Common use of CREDIT UNDERWRITING AND ADMINISTRATION Clause in Contracts

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. 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) Within sixty (60) days of the date 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 and exceptions to the appraisal requirements specified in paragraph (5) of this Article. This includes at a minimum, monthly Board monitoring of policy exceptions reports that track aggregate number and dollar amount of loans with material underwriting exceptions by type of loan and by loan officer. (3) Effective as of the date of this Agreement, the Bank may not grant, extend, renew, alter or restructure any commercial or commercial real estate loan or other extension of credit without: (a) documenting Documenting the specific reason or purpose for the extension of credit; (b) identifying Identifying the primary expected source of repayment in writing and lien statuswriting; (c) structuring Structuring the repayment terms to coincide with the expected source of repayment; (ed) obtaining 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, including a detailed analysis of the financial support of significant guarantors; (e) Performing a consistent and complete overview of the borrower’s other obligations (at both this Bank and other financial institutions) to analyze and determine the borrower’s overall debt load and ensure a robust global debt service analysis; (f) determining Determining and documenting whether the loan complies with the Bank’s Loan Policy Policy, and if it doesn’t does not comply, providing identification of the exception and ample justification to support waiving the policy exception; (g) making and documenting the determinations made Documenting a determination regarding the customer’s ability to repay the credit on the proposed repayment terms; (h) providing Providing an accurate risk assessment gradegrade according to the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller’s Handbook, and recognizing nonaccrual status for each credit according to the guidelines set forth in the Instructions for Preparation of Consolidated Reports of Condition and Income (“Call Report”); (i) documenting Documenting, with adequate supporting material, the value of collateral and collateral type for each loan properly perfecting proper perfection of the Bank’s lien on it where applicableapplicable collateral; and (j) performing adequate documented Obtaining the written approval of the Executive Loan Committee for any commercial real estate credits and any other credit analysis for participation loans greater than $300,000. (4) Within thirty (30) days of the date of this Agreement, the Board shall revise, adopt, implement and thereafter ensure Bank adherence to a written program of policies and procedures designed to manage the risk in the Bank’s commercial real estate (“CRE”) loan portfolio in accordance with OCC’s Banking Circular 181(Revisedthe guidelines in OCC Bulletin 2006-46, Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices (dated December 6, 2006). The written program shall, dated August 2at a minimum, 1984include: (a) Procedures to strengthen credit underwriting in the CRE portfolio, including expanded loan presentations and analysis providing for: (i) Detailed project plans; (ii) Timeframes for project completion; (iii) Detailed market analysis; (iv) Stress testing of significant property and lending assumptions, including, as applicable, stress testing of interest rates, capitalization rates, absorption and pricing data, occupancy/vacancy rates, and rental rates on non-owner occupied properties; and (v) Detailed analysis of the financial support of significant guarantors; (b) The establishment of diversified CRE concentration limits; (c) Strategies and procedures, including appropriate CRE loan growth restrictions, to ensure that CRE concentrations conform with established limits; (d) Monthly monitoring of concentration reports that stratify CRE portfolio by product type, locality and other meaningful measures; (e) Monthly or more frequent reports, if necessary, to senior management and the loan committee of project status, including: (i) Development status; (ii) Comparison of sales activity and development costs to budget; (iii) Current market conditions and activity; (iv) Level of interest reserve and comparison to budget; and (v) Any other significant comments on development. (5) Within thirty (30) days, the Board shall revise, adopt, implement and thereafter ensure Bank adherence to a written program of policies and procedures designed to ensure the Bank obtains appraisals in compliance with USPAP, 12 C.F.R. Part 34, Advisory Letter 2003-9, and OCC Bulletin 2005-6. Specific to commercial real estate, the written program shall, at a minimum, include: (a) The required use of a standard appraisal form for ordering all appraisals; (b) The ordering of appraisals, independent of the lending function; (c) The use of Board approved appraisers only; (d) Expectations regarding the selection of comparable sales, and when income or cost analysis should be used for income producing properties; (e) Procedures to ensure that an appraisal or evaluation is obtained when: (i) There has been material deterioration in market conditions or physical aspects of the property which would threaten the institution’s collateral protection; or (ii) There has been deterioration in the borrower’s financial condition and/or credit standing; (f) The establishment of a policy requiring a meaningful review, independent of the lender, of all appraisals to include analysis commensurate with the type, size and complexity of the property being appraised; and (g) The establishment of a tickler system for tracking appraisals ordered, received, returned, and reviewed. (6) A copy of the various written programs required pursuant to this Article shall be forwarded to the Assistant Deputy Comptroller immediately upon of completion.

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 modify or restructure any loan or other extension of credit (including participations), or purchase any new loan participation, 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 primary expected source of repayment in writing and lien statuswriting; (c) structuring the repayment terms to coincide with the expected source of repayment; (ed) obtaining current and satisfactory verified credit information, including performing and documenting analysis of credit information and information, a detailed cash flow analysis of all expected repayment sources, and a global cash flow analysis to evaluate the repayment ability of borrowers with multiple projects; (fe) determining and documenting whether the loan complies with the Bank’s Loan Policy and if it doesn’t does not comply, providing identification of the exception and ample justification to support waiving the policy exception; (gf) making and documenting the determinations made regarding the customer’s ability to repay the credit on the proposed repayment terms; (hg) providing an accurate risk assessment gradegrade and proper accrual status for each credit; (ih) documenting 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 (ji) performing adequate documented credit analysis for participation loans in accordance with OCCobtaining the written approval of the Bank’s Banking Circular 181(Revised)Loan Committee or Board. (3) Within sixty (60) days of this Agreement, dated August 2the Board shall take the necessary steps to eliminate credit, 1984collateral, and 12 C.F.R. Part 34Bank Loan Policy exceptions, to include, at a minimum, the development of policies and procedures to hold loan officers accountable for such exceptions and that considers such exceptions in their periodic performance reviews and compensation of such loan officers.

CREDIT UNDERWRITING AND ADMINISTRATION. (1) Effective as of the date Within sixty (60) days of this Agreement, the Board shall take the necessary steps to ensure that all lending officers comply with all laws, rules, regulations, the Bank policies and procedures, develops safe and sound banking credit risk management and administration practices, and fiduciary duties. The Board shall ensure that there is to include at a program in place that addressesminimum: (a) requirements policies and procedures that lending officers appropriately analyze, document, define the Bank’s trade area and communicate appropriate credit guidelines and collateral informationlimitations for originating loans outside of the Bank’s trade area; (b) requirements policies and procedures that lending officers receive training on appropriate prohibit the origination or purchase of any loan gradingor extension of credit for which the Bank does not have the knowledge, skills, or ability to properly underwrite and control; (c) requirement to establish a training policy for loan officers to ensure they understand policy requirements; and (d) establishment of a tracking system policies and procedures 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 does not grant, extend, renew, alter modify or restructure any loan or other extension of credit credit, or purchase any loan participation, equal to or exceeding seventy-five thousand dollars ($75,000), without: (ai) documenting the specific reason or purpose for the extension of credit; (bii) identifying the primary expected source of repayment in writing and lien statuswriting; (ciii) structuring the repayment terms to coincide with the expected source of repaymentrepayment and the useful life of the collateral; (eiv) 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, including global cash flow analysis, evaluation of contingent liabilities and verification of liquid assets, where appropriate; (fv) determining and documenting whether the loan complies with the Bank’s Loan Policy and if it doesn’t does not comply, providing identification of the exception and ample justification to support waiving the policy exception; (gvi) making and documenting the determinations made regarding the customer’s ability to repay the credit on the proposed repayment terms; (hvii) providing an accurate risk assessment gradegrade consistent with the guidelines set forth in Rating Credit Risk, A-RCR, of the Comptroller’s Handbook and based upon definitive objective and subjective criterion; (iviii) documenting determining the proper accrual status for each credit; (ix) obtaining a real estate appraisal or evaluation as appropriate; (x) 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; (jxi) performing adequate documented credit analysis for participation loans determining and documenting that any participations purchased comply with safe and sound banking practices, guidelines set forth in accordance with OCC’s Banking Circular 181(Revised181 (Revised), dated August 2, 1984, and the requirements of 12 C.F.R. Part 34; (xii) performing loan stress testing and/or sensitivity analysis for agricultural loan relationships totaling two-hundred-fifty thousand dollars ($250,000) or more to quantify the impact of common stresses such as varying input costs, commodity prices, and interest rates; and (xiii) obtaining the written approval of the Bank’s Loan Committee or Board. (d) policies and procedures to ensure that all commercial loans, commercial real estate loans, and agricultural loans and participations purchased, are properly monitored to include periodic receipt (no less than annually), analysis and documentation of sufficient financial, operating and collateral information to measure and monitor the borrower’s financial condition and repayment ability, and assess the Bank’s collateral position; (e) policies and procedures for on-site inspections with written reports detailing the condition of collateral, including but not limited to, farm assets and farm operations at least annually, to include independent inspections for aggregate borrowings exceeding $250,000; (f) policies and procedures to ensure that the Bank’s retail credits are charged-off in conformance with OCC Bulletin 2000-20, Uniform Retail Credit Classification and Account Management Policy; (g) policies and procedures designed to ensure compliance with 12 C.F.R. Part 34 and the “Interagency Appraisal and Evaluation Guidelines,” dated December 10, 2010, to include at a minimum: (i) the establishment of criteria for obtaining and reviewing updated appraisals, new appraisals, and evaluations; (ii) the development of procedures to ensure that appraisals, updates and evaluations are ordered in a timely manner; and (iii) the development of procedures to ensure that appraisals, updates and evaluations are reviewed in a timely manner; (h) policies and procedures for maintaining an appropriate Allowance for Loan and Lease Losses (“Allowance”) in accordance with GAAP and the “Interagency Policy Statement on the Allowance for Loan and Lease Losses,” dated December 13, 2006 (OCC Bulletin 2006-47), and July 20, 2001 (OCC Bulletin 2001-37); (i) policies and procedures that include limits and provide for Board monitoring of concentrations stratified by product type, locality, and other meaningful measures, and that provide information in both dollar volume and as a percentage of the Bank’s capital; (j) policies and procedures to ensure Other Real Estate Owned (OREO) is managed in accordance with 12 U.S.C. § 29 and 12 C.F.R. Part 34, and is accounted for consistent with GAAP and the Call Report instructions; and (k) policies and procedures that establish limits for the number and dollar amount of credit, collateral, and underwriting exceptions allowable at any one time, and a system for measuring exceptions against Board approved limits, monthly Board monitoring of exception reports, and accountability by the lending staff for such exceptions that considers such exceptions in periodic performance reviews and compensation of such lending staff. (2) The Board shall take the necessary steps to ensure that current and satisfactory credit and collateral information is maintained on all loans. Within thirty (30) days of notification, the Board shall ensure that the Bank obtains any missing credit or collateral information described in the XXX, 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.