Common use of LOAN REVIEW Clause in Contracts

LOAN REVIEW. (1) The Board shall review, revise, and thereafter ensure adherence to a Loan Review Program, that at a minimum: (a) Assigns risk ratings on credits reviewed that are consistent with the guidelines set forth in “Rating Credit Risk” and “Allowance for Loan and Lease Losses” booklets of the Comptroller’s Handbook; (b) Operates independently from Bank management and that specifically prohibits management from overturning any downgrades made or recommended by Loan Review; (c) Is adequately staffed; and (d) Recognizes loan losses and records charge-offs in a timely manner in accordance with Generally Accepted Accounting Principles (“GAAP”). (2) The Loan Review Program shall require that a written report be submitted to the Board after each review, but at least quarterly. Such reports shall include, at a minimum, comments and conclusions regarding: (a) The loan review scope and coverage parameters; (b) The overall quality of loan and lease portfolios reviewed; (c) The identification, type, rating, and amount of problem loans and leases, including grading differences; (d) The identification, type and amount of charged off loans; (e) The identification and amount of delinquent loans and leases; (f) The identification and amount of performing loans that have extended terms; (g) The identification of credit and collateral documentation exceptions; (h) The identification and status of credit related violations of law, rule or regulation; (i) Loans and leases identified as exceptions to the Bank’s Loan Policy; (j) The identity of the loan officer who originated each loan reported in accordance with subparagraphs (c) through (i) of this Paragraph; and (k) Any recommendations for improvements. (3) The revised Loan Review Program shall also require an annual report to the Board containing an independent reviewer’s assessment of the Bank’s systems to: (a) Accurately identify and risk rate problem credits based on lending officer submissions; (b) Measure, monitor and control risk in significant credit concentrations; (c) Evaluate the repayment ability of real estate construction and development borrowers with multiple projects; (d) Evaluate guarantor support of real estate construction and development projects; (e) Monitor compliance with the Bank's lending policies and applicable laws, rules, and regulations; and (f) Monitor and control the volume of credit and collateral documentation exceptions. (4) A written description of the Loan Review Program called for in this Article shall be forwarded to the Assistant Deputy Comptroller upon implementation. (5) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the revised Loan Review Program developed pursuant to this Article. (6) The Board shall evaluate the internal loan review report(s) and shall ensure that immediate, adequate, and continuing remedial action, if appropriate, is taken upon all findings noted in the report(s). (7) Within sixty (60) days of the date of this Agreement, the Bank shall engage an independent, external loan review. The purpose of the independent, external loan review shall be to verify the accuracy of internal risk ratings, with specific emphasis on and beginning with the construction and land development portfolios. Subsequently, external loan reviews shall be conducted each quarter on other segments of the loan portfolio until the Loan Review Program required pursuant to this Article is fully implemented. The scope of the independent, external loan reviews shall be based on the Board’s and management’s assessments of portfolio risk. Upon completion, all external loan review reports shall be submitted to the Board for review and approval. (8) By June 30, 2008, the Bank, using any combination of qualified internal or external resources, shall complete a loan review of all construction and land development loans greater than two hundred fifty thousand dollars ($250,000).

LOAN REVIEW. (1) The Board Within sixty (60) days, the Association shall reviewadopt a formal loan review policy that provides comprehensive detail regarding the necessary qualifications of loan review personnel, reviseestablishes reporting criteria including the frequency and scope of reviews, and thereafter ensure adherence to a Loan Review Program, that at a minimumensures the loan review function incorporates the following: (a2) Assigns risk ratings on credits reviewed that are Within sixty (60) days, the Board shall establish an effective, independent and on-going loan review system to review, at least quarterly, the Association's loan and lease portfolios to assure the timely identification and categorization of problem credits. The system shall provide for a written report to be filed with the Board after each review and shall use a loan and lease grading system consistent with the guidelines set forth in “Rating Credit Risk” OTS CEO Memo 140, OTS Examination Handbook Section 260, and “the Interagency Policy Statement on the Allowance for Loan and Lease Losses” booklets of the Comptroller’s Handbook; Losses (b) Operates independently from Bank management and that specifically prohibits management from overturning any downgrades made or recommended by Loan Review; (c) Is adequately staffed; and (d) Recognizes loan losses and records charge-offs in a timely manner in accordance with Generally Accepted Accounting Principles (“GAAP”December 2006). (2) The Loan Review Program shall require that a written report be submitted to the Board after each review, but at least quarterly. Such reports shall include, at a minimum, comments and conclusions regarding: (a) The the overall quality of the loan review scope and coverage parameterslease portfolios; (b) The overall quality of loan and lease portfolios reviewed; (c) The the identification, type, rating, and amount of problem loans and leases, including grading differences; (dc) The identification, type and amount of charged off loans; (e) The the identification and amount of delinquent loans and leases; (fd) The identification and amount of performing loans that have extended terms; (g) The identification of credit and collateral documentation exceptions; (he) The the identification and status of credit related violations of law, rule or regulation; (if) Loans and leases identified as exceptions to the Bank’s Loan Policy; (j) The identity of the loan officer who originated each loan reported in accordance with subparagraphs (cb) through (ie) of this Paragraphthe Article; (g) concentrations of credit; (h) loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Association; and (ki) Any recommendations for improvementsloans and leases not in conformance with the Association's lending and leasing policies, and exceptions to the Association’s lending and leasing policies. (3j) The revised Loan Review Program shall also require an annual report to the Board containing an independent reviewer’s assessment accrual status of the Bank’s systems to: (a) Accurately identify and risk rate problem credits based on lending officer submissionsloans under review; (bk) Measure, monitor and control risk in significant credit concentrations;the adequacy of impairment analyses. (cl) Evaluate the repayment ability of real estate construction and development borrowers with multiple projects; (d) Evaluate guarantor support of real estate construction and development projects; (e) Monitor system for monitoring compliance with the BankAssociation's lending policies and applicable laws, rules, and regulationsregulations pertaining to the Association's lending function; and (f) Monitor and control the volume of credit and collateral documentation exceptions. (43) A written description of the Loan Review Program program called for in this Article shall be forwarded to the Assistant Deputy Comptroller upon implementation. (5) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the revised Loan Review Program developed pursuant to this Article. (64) The Board shall evaluate the internal loan and lease review report(s) and shall ensure that immediate, adequate, and continuing remedial action, if appropriate, is taken upon all findings noted in the report(s). (75) Within sixty (60) days A copy of the date of this Agreementreports submitted to the Board, the Bank shall engage an independent, external loan review. The purpose as well as documentation of the independentaction taken by the Association to collect or strengthen assets identified as problem credits, external loan review shall be preserved in the Association. (6) The Board shall ensure that the Association has processes, personnel, and control systems to verify ensure implementation of and adherence to the accuracy of internal risk ratings, with specific emphasis on and beginning with the construction and land development portfolios. Subsequently, external loan reviews shall be conducted each quarter on other segments of the loan portfolio until the Loan Review Program required program developed pursuant to this Article is fully implemented. The scope of the independent, external loan reviews shall be based on the Board’s and management’s assessments of portfolio risk. Upon completion, all external loan review reports shall be submitted to the Board for review and approvalArticle. (8) By June 30, 2008, the Bank, using any combination of qualified internal or external resources, shall complete a loan review of all construction and land development loans greater than two hundred fifty thousand dollars ($250,000).

LOAN REVIEW. (1) The Within ninety (90) days, the Board shall reviewestablish an effective, revise, independent and thereafter ensure adherence ongoing loan review system to review annually the Bank's loan and lease portfolios to assure the timely identification and categorization of problem credits. The scope of the review shall include at least 65% coverage of the commercial and commercial real estate portfolios and a Loan Review Program, that at 25% sample of the residential portfolio. The system shall provide for a minimum: (a) Assigns risk ratings on credits reviewed that are written report to be filed with the Board after each review and shall use a loan and lease grading system consistent with the guidelines set forth in “Rating Credit Risk” and “Allowance for Loan and Lease Losses” booklets of the Comptroller’s Handbook; (b) Operates independently from Bank management and that specifically prohibits management from overturning any downgrades made or recommended by Loan Review; (c) Is adequately staffed; and (d) Recognizes loan losses and records charge-offs in a timely manner in accordance with Generally Accepted Accounting Principles (“GAAP”). (2) The Loan Review Program shall require that a written report be submitted to the Board after each review, but at least quarterly. Such reports shall include, at a minimum, comments and conclusions regarding: (a) The the overall quality of the loan review scope and coverage parameterslease portfolios; (b) The overall quality of loan and lease portfolios reviewed; (c) The the identification, type, rating, and amount of problem loans and leases, including grading differences; (dc) The identification, type and amount of charged off loans; (e) The the identification and amount of delinquent loans and leases; (fd) The identification and amount of performing loans that have extended terms; (g) The identification of credit and collateral documentation exceptions; (he) The the identification and status of credit related violations of law, rule or regulation; (if) Loans and leases identified as exceptions to the Bank’s Loan Policy; (j) The identity of the loan officer who originated each loan reported in accordance with subparagraphs (cb) through (e) of the Article; (g) concentrations of credit; (h) loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Bank; and, (i) of this Paragraph; andloans and leases not in conformance with the Bank's lending and leasing policies, and exceptions to the Bank’s lending and leasing policies. (k2) Any recommendations A copy of the Board’s program shall be submitted to the Assistant Deputy Comptroller for improvementsreview and prior written determination of no supervisory objection. Upon receiving a determination of no supervisory objection from the Assistant Deputy Comptroller, the Bank shall implement and adhere to the program. (3) The revised Loan Review Program shall also require an annual report to the Board containing an independent reviewer’s assessment of the Bank’s systems to: (a) Accurately identify and risk rate problem credits based on lending officer submissions; (b) Measure, monitor and control risk in significant credit concentrations; (c) Evaluate the repayment ability of real estate construction and development borrowers with multiple projects; (d) Evaluate guarantor support of real estate construction and development projects; (e) Monitor compliance with the Bank's lending policies and applicable laws, rules, and regulations; and (f) Monitor and control the volume of credit and collateral documentation exceptions. (4) A written description of the Loan Review Program called for in this Article shall be forwarded to the Assistant Deputy Comptroller upon implementation. (5) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the revised Loan Review Program developed pursuant to this Article. (6) The Board shall evaluate the internal loan and lease review report(s) and shall ensure that immediate, adequate, and continuing remedial action, if appropriate, is taken upon all findings noted in the report(s). (74) Within sixty (60) days of the date of this Agreement, The Board shall ensure that the Bank shall engage an independenthas processes, external loan review. The purpose personnel, and control systems to ensure implementation of and adherence to the independent, external loan review shall be to verify the accuracy of internal risk ratings, with specific emphasis on and beginning with the construction and land development portfolios. Subsequently, external loan reviews shall be conducted each quarter on other segments of the loan portfolio until the Loan Review Program required program developed pursuant to this Article is fully implemented. The scope Article. (5) A copy of the independent, external loan reviews shall be based on the Board’s and management’s assessments of portfolio risk. Upon completion, all external loan review reports shall be submitted to the Board for review and approval. (8) By June 30Board, 2008as well as documentation of the action taken by the Bank to collect or strengthen assets identified as problem credits, shall be preserved in the Bank, using any combination of qualified internal or external resources, shall complete a loan review of all construction and land development loans greater than two hundred fifty thousand dollars ($250,000).

LOAN REVIEW. (1) The Board shall reviewwithin thirty (30) days engage a sufficiently experienced and qualified independent loan review firm, revisesubject to OCC concurrence, and thereafter ensure adherence to evaluate the bank’s loan portfolio. (2) Within ninety (90) days after engagement, the independent loan review firm shall provide a Loan Review Programwritten report, that which should, at a minimum, include a conclusion on the following: (ai) Assigns the accuracy of assigned risk ratings to individual credits and credit relationships, and the timeliness of risk rating changes; (ii) the appropriateness of loan underwriting and structures (term, repayment, loan covenants, interest rate, etc.); (iii) the quality and completeness of financial information, in particular on credits reviewed guarantors and contingent liabilities, noting any exceptions; (iv) the adequacy and timeliness of collateral valuations, noting any exceptions; (v) the level of financial statement and collateral documentation exceptions relative to volume and other risk metrics; (vi) the appropriateness of extensions or renewals; (vii) the appropriateness and timeliness of impairment and loan loss recognition; (viii) the adequacy of problem loan action plans in removing the basis for criticism, protecting the bank’s interest and providing sufficient disclosure to the board so that they may independently measure progress or determine if management actions are consistent sufficient; (ix) the level of compliance with regulatory guidance, particularly OCC Bulletins 2009-32 – Guidance on Prudent CRE Loan Workouts; 2006-47 – Interagency Policy Statement on the guidelines set forth in “Rating Credit Risk” and “Allowance for Loan and Lease Losses” booklets of the Comptroller’s Handbook; and 2006-46 Concentrations in Commercial Real Estate Lending and Sound Risk Management Practices; (bx) Operates independently from Bank management and that specifically prohibits management from overturning any downgrades made or recommended by Loan Review; (c) Is adequately staffed; the adequacy of the ALLL and (dxi) Recognizes loan losses and records charge-offs in a timely manner in accordance with Generally Accepted Accounting Principles (“GAAP”)any violations of law or regulation. (23) The Loan Review Program Within one hundred twenty days (120) days after the engagement, the independent loan review firm shall require that provide a written report be submitted to the Board after each reviewreport, but at least quarterly. Such reports shall includewhich should, at a minimum, comments and conclusions regardinginclude a conclusion on the following: (a) The loan review scope and coverage parameters; (b) The overall quality of loan and lease portfolios reviewed; (c) The identification, type, rating, and amount of problem loans and leases, including grading differences; (d) The identification, type and amount of charged off loans; (e) The identification and amount of delinquent loans and leases; (f) The identification and amount of performing loans that have extended terms; (g) The identification of credit and collateral documentation exceptions; (h) The identification and status of credit related violations of law, rule or regulation; (i) Loans the adequacy of lending personnel qualifications and leases identified as exceptions to lending department staffing levels; (ii) the quality of loan reporting at the line, management and Board levels given the Bank’s Loan Policycredit risk profile; (jiv) The identity of the key credit metrics, which at a minimum includes: loan officer who originated each growth, concentrations, problem loans, past due loans, non-accrual loans, loan reported in accordance with subparagraphs (c) through (i) of this Paragraph; and (k) Any recommendations for improvements. (3) The revised Loan Review Program shall also require an annual report to the Board containing an independent reviewer’s assessment of the Bank’s systems to: (a) Accurately identify losses, ALLL levels, and risk rate problem credits based on lending officer submissions; (b) Measure, monitor and control risk in significant credit concentrations; (c) Evaluate the repayment ability of other real estate construction and development borrowers with multiple projectsowned; (d) Evaluate guarantor support of real estate construction and development projects; (e) Monitor compliance with the Bank's lending policies and applicable laws, rules, and regulations; and (f) Monitor and control the volume of credit and collateral documentation exceptions. (4) A written description of the Loan Review Program called for in this Article shall be forwarded to the Assistant Deputy Comptroller upon implementation. (5) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the revised Loan Review Program developed pursuant to this Article. (6) The Board shall evaluate the internal loan review report(s) and shall ensure that immediate, adequate, and continuing remedial action, if appropriate, is taken upon all findings noted in the report(s). (7) Within sixty (60) days of the date of this Agreement, the Bank shall engage an independent, external loan review. The purpose of the independent, external loan review shall be to verify the accuracy of internal risk ratings, with specific emphasis on and beginning with the construction and land development portfolios. Subsequently, external loan reviews shall be conducted each quarter on other segments of the loan portfolio until the Loan Review Program required pursuant to this Article is fully implemented. The scope of the independent, external loan reviews shall be based on the Board’s and management’s assessments of portfolio risk. Upon completion, all external loan review reports shall be submitted to the Board for review and approval. (8) By June 30, 2008, the Bank, using any combination of qualified internal or external resources, shall complete a loan review of all construction and land development loans greater than two hundred fifty thousand dollars ($250,000).

LOAN REVIEW. (1) The Within sixty (60) days, the Board shall employ a qualified consultant to perform an ongoing asset quality review of the Bank. The consultant shall be utilized until such time as an ongoing internal asset quality review system is developed by the Board, implemented and demonstrated to be effective. Before terminating the consultant's asset quality review services, the Board shall both certify the effectiveness of the internal asset quality review system, and receive prior approval from the Assistant Deputy Comptroller. (2) Prior to hiring a consultant or entering into any contract with a consultant, the Bank shall submit the proposed terms of employment and the qualifications of the consultant to the Assistant Deputy Comptroller who shall have the power of veto. However, the failure to exercise such veto power shall not constitute an approval or endorsement of the proposed consultant. If the Assistant Deputy Comptroller exercises his veto power, the Bank shall have an additional sixty (60) days to submit another proposed consultant. (3) Within one hundred twenty (120) days, the Board shall establish an effective, independent and on-going loan review system to review, reviseat least every six months, the Bank's loan and thereafter ensure adherence lease portfolios to assure the timely identification and categorization of problem credits. The system shall provide for a Loan Review Program, that at written report to be filed with the Board after each review and shall use a minimum: (a) Assigns risk ratings on credits reviewed that are loan and lease grading system consistent with the guidelines set forth in “Rating Credit Risk” and “Allowance for the Loan and Lease Losses” booklets Portfolio Management Booklet of the Comptroller’s Handbook's (a) the overall quality of the loan and lease portfolios; (b) Operates independently from Bank management and that specifically prohibits management from overturning any downgrades made or recommended by Loan Review; (c) Is adequately staffed; and (d) Recognizes loan losses and records charge-offs in a timely manner in accordance with Generally Accepted Accounting Principles (“GAAP”). (2) The Loan Review Program shall require that a written report be submitted to the Board after each review, but at least quarterly. Such reports shall include, at a minimum, comments and conclusions regarding: (a) The loan review scope and coverage parameters; (b) The overall quality of loan and lease portfolios reviewed; (c) The identification, type, rating, and amount of problem loans and leases, including grading differences; (dc) The identification, type and amount of charged off loans; (e) The the identification and amount of delinquent loans and leases; (fd) The identification and amount of performing loans that have extended terms; (g) The identification of credit and collateral documentation exceptions; (he) The the identification and status of credit credit-related violations of law, rule or regulation; (if) Loans and leases identified as exceptions to the Bank’s Loan Policy; (j) The identity of the loan officer who originated each loan reported in accordance with subparagraphs (cb) through (ie) of this Paragraph; andthe Article; (kg) Any recommendations for improvements.concentrations of credit; (3h) The revised Loan Review Program shall also require an annual report loans and leases to the Board containing an independent reviewer’s assessment executive officers, directors, principal shareholders (and their related interests) of the Bank’s systems to: (a) Accurately identify and risk rate problem credits based on lending officer submissions; (bi) Measure, monitor loans and control risk leases not in significant credit concentrations; (c) Evaluate the repayment ability of real estate construction and development borrowers with multiple projects; (d) Evaluate guarantor support of real estate construction and development projects; (e) Monitor compliance conformance with the Bank's lending policies and applicable laws, rulesleasing policies, and regulationsexceptions to the Bank's lending and leasing policies; and (fj) Monitor and control the volume of credit and collateral documentation exceptions. (4) A written description of the Loan Review Program called for in this Article shall be forwarded to the Assistant Deputy Comptroller upon implementation. (5) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the revised Loan Review Program developed pursuant to this Article. (6) The Board shall evaluate the internal loan review report(s) and shall ensure that immediate, adequate, and continuing remedial action, if appropriate, is taken upon all findings noted in the report(s). (7) Within sixty (60) days of the date of this Agreement, the Bank shall engage an independent, external loan review. The purpose of the independent, external loan review shall be to verify the accuracy of internal risk ratings, with specific emphasis on and beginning with the construction and land development portfolios. Subsequently, external loan reviews shall be conducted each quarter on other segments direct confirmation of the loan portfolio until the Loan Review Program required pursuant to this Article is fully implemented. The scope portfolios of the independent, external former President Xxxxxx Xxxxxx and other loan reviews shall be based on the Board’s and management’s assessments of portfolio risk. Upon completion, all external loan review reports shall be submitted to the Board for review and approvalofficers that he supervised. (8) By June 30, 2008, the Bank, using any combination of qualified internal or external resources, shall complete a loan review of all construction and land development loans greater than two hundred fifty thousand dollars ($250,000).