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 Bank’s lien where applicable; (vii) conducting a thorough global cash flow analysis; and (viii) ensuring that loan officers are held accountable for the requirements of this subparagraph. (3) Loan officers shall draft credit memoranda to document the completion of the requirements of the program adopted pursuant to this Article. (4) 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, policies and procedures required by this Article. (5) The Board shall take the necessary steps to ensure that current and satisfactory credit and proper collateral information is maintained on all loans. Within thirty (30) days of notification, the Board shall ensure that the Bank takes all necessary actions, and maintains appropriate documentation of the actions taken, to obtain any missing credit or collateral information described in the 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.
Appears in 1 contract
Samples: Banking Agreement
CREDIT UNDERWRITING AND ADMINISTRATION. (1) By January 31, 2023, the Bank shall submit to the ADC for review and prior written determination of no supervisory objection, 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. The Credit Underwriting and Administration Program shall, at a minimum, include:
(a) policies that address acceptable loan types, terms, covenants, controls, and collateral requirements and exceptions;
(b) a description of the types of credit information required from borrowers and guarantors prior to making a loan decision, including annual audited financial statements, interim financial statements, personal financial statements, and tax returns with supporting schedules;
(c) procedures that require any extensions of credit to be granted, by renewal or otherwise, only after obtaining the required credit information and adequately analyzing and documenting borrower and guarantor cash flow, debt service, contingent liabilities, global liquidity condition, and sensitivity analysis in support of the credit decision;
(d) management information systems to identify and track all exceptions and efforts to mitigate or cure exceptions, including but not limited to financial exceptions, collateral exceptions, policy exceptions, and underwriting exceptions.
(e) a monthly report to the Board of the number of loans with exceptions, the type of exceptions, and the aggregate dollar value of loans with exceptions;
(f) the establishment of Board-approved, safe and sound, formal limits for aggregate exceptions based on the dollar value of loans and exceptions by type based on the dollar value of loans;
(g) policies and procedures to consider each loan officer’s exceptions in conducting periodic performance reviews and the making of compensation decisions;
(h) policies and procedures regarding compliance with the legal lending limit in 12 CFR Part 32 and the appraisal requirements in 12 CFR Part 34, Subpart C;
(i) identification of the roles and responsibilities of credit underwriting and administration management and staff; designation of a qualified individual to a Credit Administration Officer/Manager position; and implement and maintain appropriate authority, reporting lines, and accountability over the credit administration process;
(j) a review of the experience level of credit underwriting and administration management staff at least annually, and more frequently if necessary or if required by the OCC in writing to ensure management and staff have the requisite knowledge to perform their credit administration duties and actions to hire additional staff as needed;
(k) train management, loan officers, and credit staff basics of credit administration for loans, the role and authority of the Bank’s Credit Administration Officer/Manager, and any topic where knowledge gaps exist;
(l) internal, risk-based reviews of commercial lending relationships to support or revise current risk ratings on at least an annual basis;
(m) underwriting and ongoing requirements for loan participations purchased. Refer to OCC Bulletin 2020-81, “Credit Risk: Risk Management of Loan Purchase Activities”; and
(n) procedures specifically addressing safe and sound controls over disbursements of unfunded loans to ensure disbursements are in keeping with loan covenants, are being made with reasonable assurance of completion of work, delivery of material, receipt of applicable releases, and other such controls deemed necessary to protect the interest of the bank.
(2) By January 31, 2023, the Bank shall submit to the ADC for review and prior written determination of no supervisory objection an acceptable written supervisory loan-to- value program (SLTV Program) designed to ensure the Bank identifies, measures, monitors, and controls the Bank’s credit risk. The SLTV Program shall be consistent with safe and sound banking practices. Refer to the 12 CFR 34, appendix A to subpart D, “Interagency Guidelines for Real Estate Lending.” The SLTV Program shall, at a minimum, include:
(a) a review of the real estate portfolio to identify any loan in excess of SLTV limits at origination that remain in excess of the SLTV limits;
(b) the establishment of Board-approved safe and sound, formal loan-to-value limits for real estate loans whereby those loan-to-value limits do not exceed SLTV limits: annual re-evaluations and Board approval of loan-to- value limits whereby those loan-to-value limits do not exceed SLTV limits, and detailed analysis and written support of any proposed or actual changes to the loan-to-value limits with analyses of the credit risk that will result from the change;
(c) development and implementation of an action plan, approved by the Board, to address loans with loan-to-value ratios that exceeded SLTV limits at origination and remain in excess of the SLTV limits to conform to the limits set in subparagraph (2)(b) of this Article, including target reductions by month and strategies and procedures when loan-to-value limits or SLTVs approach or exceed Board-approved limits;
(d) development and implementation of heightened risk management practices for loans in excess of SLTV consistent with the safe and sound principles set forth in 12 CFR 34, appendix A to subpart D, “Interagency Guidelines for Real Estate Lending” for loans in excess of SLTV;
(e) policy addressing SLTV identification, monitoring, responsibilities, limits, reporting, and risk management;
(f) training for credit approval committee members, loan officers, and credit staff on SLTV and internal policy and processes; and
(g) reporting to the Board of loans and aggregate totals of non-1-4 family loans and total loans in excess of SLTV and percentage of total risk-based capital on at least a monthly basis.
(3) Effective as of the date of this Agreement, the Board shall ensure that all lending officers and staff comply with all lawsBank may only grant, rulesextend, regulationsrenew, Bank policies and proceduresalter, 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 or restructure any loan or other extension 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 thatafter:
(a) clear responsibilities, authority and lines of reporting are established in documenting 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 specific reason or purpose for the examination conducted as extension of September 30, 2009 (the “XXX”); and
c. take necessary action to maintain satisfactory credit risk management systemscredit;
(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 source of repayment in writing;
(iic) structuring repayment terms to correspond with the expected source of repayment;
(d) obtaining and documenting current and satisfactory credit information for all borrowers and guarantorsinformation, 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;
(iiie) assessing the liquidity of all borrowers determining and guarantors, which documenting whether the loan officer had verified as necessary complies with the Bank's loan policy, and if it does not comply, providing identification of the exception and sufficient justification to document capacitysupport waiving the policy exception;
(ivf) determining and documenting 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, consistent with Article V of this Agreement;; and
(v) obtaining an appraisal or evaluation as appropriate, consistent with Article VI of this Agreement;
(vih) documenting, with adequate supporting material, the value of collateral collateral, and properly perfecting the Bank’s 's lien on it where applicable;
(vii) conducting a thorough global cash flow analysis; and
(viii) ensuring that loan officers are held accountable for the requirements of this subparagraph.
(3) Loan officers shall draft credit memoranda to document the completion of the requirements of the program adopted pursuant to this Article.
(4) Upon receiving a Within fifteen (15) days following receipt of the ADC’s prior written determination of no supervisory objection from to the Assistant Deputy ComptrollerCredit Underwriting and Administration Program or to any subsequent amendment to the Credit Underwriting and Administration Program, the Board shall adopt and Bank management, subject to Board review and ongoing monitoring, shall immediately implement and thereafter ensure adherence to the programCredit Underwriting and Administration Program. The Board shall review the effectiveness of the Credit Underwriting and Administration Program at least annually, policies and procedures more frequently if necessary, or if required by this Articlethe OCC in writing, and amend the Credit Underwriting and Administration Program as needed or directed by the OCC. Any amendment to the Credit Underwriting and Administration Program must be submitted to the ADC for review and prior written determination of no supervisory objection.
(5) The Board shall take the necessary steps to ensure that current and satisfactory credit and proper collateral information is maintained on all loans. Within thirty fifteen (3015) days following receipt of notificationthe ADC’s prior written determination of no supervisory objection to the SLTV Program or to any subsequent amendment to the SLTV Program, the Board shall adopt and Bank management, subject to Board review and ongoing monitoring, shall immediately implement and thereafter ensure that adherence to the Bank takes all necessary actionsSLTV Program. The Board shall review the effectiveness of the SLTV Program at least annually, and maintains appropriate documentation of the actions taken, to obtain any missing credit or collateral information described in the XXX, in any internal or external loan reviewmore frequently if necessary, or in any listings of loans lacking such information provided to management if required by the National Bank Examiners at OCC in writing, and amend the conclusion SLTV Program as needed or directed by the OCC. Any amendment to the SLTV Program must be submitted to the ADC for review and prior written determination of an examinationno supervisory objection.
Appears in 1 contract
Samples: Compliance Agreement
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within thirty (30) days of the date of this Agreement, the Bank shall submit to the Assistant Deputy Comptroller for review and prior written determination of no supervisory objection a credit underwriting and administration program (“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 Program shall be consistent with safe and sound banking practices.
(2) The credit underwriting and administration program shall, at a minimum, include:
(a) policies that address acceptable loan types, terms, covenants, concentration limits, and collateral requirements and exceptions;
(b) a description of the types of credit information required from borrowers and guarantors prior to making a loan determination, including, annual audited statements, interim financial statements, personal financial statements, and tax returns with supporting schedules;
(c) procedures that require any extensions of credit are granted, by renewal or otherwise, only after obtaining the required credit information and adequately analyzing and documenting the borrower’s and guarantor’s cash flow, debt service requirements, contingent liabilities, global liquidity condition, and sensitivity analysis in support of the credit decision;
(d) procedures to identify and track all exceptions and efforts to mitigate or cure exceptions, including but not limited to financial exceptions, collateral exceptions, policy exceptions, and underwriting exceptions. The number of loans with exceptions, and their aggregate dollar value, shall be reported to the Board on a monthly basis. The Board shall establish aggregate exception level limits. The Bank shall consider each loan officer’s exceptions in conducting periodic performance reviews and compensation decisions;
(e) established criteria to limit the number and/or frequency of, and procedures to identify, track, and approve covenant waivers in accordance with the applicable loan agreements. The number of loans with covenant waivers, and their aggregate dollar value, shall be reported to the Board on a quarterly basis;
(f) established criteria to limit the number or frequency of, and procedures to identify, track, and approve extensions, renewals, or rewrites of existing extensions of credit. The number of loans that have been extended, renewed, or rewritten, and their aggregate dollar value, shall be reported to the Board on a quarterly basis and documented in the Board minutes;
(g) policies regarding the appropriateness of the capitalization of interest, which shall be prohibited unless doing so is conducted in a safe and sound manner. Refer to OCC Examining Circular 229 – Guidelines for Capitalization of Interest on Loans, and OCC Bank Accounting Advisory Series for guidance;
(h) procedures for the identification of, and accounting treatment for, nonaccrual loans that are consistent with the accounting requirements contained in the appropriate FFIEC’s Instructions for Preparation of Consolidated Reports of Condition and Income;
(i) specific assignment of responsibility and accountability over the credit administration process to ensure the Program developed pursuant to this Article is effectively implemented;
(j) the Bank must review the experience level of lending staff, on an annual basis, to ensure employees have the requisite knowledge to perform their duties, and must implement a plan to hire additional staff and/or provide periodic training where staffing or knowledge gaps exist;
(k) risk-based reviews of commercial lending relationships to support or revise current risk ratings on at least an annual basis; and
(l) an independent loan review process reporting directly to the Loan Committee.
(3) Effective as of the date of this Agreement, the Board shall ensure that all lending officers and staff comply with all lawsBank may not grant, rulesextend, regulationsrenew, 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 alter or restructure any loan or other extension 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 thatwithout:
(a) clear responsibilities, authority and lines of reporting are established in documenting 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 specific reason or purpose for the examination conducted as extension of September 30, 2009 (the “XXX”); and
c. take necessary action to maintain satisfactory credit risk management systemscredit;
(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 source of repayment in writing;
(iic) structuring the repayment terms to coincide with the expected source of repayment;
(d) obtaining current and satisfactory credit information for all borrowers and guarantorsinformation, 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;
(iiie) assessing the liquidity of all borrowers determining and guarantors, which documenting whether the loan officer had verified as necessary complies with the Bank's loan policy and if it does not comply, providing identification of the exception and ample justification to document capacitysupport waiving the policy exception;
(ivf) determining and documenting 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, consistent with Article V of this Agreement;
(v) obtaining an appraisal or evaluation as appropriate, consistent with Article VI of this Agreement;
(vih) documenting, with adequate supporting material, the value of collateral collateral; and properly perfecting the Bank’s 's lien on it where applicable;
(viii) conducting ensuring, prior to the release of collateral during the term of the loans, that there is either a thorough global cash flow analysisprincipal curtailment in an amount not less than the fair value of the collateral or written approval of the Loan Committee; and
(viiij) ensuring that loan officers are held accountable for obtaining the requirements of this subparagraph.
(3) Loan officers shall draft credit memoranda to document the completion written approval of the requirements Bank's loan committee or Board for any extension of the program adopted pursuant to this Article.
(4) 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, policies and procedures required by this Article.
(5) The Board shall take the necessary steps to ensure that current and satisfactory credit and proper collateral information is maintained on all loans. Within thirty (30) days of notification, the Board shall ensure that the Bank takes all necessary actions, and maintains appropriate documentation of the actions taken, to obtain any missing credit or collateral information described in the 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.greater than $150,000
Appears in 1 contract
Samples: Compliance Agreement
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 sixty (9060) daysdays of this Agreement, the Board shall develop review, revise, and submit thereafter ensure adherence 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 Loan Policy to include, at a minimum, policies and procedures to ensure thatrevisions relating to:
(a) clear responsibilitiescompliance with OCC Bulletin 2000-20, authority Uniform Retail Credit Classification and lines Account Management Policy, and OCC Bulletin 2005-9, Overdraft Protection Programs;
(b) expectations regarding required credit file information for each different lending product offered;
(c) limits for the number and dollar amount of reporting are established in credit, collateral, and underwriting exceptions allowable at any given time;
(d) a system for measuring exceptions against the Board approved limits, monthly Board monitoring of exception reports, and accountability by the lending areastaff for such exceptions that considers such exceptions in periodic performance reviews and compensation of such lending staff;
(e) requirements that lending officers appropriately analyze and document appropriate credit and collateral information on all extensions of credit (new, and that appropriate and qualified personnel oversee the lending functionmaturity extension, includingor renewal) including participations purchased, equal to or exceeding two hundred thousand dollars ($200,000), to include, at a minimum, that:
(i) documenting 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 specific reason or purpose for the examination conducted as extension of September 30, 2009 (the “XXX”); and
c. take necessary action to maintain satisfactory credit risk management systemscredit;
(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:
(iii) identifying the expected sources source of repayment in writing;
(iiiii) structuring the repayment terms to coincide with the expected source of repayment;
(iv) obtaining current and satisfactory credit information for all borrowers about the borrower and guarantorsany guarantor, including performing and documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources, sufficient to include all direct fully assess and indirect obligationsanalyze the borrower’s and guarantor’s cash flow, debt service requirements, contingent liabilities liabilities, and personal expenses;
(iii) assessing the global 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 Agreementcondition;
(v) obtaining an appraisal or evaluation as appropriatedetermining and documenting whether the loan complies with the Bank’s Loan Policy and if it does not comply, consistent with Article VI providing identification of this Agreementthe exception and ample justification to support waiving the policy exception;
(vi) making and documenting determinations regarding the customer’s ability to repay the credit on the proposed repayment terms, including an evaluation of both primary and secondary sources of repayment, as well as a global cash flow analysis that considers all customer debt service requirements;
(vii) verification of liquid assets that the Bank is relying on as a source of repayment;
(viii) documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank’s lien on it where applicable;
(viiix) conducting a thorough global cash flow analysisproviding an accurate risk assessment grade;
(x) ongoing requirements for obtaining and analyzing financial statements; and
(viiixi) ensuring ongoing requirements for obtaining periodic collateral inspections as appropriate;
(f) requirements relating to guarantor support;
(g) minimum loan covenants;
(h) maturity scheduling related to the anticipated source of repayment, the purpose of the loan, and the useful life of the collateral;
(i) a definition of the Bank’s trade area;
(j) guidelines and limitations for loans originating outside of the Bank’s trade area;
(k) guidelines for loans to insiders, including a statement that such loans will not be granted on terms more favorable than those offered to similar outside borrowers;
(l) guidelines and limitations on concentrations of credit, including by type of credit, geographic location, and source;
(m) a limitation on the type and size of loans that may be made by loan officers are held accountable without prior approval by the Board or a committee established by the Board for this purpose;
(n) guidelines for participations as set forth in Banking Circular 181 (Revised), dated August 2, 1984, and the requirements of this subparagraph12 C.F.R. Part 34, and a prohibition against purchasing any participation for which the Bank does not have the knowledge, skills or ability to properly underwrite on its own;
(o) a system for identifying and monitoring legal lending limit compliance, and combination rules;
(p) guidelines for loan stress testing and/or sensitivity analysis to quantify the impact of common stresses; and
(q) procedures for periodic review of the Bank’s adherence to the revised lending policy.
(3) Loan officers shall draft credit memoranda to document the completion of the requirements of the program adopted pursuant to this Article.
(4) 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, policies and procedures required by this Article.
(5) The Board shall take the necessary steps to ensure that current and satisfactory credit and proper collateral information is maintained on all loans. Within thirty (30) days of notificationthis Agreement, the Board shall ensure that the Bank takes all necessary actions, and maintains appropriate documentation of the actions taken, to obtain obtains any missing credit or and collateral information described in the Report of Examination for the examination conducted as of June 30, 2010 and updated through September 30, 2010 as appropriate (the “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 sixty (60) days of this Agreement, the Board shall revise, adopt, implement, and thereafter ensure Bank adherence to a written program of policies and procedures designed to aggregate and track exceptions to the Bank Loan Policy and underwriting guidelines for all loans. This includes at a minimum, monthly Board monitoring of policy exception reports that track aggregate number and dollar amounts of loans with material policy exceptions by type of loan and loan officer.
Appears in 1 contract
Samples: Banking Agreement
CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within ninety (90) days of the date of this Agreement, the Bank shall submit to the ADC for review and prior written determination of no supervisory objection a commercial and retail credit underwriting and administration program (“Credit 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 Program shall be consistent with safe and sound banking practices.
(2) The Credit Program shall, at a minimum, include:
(a) policies that address acceptable loan types, terms, covenants, concentration limits, and collateral requirements and exceptions;
(b) a description of the types of credit information required from borrowers and guarantors prior to making a loan determination, including financial statements and tax returns with supporting schedules;
(c) procedures that require any extensions of credit are granted, by renewal or otherwise, only after obtaining the appropriate credit information and adequately analyzing and documenting the borrower’s and guarantor’s ability to repay (including cash flow), debt service requirements, contingent liabilities, global liquidity condition, and sensitivity analysis in support of the credit decision;
(d) procedures to identify and track all exceptions and efforts to mitigate or cure exceptions, including but not limited to financial, collateral, policy, and underwriting exceptions;
(e) procedures for the identification of, and accounting treatment for, nonaccrual loans that are consistent with the accounting requirements contained in the appropriate Federal Financial Institutions Examination Council’s (“FFIEC”) Instructions for Preparation of Consolidated Reports of Condition and Income;
(f) specific assignment of responsibility and accountability over the credit administration process to ensure the Credit Program developed pursuant to this Article is effectively implemented;
(g) risk-based reviews of lending relationships to support or revise current risk ratings on at least an annual basis;
(h) an independent loan review process reporting directly to the Board; and
(i) requirements that the loan committee makes the final decision for loans requiring the committee’s approval before funding the loan or providing a legal commitment to lend.
(3) Effective as of the date of this Agreement, the Board shall ensure that all lending officers and staff comply with all lawsBank may not grant, rulesextend, regulationsrenew, 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 alter or restructure any loan or other extension 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 thatwithout:
(a) clear responsibilities, authority and lines of reporting are established in documenting 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 specific reason or purpose for the examination conducted as extension of September 30, 2009 (the “XXX”); and
c. take necessary action to maintain satisfactory credit risk management systemscredit;
(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 source of repayment in writing;
(iic) structuring the repayment terms to coincide with the expected source of repayment;
(d) obtaining current and satisfactory credit information for all borrowers and guarantorsinformation, 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;
(iiie) assessing analyzing the liquidity of all borrowers borrower’s operations, industry, risk impacting the borrower, and guarantors, which the loan officer had verified as necessary to document capacityany mitigating factors;
(ivf) concluding on the financial condition, trends, and reasons for change in the borrower’s financial information (cash flow, liquidity, leverage, etc.);
(g) summarizing compliance with financial or reporting covenants for credit actions related to existing credit relationships;
(h) 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;
(i) determining and documenting the customer's ability to repay the credit on the proposed repayment terms;
(j) 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;
(vik) documenting, with adequate supporting material, the value of collateral collateral; and properly perfecting the Bank’s 's lien on it where applicable;
(vii) conducting a thorough global cash flow analysis; and
(viiil) ensuring that loan officers are held accountable for obtaining the requirements of this subparagraph.
(3) Loan officers shall draft credit memoranda to document the completion written approval of the requirements Bank's loan committee or Board for any extension of credit as required by the program adopted pursuant to this ArticleBank’s Credit Program.
(4) Upon receiving a Within fifteen (15) days following receipt of the ADC’s written determination of no supervisory objection from to the Assistant Deputy ComptrollerCredit Program, the Board shall adopt and Bank management, subject to Board review and ongoing monitoring, shall immediately implement and thereafter ensure adherence to the program, policies Credit Program and procedures required by this Articleany amendments or revisions thereto.
(5) The Board shall take the necessary steps to ensure that current and satisfactory credit and proper collateral information is maintained on all loans. Within thirty (30) days of notification, the Board shall ensure that the Bank takes all necessary actions, and maintains appropriate documentation of the actions taken, to obtain any missing credit or collateral information described in the 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.
Appears in 1 contract
Samples: Compliance Agreement
