Common use of LENDING POLICY Clause in Contracts

LENDING POLICY. (1) Within sixty days of the date of this FA, the Board shall review and revise the Bank's written loan policy to address specific weaknesses identified in commercial real estate lending. In revising this policy, the Board shall refer to “Commercial Real Estate and Construction Lending” booklet of the Comptroller’s Handbook. This loan policy shall be expanded to incorporate, but not necessarily be limited to, the following: (a) guidance on the use of specific loan covenants for all types of loans in credit agreements; (b) process to track absence of specified covenants as well as borrower noncompliance with covenants as policy exceptions; (c) guidelines for reasonable repayment terms based on the type of commercial real estate loan and/or performance of the project including maturity scheduling related to the anticipated source of repayment, the purpose of the loan, and the useful life of the collateral; (d) guidelines under (c) above should include consideration of guarantor support and use of curtailment payments to maintain reasonable repayment terms; (e) procedures for stress testing individual loans at origination and periodically through the life of the loan. The procedures should address stressing of factors including, but not limited to, sales prices, absorption or holding period, discount rates, interest rate, capitalization rates, vacancies, and net operating income based on actual rental income and expenses; (f) guidelines for obtaining updated appraisals or other collateral valuations and maintaining borrower equity that are consistent with the standards of 12 C.F.R. Part 34, Subpart C and Subpart D. The policy guidelines should specify criteria when re-margining should be considered to maintain borrower equity in the project; (g) guidelines for renewals or extensions 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; (ii) provide guidelines and limitations on the capitalization of interest; (iii) provide guidelines and limitations on the use of interest reserves in extensions or renewals including criteria and limitations on the source of funding (borrower, partners, shareholders, guarantors, new debt, etc.); and (iv) establish criteria to ensure accurate reporting of troubled debt restructurings; (h) guidelines and limitations on concentrations of credit; (i) criteria for the timely recognition of criticized or classified assets based on consideration of factors such as, but not limited to, actual and planned project performance, reasons for delays, project viability, collateral value, cost overruns, repayment term, stress testing results, and source of repayment; (j) measures to correct the deficiencies in the Bank's lending procedures noted in any Report of Examination (▇▇▇); and (k) 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.

LENDING POLICY. (1) Within sixty days of the date of this FAone hundred twenty (120) days, the Board shall review and revise the Bank's written loan policy to address specific weaknesses identified in commercial real estate lendingpolicy. In revising this policy, the Board shall refer to the “Commercial Real Estate and Construction LendingLoan Portfolio Management” booklet of the Comptroller’s Handbook. This loan policy shall be expanded to incorporate, but not necessarily be limited to, the following: (a) guidance detailed financial statement requirements that establish specific standards for quality (Audited, Reviewed, Compiled, etc.), frequency and content based on the use of specific loan covenants for all types of loans in credit agreementssize and loan type; (b) process detailed guidance for guarantor statement requirements to track absence of specified covenants as well as borrower noncompliance with covenants as policy exceptionsinclude frequency, information on real estate investments, contingent liabilities, debt service requirements, and information to verify liquidity; (c) guidelines for reasonable repayment terms detailed feasibility study and pre-sale/leasing requirements that establish specific standards based on the type of commercial real estate loan and/or performance of the project including maturity scheduling related to the anticipated source of repayment, the purpose of the loan, size and the useful life of the collateralloan type; (d) guidelines under (c) above should include consideration CRE limits expressed as a percentage of guarantor support and use of curtailment payments to maintain reasonable repayment termstotal capital; (e) procedures for stress testing individual prudent sub-limits on major categories of real estate loans within the aggregate limits established at origination and periodically through the life of the loan. The procedures should address stressing of factors including, but not limited to, sales prices, absorption or holding period, discount rates, interest rate, capitalization rates, vacancies(d) above, and net operating income based on actual rental income and expensesconsistent with Subpart D of 12 C.F.R § 34; (f) guidelines a pricing policy that takes into consideration costs, general overhead, and probable loan losses, while providing for obtaining updated appraisals or other collateral valuations and maintaining borrower equity that are consistent with the standards a reasonable margin of 12 C.F.R. Part 34, Subpart C and Subpart D. The policy guidelines should specify criteria when re-margining should be considered to maintain borrower equity in the projectprofit; (g) a definition of the Bank’s trade area; (h) guidelines and limitations for renewals or extensions loans originating outside of the Bank's trade area; (i) guidelines consistent with Banking Circular 255255 Troubled Loan Workouts and Loans to Borrowers in Troubled Industries, setting forth the criteria under which renewals of extensions of credit may be approved. At a minimum the policy shall: (i) shall ensure that renewals are not made for the sole purpose of reducing the volume of loan delinquencies; (ii) , provide guidelines and limitations on the capitalization of interest; (iii) interest and provide guidelines and limitations on the use of interest reserves in extensions or renewals including criteria and limitations on the source of funding (borrower, partners, shareholders, guarantors, new debt, etc.); and (iv) establish criteria to ensure accurate reporting of troubled debt restructurings; (h) guidelines and limitations on concentrations of credit; (i) criteria for the timely recognition of criticized or classified assets based on consideration of factors such as, but not limited to, actual and planned project performance, reasons for delays, project viability, collateral value, cost overruns, repayment term, stress testing results, and source of repaymentprincipal curtailment requirements; (j) measures to correct the deficiencies in requirements that all future real estate loan documents, consistent with applicable laws, provide for the Bank's lending procedures noted ’s ability to demand additional collateral support, reduction in any Report Bank exposure, or payment in full, when there is evidence of Examination (▇▇▇); anddeteriorating credit quality; (k) 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.consistent with OCC Bulletin 2000-20,