Common use of CREDIT UNDERWRITING AND ADMINISTRATION Clause in Contracts

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 applicable, and (vi) prohibition of capitalization of interest 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 related safe and sound principles. (c) enhanced reporting to the Board, no less than quarterly, and documented in the Board minutes, to identify, track, and document: (i) loan extension volume and trends by loan officer, dollar volume, and individual borrower, (ii) status of the annual review schedule, and (iii) status of credit-related insurance documentation. (3) Upon adoption of 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 Credit Underwriting and Administration Program and any amendments thereto. The Board shall review the effectiveness of the Credit Underwriting and Administration Program at least annually, and more frequently if necessary or if required by the OCC in writing, and amend the Credit Underwriting and Administration Program as needed or directed by the OCC.

CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within one hundred twenty thirty (12030) days of the date of this Agreement, Agreement the Board Bank shall adopt submit to the Assistant Deputy Comptroller 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. (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 address acceptable loan types, terms, covenants, concentration limits, and collateral requirements and exceptions; (iib) describing a description of the borrowertypes of credit information required from borrowers and guarantors prior to making a loan determination, guarantors, and business activities in detail; (iii) obtaining the required and up-to-date credit information, as applicable (e.g., including annual audited statements, interim financial statements, personal financial statements, and tax returns with supporting schedules); (ivc) procedures that require any extensions of credit are granted, by renewal or otherwise, only after obtaining the required credit information and 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 analysisglobal liquidity condition, and collateral value and support, as applicable; andsensitivity analysis in support of the credit decision; (vd) ensuring credits with potential or wellprocedures to ensure the Bank’s adherence to safe and sound real estate lending practices, including the establishment and adherence to loan-defined weaknesses at underwriting are appropriately risk rated based on accurate informationto- value limits and the establishment of an aggregate limit for loan-to-value policy exceptions as a percentage of capital. See 12 C.F.R. Part 34, Subpart D, Appendix A – Interagency Guidelines for Real Estate Lending, for guidance. (be) procedures to identify and track all exceptions and efforts to mitigate or cure exceptions, including but not limited to financial exceptions, collateral exceptions, policy and procedures that establish Boardexceptions, loan-approved guidance regarding: (i) proper cash flow analysis to-value exceptions 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 appropriatereal estate loans, and documentation requirements to support extension rationale, (iv) reasonable annual review thresholds for credit analysts and loan officers, including requirements for reviews underwriting exceptions. The number 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 applicable, and (vi) prohibition of capitalization of interest unless doing so is conducted in a safe and sound manner. Refer to OCC Examining Circular 229 – Guidelines for Capitalization of Interest on Loansloans with exceptions, and OCC Bank Accounting Advisory Series for related safe and sound principles. (c) enhanced reporting their aggregate dollar value, shall be reported to the Board, no less than quarterly, and documented in the Board minutes, to identify, track, and document: (i) loan extension volume and trends by loan officer, dollar volume, and individual borrower, (ii) status of the annual review schedule, and (iii) status of credit-related insurance documentation. (3) Upon adoption of 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 Credit Underwriting and Administration Program and any amendments theretoon a quarterly basis. The Board shall review the effectiveness of the Credit Underwriting and Administration Program at least annually, and more frequently if necessary or if required by the OCC in writing, and amend the Credit Underwriting and Administration Program as needed or directed by the OCC.establish aggregate exception level

CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within one hundred twenty sixty (12060) days of the date of this Agreement, the Board shall adopt an acceptable develop, implement, and thereafter ensure Bank adherence to a written program to improve the Bank's 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 mannerprocess. The Credit Underwriting program shall include, at a minimum: (a) guidelines for evaluating and Administration Program shall be 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 safe and sound banking practicesthe accounting requirements contained in the Call Report Instructions; and (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. (2) The Credit Underwriting Upon adoption, a copy of the program shall be forwarded to the Assistant Deputy Comptroller for review and Administration Program shalldetermination of no supervisory objection. (3) Within ninety (90) days of the date of this Agreement, at a minimumthe Board shall ensure that the Bank obtains current and satisfactory credit information on all loans lacking such information, includeincluding 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 during any examination. (4) Within ninety (90) days of the date of this Agreement, 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 during any examination. (5) Effective immediately, the Bank may grant, extend, renew, alter or restructure any loan or other extension of credit only after: (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 specific reason or purpose for the extension 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.credit; (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 identifying the expected source 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 applicable, and (vi) prohibition of capitalization of interest unless doing so is conducted repayment 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 related safe and sound principles.writing; (c) enhanced reporting structuring the repayment terms to coincide with the expected source of repayment; (d) obtaining and analyzing current and satisfactory credit information, including cash flow analysis, where loans are to be repaid from operations; (e) documenting, with adequate supporting material, the value of collateral and properly perfecting the Bank's lien on it where applicable; (6) Failure to obtain the information in (5)(d) and (5)(e) shall require a majority of the full Board (or a delegated committee thereof) to certify in writing the specific reasons why obtaining and analyzing the information in (5)(d) and (5)(e) would be detrimental to the Board, no less than quarterly, and documented best interests of the Bank. A copy of the Board certification shall be maintained in the Board minutes, to identify, track, and document: (i) loan extension volume and trends by loan officer, dollar volume, and individual borrower, (ii) status credit file of the annual review schedule, and (iii) status affected borrower(s). The certification will be reviewed by this Office in subsequent examinations of credit-related insurance documentationthe Bank. (37) Upon adoption of the Credit Underwriting and Administration Program, the The Board shall adopt ensure that the Bank has policies, processes, personnel, and Bank management, subject control systems to Board review ensure implementation of and ongoing monitoring, shall immediately implement and thereafter ensure adherence to the Credit Underwriting and Administration Program and any amendments thereto. The Board shall review the effectiveness of the Credit Underwriting and Administration Program at least annually, and more frequently if necessary or if required by the OCC in writing, and amend the Credit Underwriting and Administration Program as needed or directed by the OCCprogram developed pursuant to this Article.

CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within one hundred twenty sixty (12060) days of the date of this Agreement, the Board shall adopt an acceptable a 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 address acceptable loan types, terms, covenants, covenant waivers, concentration limits, and collateral requirements and exceptions; (iib) describing a description of the borrowertypes of credit information required from borrowers and guarantors prior to making a loan determination, guarantors, and business activities in detail; (iii) obtaining the required and up-to-date credit information, as applicable (e.g., including annual audited statements, interim financial statements, personal financial statements, and tax returns with supporting schedules), and reasonable policies and procedures specific to asset dissipation underwriting for mortgage loans; (ivc) procedures that require any extensions of credit be granted, by renewal or otherwise, only after obtaining the required credit information and 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 analysisglobal liquidity condition, and sensitivity analysis in support of the credit decision, including policies to ensure sufficient documentation of information and analysis to support collateral value valuations and supporta risk-based approach to review of collateral valuations; (d) established aggregate exception level limits; the Bank shall consider each loan officer’s exceptions in conducting periodic performance reviews and compensation decisions; (e) specific assignment of responsibility and accountability over the credit administration process to ensure the Credit Underwriting and Administration Program developed pursuant to this Article is effectively implemented; (f) review of lending staff experience levels, as applicableon an annual basis, to ensure employees have the requisite knowledge to perform their duties, and implementation of a plan to hire additional staff and/or provide periodic training where staffing or knowledge gaps exist; (g) risk-based reviews of commercial lending relationships to support or revise current risk ratings on at least an annual basis; and (vh) ensuring credits with potential an independent loan review process reporting directly to the Board that, at a minimum, assesses the appropriateness of credit risk ratings, adequacy of controls and covenants to monitor loan performance, and opines on credit underwriting. (3) Effective as of the date of this Agreement, the Bank may not grant, extend, renew, alter, or well-defined weaknesses at underwriting are appropriately risk rated based on accurate information.restructure any loan or other extension of credit without: (a) documenting the specific reason or purpose for the extension of credit; (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 identifying the expected source 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 applicable, and (vi) prohibition of capitalization of interest unless doing so is conducted repayment 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 related safe and sound principles.writing; (c) enhanced reporting structuring the repayment terms to coincide with the Board, no less than quarterly, and documented in the Board minutes, to identify, track, and document:expected source of repayment; (id) loan extension volume obtaining current and trends by loan officersatisfactory credit information, dollar volume, including performing and individual borrower,documenting analysis of credit information and a detailed cash flow analysis of all expected repayment sources; (iie) determining and documenting whether the loan complies with the Bank’s loan policy and, if it does not comply, identifying the exception and providing ample justification to support waiving the policy exception; (f) 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 of the annual review schedule, for each credit; and (iiih) status documenting the value of credit-related insurance documentationcollateral, with adequate supporting material including a current appraisal or evaluation as appropriate, and properly perfecting the Bank’s lien on it where applicable. (34) Upon adoption of 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 Credit Underwriting and Administration Program and any amendments thereto. The Board shall review the effectiveness of the Credit Underwriting and Administration Program at least annually, and more frequently if necessary or if required by the OCC in writing, and amend the Credit Underwriting and Administration Program as needed or directed by the OCC. The Board shall forward a copy of the adopted Credit Underwriting and Administration Program, and any subsequent amendments thereto, to the Assistant Deputy Comptroller within thirty (30) days of adoption.

CREDIT UNDERWRITING AND ADMINISTRATION. (1) Within one hundred twenty thirty (12030) days of the date of this Agreement, the Board Bank shall adopt submit to the Assistant Deputy Comptroller 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. (2) The Credit Underwriting and Administration Program shall, at a minimum, include: (a) policies that provide clear and prudent underwriting guidance for unsecured and under-secured lending; (b) policies that detail critical underwriting exception definitions and covenant requirements and expand exception coding to include a comprehensive list of possible exception types; (c) procedures to identify and report all underwriting exceptions on the bank’s loan exception report to be provided to the Board on at least a monthly basis; (d) procedures that require any extensions provide for completion of credit are granted, by renewal or otherwise, only after loan officers a thorough risk assessment for all under-secured loans; (e) implement procedures for the identification of supervisory loan-to-value exceptions and credit administration staffensure complete and accurate reporting of such exceptions to the Board; (f) procedures to identify and track exceptions related to performance covenants, as applicable; (g) procedures to ensure that equity sources are fully documented at underwriting with detailed sources and uses of funds analysis; (h) policies for construction lending that provide clear guidance for sound construction controls, provide accurate including upfront equity minimums and sufficient information for approvers to make informed lending decisionswhat constitutes equity, including:guidance on independent monitoring/inspections, monitoring of third parties, disbursement of funds, and cost overrun funding; (i) addressing acceptable loan typesprocedures for construction lending that provide for internal controls that include, terms, covenants, concentration limits, but are not limited to monitoring of funds against the sworn construction statement; obtaining monitoring reports when third parties are controlling construction draws; and collateral requirements ensuring independence with inspections and exceptionsdisbursement of funds; (iij) describing policies that formally identify existing loan commitments and new extensions of credit to the borrower, guarantors, and business activities in detailsame borrower when determining lending authority; (iiik) obtaining policies that require approval from 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 applicableChief Credit Officer if loan officers are permitted to “stack” multiple loan authorities; and (vl) ensuring credits with potential or well-defined weaknesses at underwriting are appropriately risk rated based on accurate information. (b) policy and procedures an independent loan review process reporting directly to the Board that establish Board-approved guidance regardingprovides for: (i) proper i. sufficient frequency and coverage to comply with bank policy; ii. a scope that includes, at a minimum, risk rating accuracy, underwriting practice analysis, exception identification, credit concentrations, and legal lending limit and insider lending compliance; iii. independent sample selection; and iv. independent financial and 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 verify the life accuracy of the loan, as applicable, and (vi) prohibition of capitalization of interest 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 related safe and sound principles. (c) enhanced reporting to the Board, no less than quarterly, and documented in the Board minutes, to identify, track, and document: (i) loan extension volume and trends by loan officer, dollar volume, and individual borrower, (ii) status of the annual review schedule, and (iii) status of credit-related insurance documentationBank’s analysis. (3) Upon adoption Within thirty (30) days following receipt of the Assistant Deputy Comptroller’s written determination of no supervisory objection to the Credit 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 Credit Underwriting and Administration Program and any amendments theretoProgram. The Board shall review the effectiveness of the Credit Underwriting and Administration Program at least annually, and more frequently if necessary or if required by the 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 Assistant Deputy Comptroller for review and prior written determination of no supervisory objection.