Common use of PROBLEM LOAN IDENTIFICATION Clause in Contracts

PROBLEM LOAN IDENTIFICATION. (1) Within sixty (60) days of the date of this Agreement, the Board shall establish an effective problem loan identification program that provides for early identification of emerging and potential problem credits, along with a formal plan to proactively manage these assets. This includes, but is not limited to: (a) ensuring early problem loan identification and risk rating by loan officers and establishing loan officer accountability for accurately risk rating loans and recognizing nonaccrual loans under their respective supervision in a timely manner; (b) ensuring timely recognition of accrual status such that non-accrual assets are accurately reflected prior to filing of the Consolidated Reports of Condition and Income; (c) developing formal loan work out plans for problem credits that include the current status of the loan, current financial condition of the borrower, accrual status, source and date of the collateral valuation, and specific action plans with target dates; (d) establishing an independent reporting line to the Board or its committee for the internal loan review function; and (e) ensuring internal loan review provides quarterly reports to the Board, or committee thereof, that shall include, at a minimum, conclusions regarding: (i) the overall quality of the loan portfolio; (ii) the identification, type, rating, and amount of problem loans; (iii) the identification and amount of delinquent loans; (iv) credit and collateral documentation exceptions; (v) the identification and status of credit-related violations of law, rule or regulation; (vi) the identity of the loan officer who originated each loan reported in accordance with subparagraphs (ii) through (v) of this Article; (vii) concentrations of credit; and (viii) loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Bank. (2) 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. (3) Upon adoption, a copy of the program shall be forwarded to the Assistant Deputy Comptroller for review 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.

PROBLEM LOAN IDENTIFICATION. (1) Within sixty (60) days of the date of this Agreementdays, the Board or a designated committee shall establish an effective problem effective, independent, and on-going loan identification program that provides for early identification of emerging review system to review, at least quarterly, the bank’s loan and potential problem credits, along with a formal plan lease portfolios to proactively manage these assets. This includes, but is not limited to: (a) ensuring early problem loan assure the timely and accurate identification and risk rating by loan officers and establishing loan officer accountability for accurately risk rating categorization of nonaccrual loans and recognizing nonaccrual loans under their respective supervision in rated "Special Mention," "Substandard," "Doubtful," and "Loss." The bank’s loan review system shall provide for a timely manner; (b) ensuring timely recognition of accrual status such that non-accrual assets are accurately reflected prior written report to filing of the Consolidated Reports of Condition and Income; (c) developing formal loan work out plans for problem credits that include the current status of the loan, current financial condition of the borrower, accrual status, source and date of the collateral valuation, and specific action plans be filed with target dates; (d) establishing an independent reporting line to the Board or its a designated committee 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 internal loan review function; and (e) ensuring internal loan review provides quarterly Comptroller’s Handbook. Such reports to the Board, or committee thereof, that shall include, at a minimum, conclusions and comments regarding: (ia) the scope of the review; (b) the overall quality of the loan portfolioand lease portfolios; (iic) the identification, type, rating, and amount of problem loansloans and leases; (iiid) the identification and amount of delinquent loans and leases; (e) the identification and amount of nonaccrual loans; (ivf) credit and collateral documentation exceptions; (vg) the identification and status of credit-credit related violations of law, rule rule, or regulation; (vih) the identity of the loan officer who originated each loan reported in accordance with subparagraphs (iib) through (vg) of this Article; (viii) concentrations of credit; and; (viiij) loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Bank; and (k) loans and leases not in conformance with the Bank's lending and leasing policies, and exceptions to the Bank’s lending and leasing policies. (2) The Board or a designated committee 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). (3) Beginning immediately, the Board or a designated committee shall ensure that each loan officer assigns an appropriate risk rating for each loan in his/her respective portfolio, appropriately determines non-accrual status, and promptly initiates grading changes as circumstances warrant based upon: (a) Past due status, payment history, bankruptcy, or similar indicators; and/or (b) Lack of financial capacity indicated by current financial information and cash flow analysis. (4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the program programs developed pursuant to this Article. (3) Upon adoption, a copy of the program shall be forwarded to the Assistant Deputy Comptroller for review 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.

PROBLEM LOAN IDENTIFICATION. (1) Within sixty (60) days of the date of this AgreementBy March 31, 2020, the Board shall establish an effective problem loan identification develop a program to ensure that provides the risk associated with the Bank’s loans and other assets is properly reflected and accounted for early identification of emerging on the Bank’s books and potential problem credits, along with a formal plan records and to proactively manage these assetsensure that the Bank does not improperly recognize income. This includes, but is not limited to: (a) ensuring early problem loan identification and risk rating by loan officers and establishing loan officer accountability for accurately risk rating loans and recognizing nonaccrual loans under their respective supervision in a timely manner; (b) ensuring timely recognition of accrual status such that non-accrual assets are accurately reflected prior to filing of the Consolidated Reports of Condition and Income; (c) developing formal loan work out plans for problem credits that include the current status of the loan, current financial condition of the borrower, accrual status, source and date of the collateral valuation, and specific action plans with target dates; (d) establishing an independent reporting line to the Board or its committee for the internal loan review function; and (e) ensuring internal loan review provides quarterly reports to the Board, or committee thereof, that program shall include, at a minimum, conclusions regardingprovisions to: (a) adopt a risk rating system that accurately identifies and stratifies risk. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance; (b) ensure that the Bank’s loans and other assets are appropriately and timely risk rated and charged off by management using a safe and sound loan grading system that is based upon current facts and existing repayment terms. Refer to the “Rating Credit Risk” booklet of the Comptroller’s Handbook for guidance; (c) establish standards for accurate classification of commercial credits. Refer to “Commercial Real Estate Lending” booklet of the Comptroller’s Handbook for guidance; (d) adopt written policies and procedures governing the identification and accounting of nonaccrual loans and Troubled Debt Restructurings (“TDRs”). These policies and procedures shall: (i) be consistent with the overall quality accounting requirements contained in the Instructions for Preparation of the loan portfolio;Consolidate Reports of Condition and Income (“Call Report”): (ii) address the identification, type, rating, and circumstances under which accrued interest due on a loan may be added to the outstanding principal amount of problem loanswhen the loan is renewed or restructured; (iii) require the identification quarterly presentation to the Board of all loans meeting any of the nonaccrual and amount of delinquent loans;TDR criteria; and (iv) credit incorporate procedures for periodically testing the Bank’s identification of and collateral documentation exceptionsaccounting for nonaccrual loans and TDRs; (ve) ensure that the identification lending staff are held accountable for failing to appropriately and status timely risk rate, place loans on nonaccrual, and/or identify TDRs, including, but not limited to, consideration of credit-related violations of law, rule or regulation; (vi) the identity of the loan officer who originated each loan reported such failure in accordance with subparagraphs (ii) through (v) of this Article; (vii) concentrations of creditperiodic performance reviews and compensation; and (viiif) loans require that appropriate analysis and leases documentation is maintained in the credit files to executive officers, directors, principal shareholders (support the current risk rating and their related interests) of the Bankaccrual determination for each credit relationship. (2) The After the Board has developed the program required by this Article, the Board shall ensure that the Bank has processes, personneladopt, and control systems Bank management, subject to Board review and ongoing monitoring, shall immediately implement, and shall thereafter ensure implementation of and adherence to the program developed pursuant to this Article. (3) Upon adoption, a copy terms of the program shall be forwarded to the Assistant Deputy Comptroller for review 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 programany amendments or revisions thereto.

PROBLEM LOAN IDENTIFICATION. (1) Within sixty ninety (6090) days of the date of this Agreement, the Board shall establish an effective problem loan identification program that provides for early identification of emerging and potential problem credits, along with a formal plan to proactively manage these assets. This includes, but is not limited to: (a) ensuring early problem loan identification and risk rating by loan officers and establishing loan officer accountability for accurately risk rating loans and recognizing nonaccrual loans under their respective supervision in a timely manner; (b) ensuring timely recognition of accrual status such that non-accrual assets are accurately reflected prior to filing of the Consolidated Reports of Condition and Income; (c) developing formal loan work out plans for problem credits that include the current status of the loan, current financial condition of the borrower, accrual status, source and date of the collateral valuation, and specific action plans with target dates; (d) establishing an independent reporting line to the Board or its committee for the internal loan review function; and (e) ensuring internal loan review provides quarterly semi-annual reports to the Board, or committee thereof, that shall include, at a minimum, conclusions regarding: (i) the overall quality of the loan portfolio; (ii) the identification, type, rating, and amount of problem loans; (iii) the identification and amount of delinquent loans; (iv) credit and collateral documentation exceptions; (v) the identification and status of credit-related violations of law, rule or regulation; (vi) the identity of the loan officer who originated each loan reported in accordance with subparagraphs (ii) through (v) of this Article; (vii) concentrations of credit; and (viii) loans and leases to executive officers, directors, principal shareholders (and their related interests) of the Bank. (2) 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. (3) Upon adoption, a copy of the program shall be forwarded to the Assistant Deputy Comptroller for review 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.