Common use of PROBLEM LOAN MANAGEMENT Clause in Contracts

PROBLEM LOAN MANAGEMENT. (1) Effective as of the date of this Agreement, the Board shall take immediate and continuing action to protect its interest in those assets subject to adverse classification in the XXX, in any subsequent Report of Examination, by internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination. (2) Within ninety (90) days of this Agreement, the Board shall adopt, implement, and thereafter ensure Bank adherence to specific procedures designed to ensure that risk rating and nonaccrual designation definitions in the loan policy are adhered to. (3) Within ninety (90) days of this Agreement, the Board and management must develop and implement a plan that provides for external training on loan risk ratings, nonaccrual, impairment, and loss recognition for all lenders and loan committee members, the implementation of which must be completed within one hundred twenty (120) days of this Agreement. (4) The Board must ensure an annual or more frequent independent and qualified loan review that assesses credit risk in the loan portfolio, compliance with bank policy, and validates internal risk ratings. The Board must ensure that the engaged loan reviewer adheres to the terms of engagement. (5) The Board’s compliance with Paragraph (1) of this Article shall include the development of policies and procedures for the quarterly submission and review of reports of all credit relationships subject to criticism or adverse classification or Other Real Estate Owned (“OREO”) totaling fifty thousand dollars ($50,000) or more, and that require the preparation of loan status reports (“LSR”) that contain, at a minimum, analysis and documentation of the following: (a) the basis for criticism and proper risk rating and accrual designation; (b) an identification of the expected sources of repayment and an analysis of their adequacy; (c) the appraised value of supporting collateral and the position of the Bank’s lien on such collateral where applicable as well as other necessary documentation to support the collateral valuation; (d) an analysis of current and satisfactory credit information, including cash flow analysis where loans are to be repaid from operations; (e) the current grade and proposed action to eliminate the basis of criticism and the time frame for its accomplishment; (f) trigger dates for positive borrower actions or for loan officers to reassess the strategy, enact collection plans, and make appropriate downgrades or place on nonaccrual; and (g) a determination of whether the loan is impaired and the amount of the impairment, consistent with ASC 310-10. (6) A copy of each LSR, along with any Board comments regarding the effectiveness of the effort to eliminate the weaknesses in each credit or to dispose of the OREO, shall be submitted to the Assistant Deputy Comptroller within ten (10) days of the first Board meeting following the Board’s receipt of such report.

PROBLEM LOAN MANAGEMENT. (1) Effective as of the date of this Agreement, the Board shall take immediate and continuing action to protect its interest in those assets subject to adverse classification criticized in the Report of Examination conducted as of March 31, 2008 (the “XXX”), in any subsequent Report of Examination, by internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination. (2) Within ninety (90) days of this Agreement, the Board shall adopt, implement, and thereafter ensure Bank adherence to specific procedures designed to ensure that risk rating and nonaccrual designation definitions in the loan policy are adhered to. (3) Within ninety (90) days of this Agreement, the Board and management must develop and implement a plan that provides for external training on loan risk ratings, nonaccrual, impairment, and loss recognition for all lenders and loan committee members, the implementation of which must be completed within one hundred twenty (120) days of this Agreement. (4) The Board must ensure an annual or more frequent independent and qualified loan review that assesses credit risk in the loan portfolio, compliance with bank policy, and validates internal risk ratings. The Board must ensure that the engaged loan reviewer adheres to the terms of engagement. (5) The Board’s compliance with Paragraph (1) of this Article shall include the development of policies and procedures for the quarterly monthly submission and review of problem asset reports of for all criticized credit relationships subject to criticism totaling $500,000 or adverse classification or Other Real Estate Owned (“OREO”) totaling fifty thousand dollars ($50,000) or moreabove, and that require the preparation of loan status reports (“LSR”) that containrequire, at a minimum, analysis and documentation of the following: (a) the basis for criticism and proper risk rating and accrual designation; (b) an identification of the expected sources of repayment and an analysis of their adequacyrepayment; (cb) the appraised value of supporting collateral and the position of the Bank’s lien on such collateral where applicable as well as other necessary documentation to support the collateral valuation; (dc) an analysis of current and satisfactory credit information, including cash flow analysis where loans are to be repaid from operations; (ed) the current grade and proposed action to eliminate the basis of criticism and the time frame for its accomplishment; (fe) trigger dates for positive borrower actions or for loan officers to reassess the strategy, strategy and enact collection plans, and make appropriate downgrades or place on nonaccrual; and (gf) for criticized relationships of $500,000 or above that were made for the purpose of constructing or developing CRE, the reports shall also include: (i) the initial scheduled maturity date of the loan, number of extensions and/or renewals, and current maturity date; (ii) project development status; (iii) a determination comparison of whether development costs to the loan is impaired budgeted amount; (iv) a comparison of sales activity to the original sales projections; (v) amount of initial interest reserve and the amount of any subsequent additions to the impairment, consistent with ASC 310-10reserve; (vi) an assessment of the borrower’s global cash flow; and (vii) any other significant information relating to the project. (63) A copy of each LSR, along with any Board comments regarding the effectiveness Effective as of the effort date of this Agreement, the Bank may not extend credit, directly or indirectly, including renewals, extensions or capitalization of accrued interest, to eliminate a borrower whose loans or other extensions of credit are criticized in the weaknesses XXX, in any subsequent Report of Examination, in any internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination and whose aggregate loans or other extensions exceed $500,000, unless each credit or to dispose of the OREO, shall be submitted following conditions is met: (a) the Board or a designated committee thereof finds that the extension of additional credit is necessary to promote the Assistant Deputy Comptroller within ten (10) days best interests of the first Bank and that prior to renewing, extending or capitalizing any additional credit, a majority of the Board meeting following or a designated committee thereof approves the credit extension and documents in writing, the reasons that such extension is necessary to promote the best interests of the Bank; and (b) the Board’s receipt of such reportformal plan to collect or strengthen the criticized asset will not be compromised.

PROBLEM LOAN MANAGEMENT. (1) Effective as of the date of this Agreement, the Board shall take immediate and continuing action to protect its interest in those assets subject to adverse classification criticized in the XXX, in any subsequent Report of Examination, by internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination. (2) Within ninety (90) days of this Agreement, the Board shall adopt, implement, and thereafter ensure Bank adherence to specific procedures designed to ensure that risk rating and nonaccrual designation definitions in the loan policy are adhered to. (3) Within ninety (90) days of this Agreement, the Board and management must develop and implement a plan that provides for external training on loan risk ratings, nonaccrual, impairment, and loss recognition for all lenders and loan committee members, the implementation of which must be completed within one hundred twenty (120) days of this Agreement. (4) The Board must ensure an annual or more frequent independent and qualified loan review that assesses credit risk in the loan portfolio, compliance with bank policy, and validates internal risk ratings. The Board must ensure that the engaged loan reviewer adheres to the terms of engagement. (5) The Board’s compliance with Paragraph (1) of this Article shall include the development of policies and procedures for the quarterly monthly submission and review of problem asset reports of for all criticized credit relationships subject to criticism totaling $100,000 or adverse classification or Other Real Estate Owned (“OREO”) totaling fifty thousand dollars ($50,000) or moreabove, and that require the preparation of loan status reports (“LSR”) that containrequire, at a minimum, analysis and documentation of the following: (a) the basis for criticism and proper risk rating and accrual designation; (b) an identification of the expected sources of repayment and an analysis of their adequacyrepayment; (cb) the appraised value of supporting collateral and the position of the Bank’s lien on such collateral where applicable as well as other necessary documentation to support the collateral valuation; (dc) an analysis of current and satisfactory credit information, including cash flow analysis where loans are to be repaid from operations; (ed) the current grade and proposed action to eliminate the basis of criticism and the time frame for its accomplishment; (fe) trigger dates for positive borrower actions or for loan officers to reassess the strategy, strategy and enact collection plans, and make appropriate downgrades or place on nonaccrual; and (gf) for criticized relationships of $100,000 or above that were made for the purpose of constructing or developing CRE, the reports shall also include: (i) the initial scheduled maturity date of the loan, number of extensions and/or renewals, and current maturity date; (ii) project development status; (iii) a determination comparison of whether development costs to the loan is impaired budgeted amount; (iv) a comparison of sales activity to the original sales projections; (v) current market conditions and activity; (vi) amount of initial interest reserve and the amount of any subsequent additions to the impairment, consistent with ASC 310-10reserve; (vii) an assessment of the borrower’s global cash flow; (viii) an assessment of the guarantor’s ability to support the project; and (ix) any other significant information relating to the project. (63) A copy of each LSR, along with any Board comments regarding the effectiveness Effective as of the effort date of this Agreement, the Bank may not extend credit, directly or indirectly, including renewals, extensions or capitalization of accrued interest, to eliminate a borrower whose loans or other extensions of credit are criticized in the weaknesses XXX, in any subsequent Report of Examination, in any internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination and whose aggregate loans or other extensions exceed $100,000, unless each credit or to dispose of the OREO, shall be submitted following conditions is met: (a) the Board or a designated committee thereof finds that the extension of additional credit is necessary to promote the Assistant Deputy Comptroller within ten (10) days best interests of the first Bank and that prior to renewing, extending or capitalizing any additional credit, a majority of the Board meeting following or a designated committee thereof approves the credit extension and documents in writing, the reasons that such extension is necessary to promote the best interests of the Bank; and (b) the Board’s receipt of such reportformal plan to collect or strengthen the criticized asset will not be compromised.

PROBLEM LOAN MANAGEMENT. (1) Effective as of the date of this Agreement, the Board shall take immediate and continuing action to protect its interest in those assets subject to adverse classification criticized in the XXX, in any subsequent Report of Examination, by internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination. (2) Within ninety (90) days of this Agreement, the Board shall adopt, implement, and thereafter ensure Bank adherence to specific procedures designed to ensure that risk rating and nonaccrual designation definitions in the loan policy are adhered to. (3) Within ninety (90) days of this Agreement, the Board and management must develop and implement a plan that provides for external training on loan risk ratings, nonaccrual, impairment, and loss recognition for all lenders and loan committee members, the implementation of which must be completed within one hundred twenty (120) days of this Agreement. (4) The Board must ensure an annual or more frequent independent and qualified loan review that assesses credit risk in the loan portfolio, compliance with bank policy, and validates internal risk ratings. The Board must ensure that the engaged loan reviewer adheres to the terms of engagement. (5) The Board’s compliance with Paragraph (1) of this Article shall include the development of policies and procedures for the quarterly monthly submission and review of problem asset reports of for all criticized credit relationships subject to criticism totaling $50,000 or adverse classification or Other Real Estate Owned (“OREO”) totaling fifty thousand dollars ($50,000) or moreabove, and that require the preparation of loan status reports (“LSR”) that containrequire, at a minimum, analysis and documentation of the following: (a) the basis for criticism and proper risk rating and accrual designation; (b) an identification of the expected sources of repayment and an analysis of their adequacyrepayment; (cb) the appraised value of supporting collateral and the position of the Bank’s lien on such collateral where applicable as well as other necessary documentation to support the collateral valuation; (dc) an analysis of current and satisfactory credit information, including cash flow analysis where loans are to be repaid from operations; (ed) the current grade and proposed action to eliminate the basis of criticism and the time frame for its accomplishment; (fe) trigger dates for positive borrower actions or for loan officers to reassess the strategy, strategy and enact collection plans, and make appropriate downgrades or place on nonaccrual; and (gf) for criticized relationships of $50,000 or above that were made for the purpose of constructing or developing CRE, the reports shall also include: (i) the initial scheduled maturity date of the loan, number of extensions and/or renewals, and current maturity date; (ii) project development status; (iii) a determination comparison of whether development costs to the loan is impaired budgeted amount; (iv) a comparison of sales activity to the original sales projections; (v) amount of initial interest reserve and the amount of any subsequent additions to the impairment, consistent with ASC 310-10reserve; (vi) an assessment of the borrower’s global cash flow; and (vii) any other significant information relating to the project. (63) A copy Effective as of this Agreement, the Bank may not extend credit, directly or indirectly, including renewals, extensions or capitalization of accrued interest, to a borrower whose loans or other extensions of credit are criticized in the XXX, in any subsequent Report of Examination, in any internal or external loan review, or in any list provided to management by the National Bank Examiners during any examination and whose aggregate loans or other extensions exceed $50,000, unless each LSR, along with any Board comments regarding the effectiveness of the effort following conditions is met: (a) the Board or a designated committee thereof finds that the extension of additional credit is necessary to eliminate promote the weaknesses in each credit or to dispose best interests of the OREOBank and that prior to renewing, shall be submitted to the Assistant Deputy Comptroller within ten (10) days extending or capitalizing any additional credit, a majority of the first Board meeting following or a designated committee thereof approves the credit extension and documents in writing, the reasons that such extension is necessary to promote the best interests of the Bank; and (b) the Board’s receipt of such reportformal plan to collect or strengthen the criticized asset will not be compromised.

PROBLEM LOAN MANAGEMENT. (1) Effective as of the date of this AgreementWithin ninety (90) days, the Board shall take immediate require the Bank to improve the problem loan management program governing criticized and continuing action classified loans in an effort to protect its interest in those assets subject to adverse classification criticized in the XXXNovember 2, in any subsequent 2009, Report of ExaminationExamination that are still rated as criticized assets, by internal or external loan review, review or in any list provided to management by the National Bank Examiners during any subsequent examination. (2) Within ninety (90) days of this Agreement, the The Board shall adoptapprove a Bank program requiring the Bank to design, implement, implement and thereafter ensure Bank adherence to specific procedures an effective problem loan management program designed to ensure that risk rating and nonaccrual designation definitions in the loan policy are adhered to. (3) Within ninety (90) days of this Agreement, the Board and management must develop and implement a plan that provides for external training on loan risk ratings, nonaccrual, impairment, and loss recognition for all lenders and loan committee members, the implementation of which must be completed within one hundred twenty (120) days of this Agreement. (4) The Board must ensure an annual or more frequent independent and qualified loan review that assesses credit risk in the loan portfolio, compliance with bank policy, and validates internal risk ratings. The Board must ensure that the engaged loan reviewer adheres to the terms of engagement. (5) The Board’s compliance with Paragraph (1) of this Article shall include the development of policies and procedures for the quarterly submission and review of reports of all credit relationships subject to criticism or adverse classification or Other Real Estate Owned (“OREO”) totaling fifty thousand dollars ($50,000) or more, and that require the preparation of loan status reports (“LSR”) that contain, at a minimum, analysis and documentation of the following: (a) the basis for criticism and proper risk rating and accrual designation; (b) an identification of the expected sources of repayment and an analysis of their adequacy; (c) the appraised value of supporting collateral and the position of the Bank’s lien on such collateral where applicable as well as other necessary documentation to support the collateral valuation; (d) an analysis of current and satisfactory credit information, including cash flow analysis where loans are to be repaid from operations; (e) the current grade and proposed action to eliminate the basis of criticism of those assets identified as criticized by the Bank’s internal risk rating process, the National Bank Examiners during any examination or by external loan review. The program must include, at a minimum: (a) an assessment of the capabilities of credit leadership to effectively implement the approved program and reduce the time frame for its accomplishmentvolume of criticized and classified loans. The assessment needs to include a determination of the support staff or outside expertise necessary to assist credit leadership in the problem loan management process; (fb) trigger dates policy guidelines for positive borrower actions or for the administration of the problem loan officers management process. Guidelines must address items including: (i) thresholds to reassess determine the strategy, enact collection level of oversight (i.e. written action plans, and make appropriate downgrades or place on nonaccrualBoard reporting, customer contact) for each problem loan; (ii) standards for the content of written action plans; (iii) loan officer responsibilities; and (giv) reporting requirements (i.e. tracking reports, status or progress reports, trending reports) (c) written action plans for loan exposures exceeding $250 thousand that include, at a minimum: (i) a summary of the loan exposure, collateral, and guarantors; (ii) the risk rating and support for the rating (i.e. primary reasons for classification and determination of accrual status); (iii) a brief synopsis of the financial condition of the borrower and guarantor, if applicable; (iv) a determination of as to whether or not the loan is impaired and qualifies as a Troubled Debt Restructuring based on recent actions; (v) comments to address the amount appropriateness of the impairment, any charge-off amounts or specific allocations consistent with accounting standard ASC 310-10, Receivables – Allowance for Credit Losses; (vi) a detailed plan to address the primary concerns, including borrower contact and collateral valuations; and (vii) due dates and timeframes for follow-up. (6d) A copy of each LSR, along with any Board comments regarding the effectiveness of the effort to eliminate the weaknesses in each credit or to dispose of the OREO, shall be submitted regular reports to the Assistant Deputy Comptroller within ten Board or designated Board committee. The frequency of reporting should be based on the risk posed by the individual or collective borrowers, on at least a quarterly basis; and (10e) days validation of credit leadership’s effectiveness in implementing the first program by the independent review of your external loan review function. (3) The Board meeting following shall ensure that the Board’s receipt of such reportProblem Loan Management program receives staffing and funding support necessary to maintain effective processes.