LOAN RISK RATING SYSTEM. (1) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial credit relationships in excess of one hundred fifty thousand dollars ($150,000) (covered relationship), as assigned by responsible loan officers and by internal loan review, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the Rating Credit Risk Booklet, A-RCR, of the Comptroller’s
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) if the primary source of repayment is cash flow from the borrower’s operations, the strength of the borrower’s cash flow is determined through analysis of the borrower’s historical and projected financial statements, past performance, and future prospects in light of conditions that have occurred;
(c) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased;
(d) collateral values should reflect a current assessment of value based on actual market conditions and project status;
(e) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually; and
(f) the credit risk rating analysis is documented and available for review by the Board and the OCC upon request.
(2) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure that any covered relationship with a high probability of payment default or other well-defined weakness is rated no better than Substandard, unless the debt is secured by marketable securities or cash. Consistent with the guidance in the Rating Credit Risk Booklet, A-RCR, of the Comptroller’s Handbook, the presence of illiquid collateral or existence of a plan for improvement does not, and a non-government guarantee generally will not, mitigate the probability of default or a well-defined weakness.
LOAN RISK RATING SYSTEM. (1) Within one hundred twenty (120) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial credit relationships in excess of $250,000 (covered relationship), as assigned by responsible loan officers and by any independent loan reviewer, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the “Rating Credit Risk” booklet of the Comptroller's Handbook. At a minimum, the Board must ensure, on an ongoing basis, that with respect to the assessment of credit risk of any covered relationship:
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) if the primary source of repayment is cash flow from the borrower’s operations, the strength of the borrower’s cash flow is determined through analysis of the borrower’s historical and projected financial statements, past performance, and future prospects in light of conditions that have occurred;
(c) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased;
(d) collateral values should reflect a current assessment of value based on actual market conditions and project status;
(e) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually; and
(f) the credit risk rating analysis is documented and available for review by the Board and the OCC upon request.
(2) Within ninety (90) days, and on an ongoing basis thereafter, the Board must ensure that any covered relationship with a high probability of payment default or other well-defined weakness is rated no better than Substandard, unless the debt is secured by marketable securities or cash. Consistent with the guidance in the “Rating Credit Risk” booklet of the Comptroller's Handbook, the presence of illiquid collateral or existence of a plan for improvement does not, and a non-government guarantee generally will not, mitigate the probability of default or a well-defined weakness.
LOAN RISK RATING SYSTEM. (1) Within ninety (90) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial real estate credit relationships in the principal amount of $250,000 or greater (covered relationship) are timely, accurate, and consistent with the regulatory credit classification criteria set forth in Rating Credit Risk, A-RCR, of the Comptroller’s Handbook. At a minimum, the Board must ensure, on an ongoing basis, that with respect to the Bank’s assessment of credit risk of any covered relationship:
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) the strength of the borrower’s primary source of repayment is determined through analysis of the borrower’s historical and projected financial statements, past performance, and future prospects in light of conditions that have occurred or may occur during the term of the loan;
(c) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased;
(d) collateral values should reflect a current assessment of value based on actual market conditions and project status;
(e) credit risk ratings are reviewed and updated whenever relevant new information is received; and
(f) the credit risk rating analysis is documented and available for review by the Board and the OCC upon request.
(2) Within ninety (90) days, and on an ongoing basis thereafter, the Board must ensure that any covered relationship with a high probability of payment default or other well-defined weaknesses is rated no better than Substandard, regardless of the existence of illiquid collateral, non-government guarantees, and other similar credit risk of loss mitigants. A well-defined weakness in a covered relationship may include, but is not limited to, slow leasing or sales activity resulting in protracted repayment or default on the loan, changes in concept or plan due to unfavorable market conditions, materially deteriorated market conditions, delinquent taxes, or the inability to obtain necessary zoning or permits.
(3) Within ninety (90) days, the Board must establish a credit risk rating management information system that provides, at a minimum, the following information to...
LOAN RISK RATING SYSTEM. (1) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial credit relationships1 as assigned by loan officers and by any independent loan reviewer, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the “Rating Credit Risk” booklet of the Comptroller’s Handbook. At a minimum, the Board must ensure, on an ongoing basis, that with respect to the assessment of credit risk of any commercial credit relationship:
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased;
(c) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually;
(d) incorporate a process to ensure the Bank’s loans and other assets are timely placed on nonaccrual where appropriate in accordance with the Instructions for Consolidated Reports of Income and Condition (“Call Report Instructions”) and with the OCC’s Bank Accounting Advisory Series; and
1 For purposes of this Agreement, commercial credit includes commercial, industrial, commercial real estate, multi- family, and investor-owned 1-4 family loans. Commercial credit relationships include all aggregate debt exposures to the entities, related entities, and the principals and guarantors of those entities.
(e) the credit risk rating analysis is documented, maintained in the credit file, and available for review by the Board and the OCC upon request.
(2) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure that any commercial credit relationship with a high probability of payment default or other well- defined weakness is rated no better than substandard, unless the debt is secured by cash or marketable securities. Consistent with the guidance in the “Rating Credit Risk” booklet of the Comptroller’s Handbook, the presence of illiquid collateral or existence of a plan for improvement will not, and a non-government guarantee generally will not, mitigate the probability of default or a well-defined weakness.
LOAN RISK RATING SYSTEM. (1) Within (60) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial credit relationships in excess of $150,000 (covered relationship), as assigned by responsible loan officers and by internal loan review, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the Rating Credit Risk Booklet, A-RCR, of the Comptroller’s Handbook. At a minimum, the Board must ensure, on an ongoing basis, that with respect to the assessment of credit risk of any covered
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) if the primary source of repayment is cash flow from the borrower’s operations, the strength of the borrower’s cash flow is determined through analysis of the borrower’s historical financial statements, past performance, and future prospects in light of conditions that have occurred;
(c) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased;
(d) collateral values should reflect a current assessment of value based on actual market conditions and project status;
(e) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually; and
(f) the credit risk rating analysis is documented and available for review by the Board and the OCC upon request.
LOAN RISK RATING SYSTEM. (1) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial and commercial real estate credit relationships in excess of twenty-five thousand dollars ($25,000) (“covered relationships”) are timely, accurate, and consistent with the regulatory credit classification criteria set forth in Rating Credit Risk, A-RCR, of the Comptroller’s Handbook.
(2) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure the classification of retail loans consistent with the guidance set forth in the “Uniform Retail Credit Classification and Account Management Policy” dated June 20, 2000 (OCC Bulletin 2000-20).
LOAN RISK RATING SYSTEM. (1) Within sixty (60) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial credit relationships in excess of one hundred thousand dollars ($100,000) (covered relationship), as assigned by responsible loan officers and by internal loan review, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the Rating Credit Risk Booklet, A-RCR, of the Comptroller’s
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) if the primary source of repayment is cash flow from the borrower’s operations, the strength of the borrower’s cash flow is determined through analysis of the borrower’s historical and projected financial statements, past performance, and future prospects in light of conditions that have occurred;
(c) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default has increased;
(d) collateral values should reflect a current assessment of value based on actual market conditions and project status;
(e) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually; and
(f) the credit risk rating analysis is documented and available for review by the Board and the OCC upon request.
LOAN RISK RATING SYSTEM. (1) Within one hundred and twenty (120) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk rating of commercial credit relationships as assigned by loan officers and by any independent loan reviewer, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the “Rating Credit Risk” Booklet of the Comptroller’s Handbook. At a minimum, the Board must ensure, on an ongoing basis, that with respect to the assessment of credit risk of any commercial credit relationship:
(a) the primary consideration is the strength of the borrower’s primary source of repayment (i.e., the probability of default rather than the risk of loss);
(b) collateral, non-government guarantees, and other similar credit risk mitigants that affect potential loss in the event of default (rather than the probability of default) are taken into consideration only if the primary source of repayment has weakened and the probability of default as increased;
(c) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually;
(d) that loans and other assets are timely placed on nonaccrual where appropriate in accordance with the Instructions for Consolidated Reports of Income and Condition (“Call Reports); and
(e) the credit risk rating analysis is documented, maintained in the credit file, and available for review by the Board and the OCC upon request.
LOAN RISK RATING SYSTEM. (1) Within thirty (30) days, and on an ongoing basis thereafter, the Board must ensure that the Bank’s internal risk ratings of commercial credit relationships (covered relationship), as assigned by responsible loan officers and by internal loan review, are timely, accurate, and consistent with the regulatory credit classification criteria set forth in the Rating Credit Risk Booklet of the Comptroller’s Handbook. The Board must ensure, on an ongoing basis, that with respect to the assessment of credit risk of any covered relationship:
(a) credit risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually; and
(b) the credit risk rating analysis is documented and available for review by the Board and the OCC upon request.
(2) Within thirty (30) days, and on an ongoing basis thereafter, the Board must ensure that any covered relationship with a high probability of payment default or other well-defined weakness is rated no better than Substandard, unless the debt is secured by marketable securities or cash. Consistent with the guidance in the Rating Credit Risk Booklet of the Comptroller’s Handbook, the presence of illiquid collateral or existence of a plan for improvement does not, and a non-government guarantee generally will not, mitigate the probability of default or a well- defined weakness.
(3) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the program developed pursuant to this Article.
