Common use of PROBLEM LOAN MANAGEMENT Clause in Contracts

PROBLEM LOAN MANAGEMENT. (1) Within thirty (30) days of this Agreement, the Board shall submit the name and qualifications of the proposed individual pursuant to paragraph (2) of this Article to the Assistant Deputy Comptroller for a prior written determination of no objection. (2) Within seven (7) days after receipt of a written determination of no objection from the Assistant Deputy Comptroller, the Board shall appoint an individual (“loan workout specialist”) charged with implementation and supervision of the formal written program, internal or external, who shall be independent and report directly to the Board, for the purpose of collecting or resolving classified assets, consistent with OCC Banking Circular 255, including CRE loans. (3) Within sixty (60) days of this Agreement, the Board shall prepare and submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a written program designed to reduce the Bank’s classified assets (the “Problem Assets Program”). The Problem Assets Program shall include or address the following matters: (a) aggregate reporting of classified asset levels by type to the Board or a designated committee thereof every month; and (b) specific plans for the reduction of classified assets by asset type with target reductions by month. (4) The Board’s compliance with Paragraph (3) of this Article shall include the development of procedures for the quarterly review and preparation of written determinations by the Board or a designated committee thereof regarding the effectiveness of the responsible officer’s efforts to eliminate the weaknesses in each criticized credit relationship or Other Real Estate (“ORE”) totaling one-hundred thousand dollars ($100,000) or more, and that require the preparation of Problem Asset Reports (“PARs” or “PAR”) that contain, at a minimum, analysis and documentation of the following: (a) the origination data for each criticized asset, including date, amount, and purpose of the loan; (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 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; (g) a determination of whether the loan is impaired and the amount of the impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; and (h) for criticized relationships of one-hundred thousand dollars ($100,000) or above that were made for the purpose of constructing or developing CRE, the PARs 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 comparison of development costs to the 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 reserve; (vi) an assessment of the borrower’s global cash flow; (vii) an assessment of any guarantor’s global cash flow; and (viii) any other significant information relating to the project. (5) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately adopt, implement, and thereafter ensure adherence to the program required by this Article. (6) Effective as of the date 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 ▇▇▇, 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 of credit equal or exceed one-hundred thousand dollars ($100,000), unless each of the following conditions is met: (a) the Board or a designated committee thereof finds that the extension of additional credit is necessary to promote the best interests of the Bank and that prior to renewing, extending or capitalizing any additional credit, a majority of the Board 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 formal plan to collect or strengthen the criticized asset will not be compromised by the extension of credit.

PROBLEM LOAN MANAGEMENT. (1) Within thirty (30) days Effective as of the date of this Agreement, the Board shall submit take immediate and continuing action to protect its interest in those assets criticized in the name and qualifications ▇▇▇, in any subsequent Report of Examination, by internal or external loan review, or in any list provided to management by the proposed individual pursuant to paragraph (2) of this Article to the Assistant Deputy Comptroller for a prior written determination of no objectionNational Bank Examiners during any examination. (2) Within seven (7) days after receipt of a written determination of no objection from the Assistant Deputy Comptroller, the Board shall appoint an individual (“loan workout specialist”) charged with implementation and supervision of the formal written program, internal or external, who shall be independent and report directly to the Board, for the purpose of collecting or resolving classified assets, consistent with OCC Banking Circular 255, including CRE loans. (3) Within sixty (60) days of this Agreement, the Board shall prepare and submit to the Assistant Deputy Comptroller for a prior written determination of no supervisory objection, a written program designed to reduce the Bank’s classified assets (the “Problem Assets Program”). The Problem Assets Program shall include or address the following matters: (a) aggregate reporting of classified asset levels by type to the Board or a designated committee thereof every month; and (b) specific plans for the reduction of classified assets by asset type with target reductions by month. (43) The Board’s compliance with Paragraph (32) of this Article shall include the development of procedures for the quarterly submission and review and preparation of written determinations by the Board or a designated committee thereof regarding the effectiveness reports of the responsible officer’s efforts to eliminate the weaknesses in each all criticized credit relationship relationships or Other Real Estate (“ORE”) totaling one-one hundred thousand dollars ($100,000) or more, and that require the preparation of Problem Asset Reports (“PARs” or “PAR”) that contain, at a minimum, analysis and documentation of the following: (a) the origination data for each criticized asset, including date, amount, and purpose of the loan; (b) an identification of the expected sources of repayment and an analysis of their adequacy; (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, enact collection plans, and make appropriate downgrades or place on nonaccrual; (gf) a determination of whether the loan is impaired and the amount of the impairment, consistent with FASB Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan; and (hg) for criticized relationships of one-one hundred thousand dollars ($100,000) or above that were made for the purpose of constructing or developing CRE, the PARs PAR 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 comparison of development costs to the 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 reserve; (vi) an assessment of the borrower’s global cash flow; (vii) an assessment of any guarantor’s global cash flow; and (viii) any other significant information relating to the project. (5) Upon receiving a written determination of no supervisory objection from the Assistant Deputy Comptroller, the Board shall immediately adopt, implement, and thereafter ensure adherence to the program required by this Article. (64) Effective as of the date 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 ▇▇▇, 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 of credit equal or exceed one-one hundred thousand dollars ($100,000), unless each of the following conditions is met: (a) the Board or a designated committee thereof finds that the extension of additional credit is necessary to promote the best interests of the Bank and that prior to renewing, extending or capitalizing any additional credit, a majority of the Board 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 formal plan to collect or strengthen the criticized asset will not be compromised by the extension of credit.