officers.
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date of this Agreement, the Board shall ensure that all lending officers and staff comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties.
(2) Within ninety (90) days, the Board shall develop and submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program (including revisions to policies and procedures) designed to improve the Bank’s credit underwriting and administration practices. The program shall include, at a minimum, policies and procedures to ensure that:
(a) clear responsibilities, authority and lines of reporting are established in the lending area, and that appropriate and qualified personnel oversee the lending function, including, at a minimum, that:
(i) the Chief Loan Officer shall have the responsibility and authority to:
a. enforce Bank lending policy and to hold loan officers accountable for compliance with the Bank’s lending policy;
b. address credit administration weakness discussed in this Agreement and in the Report of Examination for the examination conducted as of September 30, 2009 (the “XXX”); and
c. take necessary action to maintain satisfactory credit risk management systems;
(b) to ensure that loan officers periodically (at least annually or more frequently, as necessary, given the circumstances of the particular credit relationship) perform reviews of all credit relationships totaling two hundred fifty thousand dollars ($250,000) or more, that includes analysis and documentation of the review rendered, including but not limited to:
(i) identifying the expected sources of repayment in writing;
(ii) obtaining current and satisfactory credit information for all borrowers and guarantors, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources, to include all direct and indirect obligations, contingent liabilities and personal expenses;
(iii) assessing the liquidity of all borrowers and guarantors, which the loan officer had verified as necessary to document capacity;
(iv) providing an accurate risk assessment grade and proper accrual status for each credit, consistent with Article V of this Agreement;
(v) obtaining an appraisal or evaluation as appropriate, consistent with Article VI of this Agreement;
(vi) documenting, with adequate supporting material, the value of collateral and properly perfecting the...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within one hundred twenty (120) days of the date of this Agreement, the Board shall adopt an acceptable written credit underwriting and administration program (“Credit Underwriting and Administration Program”) designed to ensure the Bank obtains and analyzes credit and collateral information sufficient to identify, monitor, and report the Bank’s credit risk, properly account for loans, and assign accurate risk ratings in a timely manner. The Credit Underwriting and Administration Program shall be consistent with safe and sound banking practices.
(2) The Credit Underwriting and Administration Program shall, at a minimum, include:
(a) policies and procedures that require any extensions of credit are granted, by renewal or otherwise, only after loan officers and credit administration staff, as applicable, provide accurate and sufficient information for approvers to make informed lending decisions, including:
(i) addressing acceptable loan types, terms, covenants, concentration limits, and collateral requirements and exceptions;
(ii) describing the borrower, guarantors, and business activities in detail;
(iii) obtaining the required and up-to-date credit information, as applicable (e.g., annual audited statements, interim financial statements, personal financial statements, and tax returns with supporting schedules);
(iv) adequately and accurately analyzing and documenting the borrower’s and guarantor’s cash flow, debt service requirements, primary and secondary sources of repayment, contingent liabilities, liquidity, interest rate sensitivity analysis, and collateral value and support, as applicable; and
(v) ensuring credits with potential or well-defined weaknesses at underwriting are appropriately risk rated based on accurate information.
(b) policy and procedures that establish Board-approved guidance regarding:
(i) proper cash flow analysis for different credit types,
(ii) reasonable advance rates for loans secured by inventory and accounts receivable,
(iii) sound approval authorities over extensions, criteria for when extensions are appropriate, and documentation requirements to support extension rationale,
(iv) reasonable annual review thresholds for credit analysts and loan officers, including requirements for reviews of term credits and loan participations purchased,
(v) appropriate standards for lending personnel to obtain insurance documents for applicable borrowers and that borrowers maintain insurance throughout the life of the loan, as applic...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within ninety (90) days of this Agreement, the Board shall submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program (including revisions to policies and procedures) designed to improve the Bank’s credit risk management and administration practices. The program shall include at a minimum, provisions requiring:
(a) guidelines addressing the allowance of a loan extension or restructure that includes minimum repayment periods by collateral type, and collateral and cash flow coverage requirements.
(b) procedures to ensure that the Bank does not grant, extend, renew, alter or restructure any loan, participation purchased or other extension of credit equal to or exceeding fifty thousand dollars ($50,000), without:
(i) documenting the specific reason or purpose for the extension of credit;
(ii) identifying the expected source of repayment in writing;
(iii) structuring the repayment terms to coincide with the expected source of repayment and the useful life of the collateral;
(iv) obtaining current and satisfactory credit information, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources, including global cash flow analysis, to include all direct and indirect obligations and personal expenses;
(v) providing an accurate risk assessment grade and proper accrual status for each credit;
(vi) documenting the value of collateral, with adequate supporting material including a current appraisal or evaluation as appropriate, and properly perfecting the Bank’s lien on it where applicable;
(vii) obtaining loan curtailment or re-margining as necessary to ensure the Bank’s collateral position is adequate; and
(viii) obtaining the written approval of the Bank’s Loan Committee or Board;
(c) procedures to ensure that monthly exception reports are accurate and that employees and officers are held accountable for non-compliance with the Bank’s loan policy and other underwriting requirements;
(d) procedures to ensure that loans are properly monitored to include periodic receipt, analysis and documentation of sufficient financial and operating information to measure and monitor the borrower’s and guarantor’s financial condition and repayment ability;
(e) the establishment of criteria for obtaining updated appraisals, new appraisals, and evaluations, in accordance with the provisions of 12 C.F.R. § 34;
(f) procedures to ensure that the renewal...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective immediately, the Board shall ensure that all lending officers comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties.
(2) Effective immediately, the Bank may not grant, extend, renew, modify or restructure any loan or other extension of commercial and agricultural credit, or purchase any loan participation, equal to or exceeding two-hundred thousand dollars ($200,000), without:
(a) documenting the specific reason or purpose for the extension of credit;
(b) identifying the expected source of repayment in writing;
(c) structuring the repayment terms to coincide with the expected source of repayment;
(d) obtaining current and satisfactory credit information, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources;
(e) determining and documenting whether the loan complies with the Bank’s Loan Policy and if it does not comply, providing identification of the exception and justification to support waiving the policy exception;
(f) documenting the determinations made regarding the customer’s ability to repay the credit on the proposed repayment terms;
(g) providing an accurate risk assessment grade and proper accrual status for each credit;
(h) documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank’s lien on it where applicable;
(i) ensuring that any participations purchased are consistent with sound banking practices, guidelines set forth in Banking Circular 181 (Revised), dated August 2, 1984, and the requirements of 12 C.F.R. Part 34; and
(j) obtaining the written approval of the Bank’s Loan Committee or Board.
(3) Within forty-five (45) days, the Board shall revise its policies and procedures to ensure that the Bank’s credit relationships are monitored and administered in a safe and sound manner, including the development of policies and procedures to ensure that lending officers:
(a) formally review all commercial and agricultural credit relationships totaling two-hundred and fifty thousand dollars ($250,000) or more, at least every twelve (12) months, and more frequently should the circumstances of the relationship so require, and that such reviews are written and contain, at a minimum, an analysis of:
(i) current and satisfactory credit information, including a detailed cash flow analysis of all expected repayment sources and the financial posi...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date of this Agreement, the Board shall ensure that all lending officers comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties. The Board shall ensure that there is a program in place that addresses:
(a) requirements that lending officers appropriately analyze, document, and communicate appropriate credit and collateral information;
(b) requirements that lending officers receive training on appropriate loan grading;
(c) requirement to establish a training policy for loan officers to ensure they understand policy requirements; and
(d) establishment of a tracking system to ensure that the appropriate documentation is obtained for financial and collateral requirements for each loan.
(2) Effective as of the date of this Agreement, the Bank may not grant, extend, renew, alter or restructure any loan or other extension of credit without:
(a) documenting the specific reason or purpose for the extension of credit;
(b) identifying the primary source of repayment in writing and lien status;
(c) structuring the repayment terms to coincide with expected source of repayment;
(e) obtaining current and satisfactory verified credit information, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources;
(f) determining and documenting whether the loan complies with the Bank’s Loan Policy and if it doesn’t comply, providing identification of the exception and ample justification to support waiving the policy exception;
(g) making and documenting the determinations made regarding the customer’s ability to repay the credit on the proposed repayment terms;
(h) providing an accurate risk assessment grade;
(i) documenting with adequate supporting material, the value of collateral and collateral type for each loan properly perfecting the Bank’s lien on it where applicable; and
(j) performing adequate documented credit analysis for participation loans in accordance with OCC’s Banking Circular 181(Revised), dated August 2, 1984, and 12 C.F.R. Part 34.
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date of this Agreement, the Board shall ensure that all lending officers comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties. Within sixty (60) days of the date of this Agreement, the Board shall develop and submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a program in place that addresses:
(a) requirements that lending officers appropriately analyze, document, and communicate appropriate credit and collateral information, including, at a minimum:
(i) personal and related business tax returns;
(ii) K-1s;
(iii) information regarding projects financed elsewhere; and
(iv) contingent liabilities;
(b) a requirement that loan officers obtain bank or brokerage statements to verify liquidity;
(c) a requirement to establish a training policy for loan officers to ensure they understand all policy requirements;
(d) the implementation of multi-factor stress testing at origination and at least annually thereafter including at a minimum:
(i) for income producing properties, variables to account for changes in interest rates, vacancies, rental rates, expenses and cap rates; and
(ii) for residential development projects, variables to account for changes in interest rates, absorption rates and prices;
(e) the performance of periodic reviews by the Chief Credit Officer of loan officers’ cash flow analyses to ensure accuracy;
(f) procedures to hold employees and officers accountable for non- compliance with the Bank’s loan policy and other underwriting requirements; and
(g) procedures to ensure that loans are properly monitored to include periodic receipt, analysis and documentation of sufficient financial and operating information to measure and monitor the borrower’s and guarantor’s financial condition and repayment ability, to include periodic (at least annually) cash flow analysis of income-producing collateral.
(2) Within ninety (90) days, the Board shall ensure that policies and procedures are created and implemented to ensure that loan officers periodically (at least annually or as necessary given the circumstances of the particular credit relationship) perform reviews of all credit relationships totaling two hundred thousand dollars ($200,000) or more, that includes analysis and documentation of the review rendered, including but not limited to:
(a) identifying the expected sources of repayment in writing;
(b) obt...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within sixty (60) days, the Board shall develop, implement, and thereafter ensure Bank adherence to a written program to improve the Bank's credit underwriting and administration process. The program shall include, at a minimum:
(a) guidelines for evaluating and monitoring a borrower’s capacity to meet a realistic repayment program from liquidity and cash flow;
(b) standards for minimally acceptable financial information on borrowers and guarantors;
(c) guidelines for the identification of and accounting treatment for nonaccrual loans that are consistent with the accounting requirements contained in the Call Report Instructions;
(d) prohibition of the extension of amortization periods to improve a borrower’s debt service coverage ratios or to match competition, unless supported by prudent underwriting;
(e) limitations on the use of interest reserves and capitalized interest that, at a minimum:
i. prohibit advances to fund interest reserves at renewal when the original repayment plan did not materialize, unless such advance is clearly supported by the project’s viability in the current market and the borrower’s repayment capacity;
ii. prohibit advances to fund interest reserves for non-construction or non-development related loans, e.g., holding of raw land; and
iii. prohibit capitalization of interest unless such capitalization is deemed appropriate pursuant to the guidance in Examining Circular 229, Guidelines for Capitalization of Interests on Loans.
(2) Upon adoption, a copy of the program shall be forwarded to the Assistant Deputy Comptroller for review and determination of no supervisory objection.
(3) Within ninety (90) days the Board shall ensure that the Bank obtains current and satisfactory credit information on all loans lacking such information, including those listed in the XXX, in any subsequent XXX, in any internal or external loan review, or in any listings of loans lacking such information provided to management by the National Bank Examiners at the conclusion of an examination.
(4) Within ninety (90) days the Board shall ensure that the Bank maintains proper collateral documentation on all loans and corrects each collateral exception listed in the XXX, in any subsequent XXX, in any internal or external loan review, or in any listings of loans lacking such information provided to management by the National Bank Examiners at the conclusion of an examination.
(5) Effective immediately, the Bank may grant, extend, renew, alter or restructu...
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date of this Agreement, the Board shall ensure that all lending officers comply with all laws, rules, regulations, Bank policies and procedures, safe and sound banking practices, and fiduciary duties.
(2) Effective as of the date of this Agreement, the Bank may not grant, extend, renew, alter or restructure any loan or other extension of credit equal to or exceeding two hundred fifty thousand dollars ($250,000), without:
(a) Documenting the specific reason or purpose for the extension of credit;
(b) Identifying the expected source of repayment in writing;
(c) Structuring the repayment terms to coincide with the expected source of repayment;
(d) Obtaining current and satisfactory credit information, including performing and documenting analysis of credit information and a detailed global cash flow analysis of all expected repayment sources, including an adequate debt service coverage analysis and contingent liabilities for affiliated companies when consolidating global cash flows;
(e) Determining and documenting whether the loan complies with the Bank’s Loan Policy and if it does not comply, providing identification of the exception and ample justification to support waiving the policy exception;
(f) Making and documenting the determinations made regarding the customer’s ability to repay the credit on the proposed repayment terms;
(g) Providing an accurate risk assessment grade; and
(h) Documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank’s lien on it where applicable.
(3) The Board shall take the necessary steps to ensure that current and satisfactory credit information is maintained on all loans. Within thirty (30) days of notification, the Board shall ensure that the Bank obtains any missing credit information described in the Report of Examination conducted as of September 30, 2010, in any subsequent Report of Examination, in any internal or external loan review, or in any listings of loans lacking such information provided to management by the National Bank Examiners at the conclusion of an examination.
