AGREEMENT BY AND BETWEEN
Exhibit 99.3
AGREEMENT
BY AND BETWEEN
The Xxxxx
National Bank
Washington,
D.C.
and
The
Comptroller of the Currency
The Xxxxx
National Bank, Washington, D.C. (“Bank”), and the Comptroller of the Currency of
the United States of America (“Comptroller”) wish to protect the interests of
the depositors, other customers, and shareholders of the Bank, and, toward that
end, wish the Bank to operate safely and soundly and in accordance with all
applicable laws, rules and regulations.
The
Comptroller has found unsafe and unsound banking practices relating to the level
of credit risk and the administration of the loan portfolio, and violations of
credit-related laws and regulations at the Bank.
In
consideration of the above premises, it is agreed, between the Bank, by and
through its duly elected and acting Board of Directors (“Board”), and the
Comptroller, through his authorized representative, that the Bank shall operate
at all times in compliance with the articles of this Agreement.
ARTICLE
I
JURISDICTION
(1) This
Agreement shall be construed to be a “written agreement entered into with the
agency” within the meaning of 12 U.S.C. § 1818(b)(1).
(2) This
Agreement shall be construed to be a “written agreement between such depository
institution and such agency” within the meaning of 12 U.S.C. § 1818(e)(1) and 12
U.S.C. § 1818(i)(2).
(3) This
Agreement shall be construed to be a “formal written agreement” within the
meaning of 12 C.F.R. § 5.51(c)(6)(ii). See 12 U.S.C. §
1831i.
(4) This
Agreement shall be construed to be a “written agreement” within the meaning of
12 U.S.C. § 1818(u)(1)(A).
(5) This
Agreement shall cause the Bank to be designated as in “troubled condition,” as
set forth in 12 C.F.R. § 5.51(c)(6), unless otherwise informed in writing by the
Comptroller. In addition, this Agreement shall cause the Bank not to be
designated as an “eligible bank” for purposes of 12 C.F.R. § 5.3(g), unless
otherwise informed in writing by the Comptroller.
(6) All
reports or plans which the Bank or Board has agreed to submit to the Assistant
Deputy Comptroller pursuant to this Agreement shall be forwarded
to:
Xxxxxxx
X. Xxxxxxx
Assistant
Deputy Comptroller
Washington,
D.C., Metro Satellite Xxxxxx
000 X
Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx,
XX 00000
ARTICLE
II
COMPLIANCE
COMMITTEE
(1)
Within thirty (30) days of the date of this Agreement, the Board shall appoint a
Compliance Committee of at least five (5) directors, of which no more than one
(1) shall be an employee or controlling shareholder of the Bank or any of its
affiliates (as the term “affiliate” is defined in 12 U.S.C. § 371c(b)(1)), or a
family member of any such person. Upon appointment, the names of the members of
the Compliance Committee and, in the event of a change of the membership, the
name of any new member shall be submitted in writing to the Assistant Deputy
Comptroller. The Compliance Committee shall be responsible for monitoring and
coordinating the Bank’s adherence to the provisions of this
Agreement.
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(2)
The Compliance Committee shall meet at least
monthly.
(3)
Within thirty (30) days of the date of this Agreement and every quarter
thereafter, the Compliance Committee shall submit a written progress report to
the Board setting forth in detail:
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(a)
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a
description of the action needed to achieve full compliance with each
Article of this Agreement;
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(b)
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actions
taken to comply with each Article of this Agreement;
and
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(c)
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the
results and status of those
actions.
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(4)
The Board shall forward a copy of the Compliance Committee’s report, with
any additional comments by the Board, to
the Assistant Deputy Comptroller within ten (10) days of receiving such
report.
ARTICLE
III
BOARD TO ENSURE COMPETENT
MANAGEMENT
(1) Within
thirty (30) days, the Board shall ensure that the Bank has competent management
in place on a full-time basis in its Chief Executive Officer/President; Senior
Loan Officer; and Credit Policy Officer positions to carry out the Board’s
policies, ensure compliance with this Agreement, applicable laws, rules and
regulations, and manage the day-to-day operations of the Bank in a safe and
sound manner.
(2) Within
thirty (30) days, the Board shall review the capabilities of the Bank’s
management to perform present and anticipated duties and the Board will
determine whether management changes will be made, including the need for
additions to or deletions from current management.
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(3) For
incumbent officers in the positions mentioned in Paragraph (1) of this Article,
the Board shall within thirty (30) days assess each of these officers’
experience, other qualifications and performance compared to the position’s
description, duties and responsibilities.
(4) If
the Board determines that an officer will continue in his/her position but that
the officer’s depth of skills needs improvement, the Board will within fifteen
(15) days develop and implement a written program, with specific time frames, to
improve the officer’s supervision and management of the Bank. At a minimum the
written program shall include:
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(a)
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an
education program designed to ensure that the officer has skills and
abilities necessary to supervise
effectively;
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(b)
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a
program to improve the effectiveness of the
officer;
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(c)
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objectives
by which the officer’s effectiveness will be measured;
and
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(d)
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a
performance appraisal program for evaluating performance according to the
position’s description and responsibilities and for measuring performance
against the Bank’s goals and
objectives.
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Upon
completion, a copy of the written program shall be submitted to the Assistant
Deputy Comptroller.
(5) If
a position mentioned in Paragraph (1) of this Article is vacant now or in the
future, including if the Board realigns an existing officer’s responsibilities
and a position mentioned in Paragraph (1) of this Article becomes vacant, the
Board shall within thirty (30) days of such vacancy appoint a capable person to
the vacant position who shall be vested with sufficient executive authority to
ensure the Bank’s compliance with this Agreement and the safe and sound
operation of functions within the scope of that position’s
responsibility.
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(6) Prior
to the appointment of any individual to an executive officer position, the Board
shall submit to the Assistant Deputy Comptroller the following
information:
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(a)
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the
information sought in the “Changes in Directors and Senior Executive
Officers” and “Background Investigations” booklets of the Comptroller’s
Licensing
Manual, together with a legible fingerprint card for the proposed
individual;
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(b)
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a
written statement of the Board’s reasons for selecting the proposed
officer; and
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(c)
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a
written description of the proposed officer’s duties and
responsibilities.
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(7) The
Assistant Deputy Comptroller shall have the power to disapprove the appointment
of the proposed new officer. However, the lack of disapproval of such individual
shall not constitute an approval or endorsement of the proposed
officer.
(8) The
requirement to submit information and the prior disapproval provisions of this
Article are based on the authority of 12 U.S.C. § 1818(b)(6)(E) and do not
require the Comptroller to complete his/her review and act on any such
information or authority within ninety (90) days.
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ARTICLE
IV
CAPITAL PLAN AND HIGHER
MINIMUMS
(1) The
Bank shall achieve by October 31, 2008 and thereafter
maintain the following capital levels (as defined in 12 C.F.R. Part
3):
(a) Total
risk based capital equal to twelve percent (12%)
of risk-weighted assets;
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(b)
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Tier
1 capital at least equal to eleven percent
(11%) of risk-weighted assets (Adjusted total assets is defined in 12
C.F.R. § 3.2(a) as the average total asset figure used for Call Report
purposes minus end-of-quarter intangible
assets);
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(c) Tier
1 capital at least equal to nine percent (9%) of
adjusted total assets.
(2) The
requirement in this Agreement to meet and maintain a specific capital level
means that the Bank may not be deemed to be “well capitalized” for purposes of
12 U.S.C. § 1831o and 12 C.F.R. Part 6 pursuant to 12 C.F.R. §
6.4(b)(1)(iv).
(3)
Within sixty (60) days, the Board shall develop, implement, and thereafter
ensure Bank adherence to a three year capital program. The program shall
include:
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(a)
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specific
plans for the maintenance of adequate capital that may in no event be less
than the requirements of paragraph
(1);
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(b)
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projections
for growth and capital requirements based upon a detailed analysis of the
Bank’s assets, liabilities, earnings, fixed assets, and off-balance sheet
activities;
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(c) projections
of the sources and timing of additional capital to meet the Bank’s current and
future needs;
(d) the
primary source(s) from which the Bank will strengthen its capital structure to
meet the Bank’s needs;
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(e)
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contingency
plans that identify alternative methods should the primary source(s) under
(d) above not be available; and
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(f) a
dividend policy that permits the declaration of a dividend only:
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(i)
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when the Bank is in compliance with its approved capital program and will remain in compliance with its approved capital program and paragraph (1) of this Article immediately following the payment of any dividend; | |
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(ii)
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when
the Bank is in compliance with 12 U.S.C. §§ 56 and 60;
and
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(iii)
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with
the prior written determination of no supervisory objection by the
Assistant Deputy Comptroller. Upon receiving a determination of no
supervisory objection from the Assistant Deputy Comptroller, the Bank
shall implement and adhere to the dividend
policy.
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(4) Upon
completion, the Bank’s capital program shall be submitted to the Assistant
Deputy Comptroller for 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 capital program.
The Board shall review and update the Bank’s capital program on an annual basis,
or more frequently if necessary. Copies of the reviews and updates shall be
submitted to the Assistant Deputy Comptroller.
(5) 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.
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ARTICLE
V
ALLOWANCE FOR LOAN AND LEASE
LOSSES
(1)
Within thirty (30) days but no later than September 30, 2008, the Board shall
make a provision to the Bank’s Allowance for Loan and Lease Losses (“ALLL” or
“Allowance”) in the amount detailed in the Report of Examination (“XXX”) dated
March 31, 2008.
(2)
Within ninety (90) days, the Board shall adopt, implement, and thereafter ensure
adherence to written policies and procedures for maintaining an adequate
Allowance for Loan and Lease Losses (“ALLL”) in accordance with generally
accepted accounting principles. The ALLL policies and procedures shall be
consistent with the guidance set forth in the Federal Financial Institutions
Examination Council’s “Interagency Policy Statement on the Allowance for Loan
and Lease Losses” dated December 13, 2006 (OCC Bulletin 2006-47), and shall at a
minimum include:
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(a)
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maintaining
directional consistency of ALLL level relative to credit risk inherent in
the loan portfolio measured by but not limited to the following
factors:
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(i)
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registered
and forecasted loan growth;
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(ii)
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level
and trend of delinquent loans;
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(iii)
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level
and trend of non-performing assets;
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(iv)
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level
and trend of classified assets;
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(v)
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level
and trend of criticized loans and loans internally rated as
pass-watch;
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(vi)
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level
and trend of policy exceptions;
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(vii)
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impact
on credit risk management systems from staff
changes
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(b)
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results
of the Bank’s internal loan review;
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(c)
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results
of the Bank’s external loan review;
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(d)
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an
estimate of inherent loss exposure on each significant credit consistent
with the Financial Accounting Standards Board (FASB) 114 impairment
analysis;
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(e)
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an
estimate of inherent loss on homogenous loan pools with similar risk
characteristics consistent with FASB
5;
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(f)
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loan
loss experience;
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(g)
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concentrations
of credit in the Bank consistent with the segmentation and analysis
required in Article V, Concentrations of
Credit;
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(h)
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present
and prospective economic conditions;
and
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(i)
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periodic
validation of the ALLL methodology.
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(3) The
program shall provide for a review of the Allowance by the Board at least once
each calendar quarter. Any deficiency in the Allowance shall be remedied in the
quarter it is discovered, prior to the filing of the Consolidated Reports of
Condition and Income, by additional provisions from earnings. Written
documentation shall be maintained indicating the factors considered and
conclusions reached by the Board in determining the adequacy of the
Allowance.
(4) A
copy of the Board’s program shall be submitted to the Assistant Deputy
Comptroller for review and prior written determination of no supervisory
objection. Upon receiving a written determination of no supervisory objection
from the Assistant Deputy Comptroller, the Bank shall implement and adhere to
the program.
(5) 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.
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ARTICLE
VI
CONCENTRATIONS OF
CREDIT
(1)
Within ninety (90) days, the Board shall adopt, implement, and thereafter ensure
Bank adherence to a written asset diversification program consistent with OCC
Bulletin 2006-46, Guidance on Concentrations in Commercial Real Estate Lending,
Sound Risk Management Practices. The program shall include, but not be limited
to, the following:
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(a)
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a
review of the balance sheet to identify any concentrations of credit which
must include a meaningful segmentation of concentrations considering
appropriate risk characteristics such
as:
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(i)
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product
or property type;
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(ii)
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geographic
location; or
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(iii)
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industry.
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(b)
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a
written analysis of any concentration of credit identified above in order
to identify and assess the inherent credit, liquidity, and interest rate
risk;
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(c)
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policies
and procedures to control and monitor concentrations of
credit;
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(d)
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periodic
concentration reports to the Board that clearly measures level and trend
of concentrations and
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(e)
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an
action plan approved by the Board to reduce the risk of any concentration
deemed imprudent in the above
analysis.
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(2) For
purposes of this Article, a concentration of credit is as defined in the “Loan
Portfolio Management” booklet of the Comptroller’s
Handbook.
(3) The
Board shall ensure that future concentrations of credit are subjected to the
analysis required by subparagraph (b) and that the analysis demonstrate that the
concentration will not subject the Bank to undue credit, liquidity or interest
rate risk.
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(4) The
Board shall forward a copy of any analysis performed on existing or potential
concentrations of credit to the Assistant Deputy Comptroller immediately
following the review.
(5) 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.
ARTICLE
VII
CRITICIZED
ASSETS
(1) The
Bank shall take immediate and continuing action to protect its interest in those
assets criticized in the XXX dated March 31, 2008, 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 sixty (60) days, the Board shall adopt, implement, and thereafter ensure
Bank adherence to a written program designed to eliminate the basis of criticism
of assets criticized in the XXX dated March 31, 2008, in any subsequent Report
of Examination, or by any internal or external loan review, or in any list
provided to management by the National Bank Examiners during any examination as
“doubtful,” “substandard,” or “special mention.” This program shall include, at
a minimum:
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(a)
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an
identification of the expected sources of
repayment;
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(b)
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the
appraised value of supporting collateral and the position of the Bank’s
lien on such collateral where
applicable;
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(c)
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an
analysis of current and satisfactory credit information, including cash
flow analysis where loans are to be repaid from operations;
and
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(d)
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the
proposed action to eliminate the basis of criticism and the time frame for
its accomplishment.
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(3) Upon
adoption, a copy of the program for all criticized assets equal to or exceeding
one hundred fifty
thousand dollars ($150,000) shall be
forwarded to the Assistant Deputy Comptroller.
(4) 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.
(5) The
Board, or a designated committee, shall conduct a review, on at least a monthly
basis, to determine:
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(a)
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the
status of each criticized asset or criticized portion thereof that equals
or exceeds one
hundred fifty thousand dollars ($150,000);
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(b)
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management’s
adherence to the program adopted pursuant to this
Article;
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(c)
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the
status and effectiveness of the written program;
and
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(d)
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the
need to revise the program or take alternative
action.
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(e)
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a
copy of each review shall be forwarded to the Assistant Deputy Comptroller
on a quarterly basis (in a format similar to Appendix A, attached
hereto).
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(6) The
Bank may extend credit, directly or indirectly, including renewals or extensions
to a borrower whose loans or other extensions of credit are criticized in the
XXX dated March 31, 2008, or 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 one hundred fifty thousand
dollars ($150,000) only if
each of the following conditions is met:
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(a)
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the
Board or designated committee finds that the extension of additional
credit is necessary to promote the best interests of the Bank and that
prior to renewing or extending any additional credit, a majority of the
full Board (or designated committee) approves the credit extension and
records, in writing, why such extension is necessary to promote the best
interests of the Bank; and
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(b)
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a
comparison to the written program adopted pursuant to this Article shows
that the Board’s formal plan to collect or strengthen the criticized asset
will not be compromised.
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(7) A
copy of the approval of the Board or of the designated committee shall be
maintained in the file of the affected borrower.
(8)
Within sixty (60) days, the Board shall develop, implement, and thereafter
ensure Bank adherence to systems which provide for effective monitoring
of:
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(a)
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early
problem loan identification to assure the timely identification and rating
of loans and leases based on lending officer
submissions;
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(b)
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statistical
records that will serve as a basis for identifying sources of problem
loans and leases by industry, size, collateral, division, group, indirect
dealer, and individual lending
officer;
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(c)
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previously
charged-off assets and their recovery potential;
and
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(d)
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adequacy
of credit and collateral
documentation.
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(9)
Beginning September 30, 2008, on a monthly basis management will provide the
Board with written reports including, at a minimum, the following
information:
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(a)
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the
identification, type, rating, and amount of problem loans and
leases;
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(b)
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the
identification and amount of delinquent loans and leases;
and
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(c)
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the
identity of the loan officer who originated each loan reported in
accordance with subparagraphs (a) and (b) of this Article and
Paragraph;
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ARTICLE
VIII
APPRAISALS OF REAL
PROPERTY
(1)
Within thirty (30) days, the Board shall engage the services of an independent,
professionally certified, or licensed appraiser(s) to provide:
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(a)
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a
written or updated appraisal, in accordance with 12 C.F.R. Part 34, for
each parcel of real property that represents primary collateral behind any
extension of credit where:
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(i)
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the
scope of the appraisal did not provide an “as-is” value on all
construction, conversion and rehabilitation loans that are more than six
(6) months delayed; or
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(ii)
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the
loan was criticized in the XXX dated March 31, 2008, or by the Bank’s
internal loan review, and the most
recent independent appraisal is more than nine (9) months old; or
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(iii)
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accrued
interest or loan fees have been or will be added to the outstanding
principal balance, and the most
recent independent appraisal is more than nine (9) months
old.
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(b)
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a
written appraisal on each parcel of Other Real Estate Owned where it is
needed to bring the Bank into conformity with the provisions of 12 C.F.R.
Part 34.
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(2) The
Board shall specifically instruct the appraiser(s) to comply with the
requirements of 12 C.F.R. Part 34. The details surrounding any and all other
instructions given to the appraiser(s) by the Bank, whether written or oral,
shall be provided to the Assistant Deputy Comptroller for review prior to the
appraiser(s) undertaking the actual appraisals.
(3) All
such appraisals shall be completed within sixty (60) days, and certification by
the Board attesting to the completion of the appraisals shall be forwarded to
the Assistant Deputy Comptroller within ninety (90) days.
ARTICLE
IX
LOAN PORTFOLIO
MANAGEMENT
(1) The
Board shall, within one hundred twenty (120) days, develop, implement, and
thereafter ensure Bank adherence to a written program to improve the Bank’s loan
portfolio management. The program shall include, but not be limited
to:
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(a)
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staffing
and organizational structure within the credit administration/credit
policy department that ensures:
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(i)
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competent
management overseeing this function with the appropriate credit skills and
leadership abilities;
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(ii)
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complete
and timely financial analysis including stress testing prior to loan
approval and at each annual update;
and
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(iii)
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assignment
of appropriate risk ratings at inception and throughout the life of the
credit.
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(b)
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procedures
to ensure that extensions of credit are granted, by renewal or otherwise,
to any borrower only after obtaining and analyzing current and
satisfactory credit information;
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(c)
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procedures
to ensure conformance with loan approval
requirements;
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(d)
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a
system to track and analyze
exceptions;
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(e)
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procedures
to ensure conformance with Call Report
instructions;
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(f)
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procedures
to ensure the accuracy of internal management information systems;
and
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(g)
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procedures
to track and analyze concentrations of credit, significant economic
factors, and general conditions and their impact on the credit quality of
the Bank’s loan and lease
portfolios.
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(2) Upon
completion, a copy of the program shall be forwarded to the Assistant Deputy
Comptroller.
(3)
Within thirty (30) days, on a monthly basis management will provide the Board
with written reports including, at a minimum, the following
information:
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(a)
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credit
and collateral documentation
exceptions;
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(b)
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the
identification and status of credit related violations of law, rule or
regulation; and
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(c)
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the
identification of loans and leases not in conformance with the Bank’s
lending and leasing policies, and exceptions to the Bank’s lending and
leasing policies.
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(4) The
Board shall ensure that the Bank has processes, personnel, and control systems
to ensure implementation of and adherence to the program and systems developed
pursuant to this Article.
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ARTICLE
X
LOAN REVIEW
CONSULTANT
(1)
Within ninety (90) days, the Board shall employ a qualified consultant to
perform quarterly 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.
(2) Prior
to the appointment or employment of any individual or entering into any contract
with a consultant to perform this loan review, the Board shall provide a copy of
any contract, agreement or engagement letter regarding the engagement of
services for an independent loan review to the Assistant Deputy Comptroller for
review prior to the execution of the contract.
(3)
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 written determination of no supervisory objection from
the Assistant Deputy Comptroller.
(4) The
requirement to submit information and the provisions for prior written
determination of no supervisory objection in this Article are based on the
authority of 12 U.S.C. § 1818(b) and do not require the Comptroller or the
Assistant Deputy Comptroller to complete his/her review and act on any such
information or authority within ninety (90) days.
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ARTICLE
XI
LENDING
POLICY
(1)
Within one hundred twenty (120) days, the Board shall review and revise the
Bank’s written loan policy. In revising this policy, the Board shall refer to
“Loan Portfolio Management” booklet of the Comptroller’s
Handbook. This policy shall incorporate, but not necessarily be limited
to, the following:
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(a)
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a
description of acceptable types of
loans;
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(b)
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a
provision that current and satisfactory credit information will be
obtained on each borrower;
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(c)
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maturity
scheduling related to the anticipated source of repayment, the purpose of
the loan, and the useful life of the
collateral;
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(d)
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maximum
ratio of loan value to appraised value or acquisition costs of collateral
securing the loan;
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(e)
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guidelines
for the appraisal ordering process that ensure
independence;
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(f)
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guidelines
for the scope and quality of appraisals that are in conformance with 12
C.F.R. Part 34 and Interagency Appraisal and Evaluation Guidelines dated
October 27, 1994;
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(g)
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the
circumstances in which a re-appraisal of properties is
required;
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(h)
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collection
procedures, to include follow-up efforts, that are systematically and
progressively stronger;
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|
|
(i)
|
a
pricing policy that takes into consideration costs, general overhead, and
probable loan losses, while providing for a reasonable margin of
profit;
|
|
|
(j)
|
guidelines
and limitations for loans originating outside of the Bank’s trade
area;
|
|
|
(k)
|
distribution
of loans by category;
|
18
|
|
(l)
|
guidelines
and limitations on concentrations of credit consistent with Article VI of
this Agreement;
|
|
|
(m)
|
a
limitation on the type and size of loans that may be made by loan officers
without prior approval by the Board or a committee established by the
Board for this purpose;
|
|
|
(n)
|
measures
to correct the deficiencies in the Bank’s lending procedures noted in any
XXX;
|
|
|
(o)
|
guidelines
designed to improve Board oversight of the loan approval process,
specifically with regard to credits exhibiting significant risk. At a
minimum, the policy shall:
|
|
|
(i)
|
establish
dollar limits on extensions of credit to any one borrower, above which the
prior approval of the Board, or a committee thereof, would be
required;
|
|
|
(ii)
|
establish
dollar limits on aggregate extensions of credit to any one borrower, above
which any new extensions of credit to that borrower, regardless of amount,
would require the prior approval of the Board, or a committee thereof;
and
|
|
|
(iii)
|
require
that all credits which deviate from the Bank’s normal course of business,
including all credits which deviate from the Bank’s written strategic
plan, receive the prior approval of the Board, or a committee
thereof.
|
19
|
|
(p)
|
guidelines
consistent with Banking Circular 255, setting forth the criteria under
which renewals of extensions of credit may be approved. At a
minimum the policy shall:
|
|
|
(i)
|
ensure
that renewals are not made for the sole purpose of reducing the volume of
loan delinquencies; and
|
|
|
(ii)
|
provide
guidelines and limitations on the capitalization of
interest;
|
|
|
(q)
|
charge-off
guidelines, by type of loan or other asset, including Other Real Estate
Owned, addressing the circumstances under which a charge-off would be
appropriate and ensuring the recognition of losses within the quarter of
discovery; and
|
|
|
(r)
|
guidelines
for periodic review of the Bank’s adherence to the revised lending
policy.
|
(2) Upon
adoption, the policy shall be implemented, the Board shall thereafter ensure
Bank adherence to the policy, and a copy of the policy shall be forwarded to the
Assistant Deputy Comptroller for review.
(3) The
Board shall ensure that the Bank has processes, personnel, and control systems
to ensure implementation of and adherence to the policy developed pursuant to
this Article.
20
ARTICLE
XII
LIQUIDITY
(1) The
Board shall take steps within sixty (60) days and continuously to maintain the
liquidity of the Bank to a level that is sufficient to sustain the Bank’s
current operations and to withstand any anticipated or extraordinary demand
against its funding base. Such actions may include, but are not limited
to:
|
|
(a)
|
establishing
sub-limits on lines of credit from the Federal Reserve Bank and
correspondent banks for contingent funding
needs;
|
(b) selling
assets; and
(c) injecting
additional equity capital.
(2)
Within thirty (30) days, the Board shall review the Bank’s liquidity on a
monthly basis. Such reviews shall consider:
(a) the
volatility of core deposit accounts;
(b) a
maturity schedule of certificates of deposit, including large uninsured
deposits;
(c) the
amount and type of loan commitments and standby letters of credit;
(d) an
analysis of the continuing availability and volatility of present funding
sources;
|
|
(e)
|
an
analysis of the impact of decreased cash flow from the depreciation in the
investment portfolio, sale of loans, or loan participations; and
geographic disbursement of and risk from brokered
deposits.
|
ARTICLE
XIII
CLOSING
(1)
Although the Board has agreed to submit certain programs and reports to the
Assistant Deputy Comptroller for review or prior written determination of no
supervisory objection, the Board has the ultimate responsibility for proper and
sound management of the Bank.
21
(2) It is
expressly and clearly understood that if, at any time, the Comptroller deems it
appropriate in fulfilling the responsibilities placed upon him by the several
laws of the United States of America to undertake any action affecting the Bank,
nothing in this Agreement shall in any way inhibit, stop, bar, or otherwise
prevent the Comptroller from so doing.
(3) Any
time limitations imposed by this Agreement shall begin to run from the effective
date of this Agreement. Such time requirements may be extended in writing by the
Assistant Deputy Comptroller for good cause upon written application by the
Board.
(4) The
provisions of this Agreement shall be effective upon execution by the parties
hereto and its provisions shall continue in full force and effect unless or
until such provisions are amended in writing by mutual consent of the parties to
the Agreement or excepted, waived, or terminated in writing by the
Comptroller.
(5) This
Agreement is intended to be, and shall be construed to be, a supervisory
“written agreement entered into with the agency” as contemplated by 12 U.S.C. §
1818(b)(1), and expressly does not form, and may not be construed to form, a
contract binding on the Comptroller or the United States. Notwithstanding the
absence of mutuality of obligation, or of consideration, or of a contract, the
Comptroller may enforce any of the commitments or obligations herein undertaken
by the Bank under his supervisory powers, including 12 U.S.C. § 1818(b)(1), and
not as a matter of contract law. The Bank expressly acknowledges that neither
the Bank nor the Comptroller has any intention to enter into a contract. The
Bank also expressly acknowledges that no officer or employee of the Office of
the Comptroller of the Currency has statutory or other authority to bind the
United States, the U.S. Treasury Department, the Comptroller, or any other
federal bank regulatory agency or entity, or any officer or employee of any of
those entities to a contract affecting the Comptroller’s exercise of his
supervisory responsibilities. The terms of this Agreement, including this
paragraph, are not subject to amendment or modification by any extraneous
expression, prior agreements or prior arrangements between the parties, whether
oral or written.
22
IN
TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller, has hereunto
set his hand on behalf of the Comptroller.
|
/s/ Xxxxxxx
X. Xxxxxxx
|
10/1/08
|
|
|
Xxxxxxx
X. Xxxxxxx
|
Date
|
|
|
Assistant
Deputy Comptroller
|
||
|
Washington,
D.C., Metro Satellite Office
|
23
IN
TESTIMONY WHEREOF, the undersigned, as the duly elected and acting Board of
Directors of the Bank, have hereunto set their hands on behalf of the
Bank.
|
/s/ Xxxxx
Xxxxxxx
|
10-1-08
|
|
|
Xxxxx
Xxxxxxx
|
Date
|
|
|
/s/ Xxxxxx
X. Xxxx, III
|
10-1-08
|
|
|
Xxxxxx
X. Xxxx, III
|
Date
|
|
|
/s/ Xxxxx
X. Xxxxxx
|
10-1-08
|
|
|
Xxxxx
X. Xxxxxx
|
Date
|
|
|
Xxxxxx
X. Xxxxxx
|
Date
|
|
|
Xxxxxxxx
X. Xxxxxxxx
|
Date
|
|
|
/s/ Xxxxxxxx
X. Xxxxxxxx
|
Oct
1, 2008
|
|
|
Xxxxxxxx
X. Xxxxxxxx
|
Date
|
|
|
/s/ Xxxxxxxx
X. Xxxxxxx
|
10-1-08
|
|
|
Xxxxxxxx
X. Xxxxxxx
|
Date
|
|
|
/s/ Xxxx
Xxxxx
|
10/1/2008
|
|
|
Xxxx
Xxxxx
|
Date
|
|
|
/s/ Xxxxxx
X. Xxxxxxxx
|
Oct.
1, 2008
|
|
|
Xxxxxx
X. Xxxxxxxx
|
Date
|
24
APPENDIX
A
The Xxxxx
National Bank
Washington,
D.C.
|
CRITICIZED
ASSET REPORT AS OF:
|
|
|
BORROWER(S):
|
ASSET
BALANCE(S) AND OCC RATING (SM, SUBSTANDARD, DOUBTFUL OR LOSS):
|
$
|
CRITICISM
|
|
AMOUNT
CHARGED OFF TO DATE
|
||
|
FUTURE
POTENTIAL CHARGE-OFF
|
|
PRESENT
STATUS (Fully explain any increase in outstanding balance; include past
due status, nonperforming, significant progress or deterioration,
etc.):
|
|
FINANCIAL
AND/OR COLLATERAL SUPPORT (include brief summary of most current financial
information, appraised value of collateral and/or estimated value and date
thereof, bank’s lien position and amount of available equity, if any,
guarantor(s) info, etc.):
|
|
PROPOSED
PLAN OF ACTION TO ELIMINATE ASSET CRITICISM(S) AND TIME FRAME FOR ITS
ACCOMPLISHMENT:
|
|
IDENTIFIED
SOURCE OF REPAYMENT AND DEFINED REPAYMENT PROGRAM (repayment program
should coincide with source of repayment):
|
|
Use
this form for reporting each criticized asset that exceeds one hundred and
fifty thousand dollars ($150,000) and retain the original in the credit
file for review by the examiners. Submit your reports quarterly until notified
otherwise, in writing, by the Assistant Deputy
Comptroller.
|
25
