Exhibit 10.32

 

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

COMPTROLLER OF THE CURRENCY

 

In the Matter of:

)

TeamBank, National Association

)

Paola, Kansas

)

 

CONSENT ORDER

 

The Comptroller of the Currency of the United States of America (“Comptroller”),
through his National Bank Examiner, has supervisory authority over TeamBank,
National Association, Paola, Kansas (“Bank”).

 

The Bank, by and through its duly elected and acting Board of Directors
(“Board”), has executed a “Stipulation and Consent to the Issuance of a Consent
Order,” dated September 2, 2008, that is accepted by the Comptroller.  By this
Stipulation and Consent, which is incorporated by reference, the Bank has
consented to the issuance of this Consent Order (“Order”) by the Comptroller.

 

Pursuant to the authority vested in it by the Federal Deposit Insurance Act, as
amended, 12 U.S.C. § 1818, the Comptroller hereby orders that:

 

ARTICLE I

 

COMPLIANCE COMMITTEE

 

(1)           Within ten (10) days, the Board shall appoint a Compliance
Committee of at least three (3) directors, none of whom 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 Director for Special Supervision
(“Director”).  The Compliance

 

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Committee shall be responsible for monitoring and coordinating the Bank’s
adherence to the provisions of this Order.

 

(2)           The Compliance Committee shall meet at least monthly.

 

(3)           Within thirty (30) days of the date of this Order and every thirty
(30) days  thereafter, the Compliance Committee shall submit a written progress
report to the Board setting forth in detail:

 

(a)                                  a description of the action needed to
achieve full compliance with each Article of this Order;

 

(b)                                 actions taken to comply with each Article of
this Order; and

 

(c)                                  the results and status of those actions.

 

(4)           The Board shall forward a copy of the Compliance Committee’s
report, with any additional comments by the Board, to the Director within ten
(10) days of receiving such report.

 

(5)           All reports or plans which the Bank or Board has agreed to submit
to the Director pursuant to this Order shall be forwarded, by overnight mail, to
the following:

 

Director for Special Supervision

Comptroller of the Currency

250 E Street, S.W.

Mail Stop 6-4

Washington, D.C.  20219

 

with a copy to:

 

Kansas City-South Field Office

Comptroller of the Currency

7101 College Boulevard, Suite 1600

Overland Park, Kansas  66210-2007

 

(6)           The Board shall ensure that the Bank has sufficient processes,
personnel, and control systems to effectively implement and adhere to all
provisions of this Order, and that Bank personnel are sufficiently trained to
execute their duties and responsibilities under this Order.

 

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ARTICLE II

 

STRATEGIC PLAN

 

(1)           Within one hundred twenty (120) days, the Board shall forward to
the Director for his review pursuant to paragraph (4) of this Article a written
Strategic Plan for the Bank covering at least a three-year period.  At the next
Board meeting following receipt of the Director’s determination of no
supervisory objection, the Board shall adopt and the Bank (subject to Board
review and ongoing monitoring) shall implement and thereafter ensure adherence
to the Strategic Plan.  The Strategic Plan shall establish objectives for the
Bank’s overall risk profile, earnings performance, growth, balance sheet mix,
off-balance sheet activities, liability structure, capital adequacy, reduction
in the volume of nonperforming assets, product line development and market
segments that the Bank intends to promote or develop, together with strategies
to achieve those objectives and, at a minimum, include:

 

(a)                                  a mission statement that forms the
framework for the establishment of strategic goals and objectives;

 

(b)                                 a description of the Bank’s targeted
market(s) and an assessment of the current and projected risks and competitive
factors in its identified target market(s);

 

(c)                                  the strategic goals and objectives to be
accomplished and actions to be taken to achieve identified goals and objectives,
including specific time frames;

 

(d)                                 specific actions to improve Bank earnings
and asset quality, to reduce the level of concentrations of credit and funding
costs, and to reduce reliance on non-core funding;

 

(e)                                  a financial forecast to include projections
for major balance sheet and income statement accounts, targeted financial
ratios, and growth projections over the period covered by the strategic plan;

 

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(f)                                    a description of the assumptions used to
determine financial projections and growth targets;

 

(g)                                 an identification and risk assessment of the
Bank’s present product lines (assets and liabilities), and an identification and
risk assessment of future product lines prior to the offering of such product
lines that will be utilized to accomplish the strategic goals and objectives
established in (1)(c) of this Article;

 

(h)                                 control systems to mitigate risks associated
with planned new products, growth, or any proposed changes in the Bank’s
operating environment;

 

(i)                                     an evaluation of the Bank’s internal
operations, staffing requirements, board and management information systems and
policies and procedures for their adequacy and contribution to the
accomplishment of the goals and objectives developed under (1)(c) of this
Article;

 

(j)                                     an assessment of the skills and
abilities of senior management to successfully implement the strategic plan;

 

(k)                                  a management employment and succession
program to promote the retention and continuity of capable management;

 

(l)                                     assigned responsibilities and
accountability of Bank personnel for the strategic planning process, new
products, growth goals, or proposed changes in the Bank’s operating environment;
and

 

(m)                               a description of systems to monitor the Bank’s
progress in meeting the plan’s goals and objectives.

 

(2)           On at least a quarterly basis, the Board shall evaluate the Bank’s
performance against the Strategic Plan and require the Bank to prepare written
explanations of the reasons behind any differences between actual performance
and the Bank’s strategic goals and objectives,

 

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and a description of the actions the Board will require the Bank to take to
address any shortcomings, which shall be documented in the Board meeting
minutes.  Upon completion, a copy of the evaluation shall be submitted to the
Director.

 

(3)           Prior to adoption by the Board, a copy of the Strategic Plan, and
any subsequent amendments or revisions, shall be forwarded to the Director for
review and prior written determination of no supervisory objection.  Upon
receiving a determination of no supervisory objection from the Director, the
Bank shall immediately implement and adhere to the Strategic Plan.

 

(4)           The Bank may not initiate any action which deviates significantly
from the Board-approved Strategic Plan without a written determination of no
supervisory objection from the Director.  The Board must give the Director
advance, written notice of its intent to deviate significantly from the
Strategic Plan, along with an assessment of the impact of such change on the
Bank’s condition, including a profitability analysis and an evaluation of the
adequacy of the Bank’s organizational structure, staffing, management
information systems, internal controls, and written policies and procedures to
identify, measure, monitor, and control the risks associated with the change in
the Strategic Plan.

 

(5)           For the purposes of this Article, changes that may constitute a
significant deviation from the Strategic Plan include, but are not limited to, a
change in the Bank’s marketing strategies, marketing partners, underwriting
practices and standards, credit administration, account management, collection
strategies or operations, fee structure or pricing, accounting processes and
practices, or funding strategy, any of which, alone or in aggregate, may have a
material impact on the Bank’s operations or financial performance; or any other
changes in personnel, operations, or external factors that may have a material
impact on the Bank’s operations or financial performance.  For purposes of this
paragraph (5) personnel shall include the president, chief executive officer,
chief operating officer, chief financial officer, chief credit officer, chief
compliance officer, risk

 

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manager, auditor, member of the Bank’s board of directors, or any other position
subsequently identified in writing by the Director.

 

ARTICLE III

 

CAPITAL PLAN AND HIGHER MINIMUMS

 

(1)           Within one hundred twenty (120) days of the date of this Order,
the Bank shall achieve and at all times maintain the following minimum capital
levels(1):

 

(a)                                  Tier 1 capital at least equal to eight
percent (8%) of adjusted total assets(2); and

 

(b)                                 Tier 1 capital at least equal to ten percent
(10%) of risk-weighted assets.

 

(2)           Within one hundred twenty (120) days, the Board shall forward to
the Director for his review pursuant to paragraph (3) of this Article a written
Capital Plan for the Bank, consistent with the Bank’s Strategic Plan required by
Article II, covering at least a three-year period.  At the next Board meeting
following receipt of the Director’s determination of no supervisory objection,
the Board shall adopt and the Bank (subject to Board review and ongoing
monitoring) shall implement and thereafter ensure adherence to the Capital
Plan.  The Capital Plan shall include:

 

(a)                                  specific plans for the maintenance of
adequate capital that may in no event be less than the requirements of paragraph
(1);

 

(b)                                 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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(1)          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).

 

(2)          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)                                  projections of the sources and timing of
additional capital to meet the Bank’s future needs as set forth in the Strategic
Plan;

 

(d)                                 the primary source(s) from which the Bank
will maintain an appropriate capital structure to meet the Bank’s future needs
as set forth in the Strategic Plan;

 

(e)                                  contingency plans that identify alternative
methods should the primary source(s) under (d) above not be available; and

 

(f)                                    a dividend policy that permits the
declaration of a dividend only:

 

(i)                                     when the Bank is in compliance with its
approved Capital Plan and will remain in compliance with its approved Capital
Plan and paragraph (1) of this Article immediately following the payment of any
dividend;

 

(ii)                                  when the Bank is in compliance with
12 U.S.C. §§ 56 and 60; and

 

(iii)                               following the prior written determination of
no supervisory objection by the Director.

 

(3)           Prior to adoption by the Board, a copy of the Capital Plan, and
any subsequent amendments or revisions, shall be forwarded to the Director for
review and prior written determination of no supervisory objection.  Upon
receiving a determination of no supervisory objection from the Director, the
Bank shall immediately implement and adhere to the Capital Plan

 

(4)           If the Director determines, in his sole judgment, that the Bank
failed to submit an acceptable Capital Plan as required by paragraph (2) of this
Article, or fails to implement or adhere to a Capital Plan for which the
Director has taken no supervisory objection pursuant to paragraph (3) of this
Article; then within thirty (30) days of receiving written notice from the
Director, the Bank shall develop and shall submit to the Director for his review
and prior written determination

 

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of no supervisory objection a Disposition Plan, which shall detail the Board’s
proposal to sell or merge the Bank, or liquidate the Bank under 12 U.S.C. § 181.

 

(5)           In the event that the Disposition Plan submitted by the Bank’s
Board outlines a sale or merger of the Bank, the Disposition Plan, at a minimum,
shall address the steps that will be taken and the associated timeline to ensure
that a definitive agreement for the sale or merger is executed not later than
ninety (90) days after the receipt of the Director’s written determination of no
supervisory objection to the Disposition Plan.  If the Disposition Plan outlines
a liquidation of the Bank, the Disposition Plan shall detail the actions and
steps necessary to accomplish the liquidation in conformance with 12 U.S.C.
§§ 181 and 182, and the dates by which each step of the liquidation shall be
completed, including the date by which the Bank will terminate the national bank
charter.  In the event of liquidation, the Bank shall hold a shareholder vote
pursuant to 12 U.S.C. § 181, and commence liquidation, within thirty (30) days
of receiving the Director’s written determination of no supervisory objection to
the Disposition Plan.

 

(6)           After the Director has advised the Bank in writing that he does
not take supervisory objection to the Disposition Plan, the Board shall
immediately implement, and shall thereafter ensure adherence to, the terms of
the Disposition Plan.  Failure to submit a timely, acceptable Disposition Plan,
or failure to implement and adhere to the Disposition Plan after the Board
obtains a written supervisory non-objection from the Director, may be deemed a
violation of this Order, in the exercise of the Director’s sole discretion.

 

ARTICLE IV

 

NEW SENIOR LOAN OFFICER

 

(1)           Within sixty (60) days, the Board shall identify and submit to the
Director, pursuant to paragraph (2) of this Article, a proposed new, qualified
and capable Senior Loan

 

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Officer who shall be vested with sufficient executive authority to fulfill the
duties and responsibilities of the position and ensure the safe and sound
operation of the Bank.

 

(2)           Prior to the appointment of any individual pursuant to paragraph
(1), the Board shall submit to the Director written notice as required by 12
C.F.R. § 5.51 and in accordance with the Comptroller’s Licensing Manual.  The
Director shall have the power to disapprove the appointment of the proposed
officer.  However, the failure to exercise such veto power shall not constitute
an approval or endorsement of the proposed officer.

 

(3)           The requirement to submit information and the prior disapproval
provisions of this Article are based upon the authority of 12 U.S.C. §
1818(b) and do not require the Comptroller or the Director to complete his
review and act on any such information or authority within ninety (90) days.

 

ARTICLE V

 

LIQUIDITY MANAGEMENT PROGRAM

 

(1)           Within thirty (30) days, the Board shall maintain a comprehensive
liquidity management program which assesses, on an ongoing basis, the Bank’s
current and expected funding needs, and ensures that sufficient funds or access
to funds exist to meet those needs.  Such a program must include effective
methods to achieve and maintain sufficient liquidity, and to measure and monitor
liquidity risk, to include at a minimum:

 

(a)                                  a deposit maturity schedule by deposit
type, including brokered deposits and uninsured deposits, showing the balances
that can be withdrawn immediately, maturities on a weekly basis for the next two
months and monthly for the following ten months, which schedule shall be updated
at least weekly;

 

(b)                                 a funding obligation schedule including
outstanding lines of credit, unfunded loan commitments, and outstanding letters
of credit, showing the obligations that can be drawn immediately, on a weekly
basis for the next

 

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two months and monthly for the following ten months, which schedule shall be
updated at least weekly;

 

(c)                                  a listing of funding sources, updated
weekly, including:

 

(i)                                     federal funds sold;

 

(ii)                                  borrowing lines by lender, including
original amount, remaining availability, type and book value of collateral
pledged, terms, and maturity date, if applicable;

 

(iii)                               unpledged assets and assets available for
sale; and

 

(iv)                              other available sources of funds to meet
liquidity needs.

 

(d)                                 a sources and uses of funds report covering
each of the next four weeks, updated weekly, which reflects known and projected
changes in asset and liability accounts under best case and worst case
scenarios, and the assumptions used in developing the projections, to incude:

 

(i)                                     projected additional funding
requirements from, a reduction in deposit accounts including uninsured and
brokered deposits, cancellation of unsecured borrowing lines or ability to
acquire federal funds purchased, or availability limitations or reductions
associated with secured borrowing relationships;

 

(ii)                                  projected additional funding sources,
including loan payments, loan sales/participations, or deposit increases; and

 

(iii)                               projected impact of reputation, economic and
credit conditions in the Bank’s market.

 

(e)                                  strategies to maintain sufficient liquidity
at reasonable costs including, but not limited to, the following:

 

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(i)            better diversification of funding sources, with particular
emphasis on increasing traditional core funding; and

 

(ii)           increasing liquidity through such actions as obtaining additional
capital, limits on asset growth, aggressive collection of problem loans and
recovery of charged-off assets, and asset sales.

 

(f)            A contingency funding plan that forecasts funding needs, and
funding sources under a stressed scenario which:

 

(i)            represents management’s best estimate of balance sheet changes
that may result from a liquidity or credit event;

 

(ii)           identifies, quantifies, establishes, and ranks all sources of
funding by preference for best case and worst case scenarios, including asset
funding, liability funding and off-balance sheet funding; and

 

(iii)          ensures that administrative policies and procedures are
consistent with the Board’s guidance and risk tolerances.

 

(2)           The Board shall submit a copy of the comprehensive liquidity
management program, along with the weekly schedules and reports required by this
Article to the Director for review.

 

ARTICLE VI

 

CRITICIZED ASSETS

 

(1)           The Board shall take immediate and continuing action to protect
the Bank’s interest in those assets criticized in the most recent Report of
Examination (“ROE”) and any future ROE, by internal or external loan review, or
in any list provided to management by the National Bank Examiners during any
examination.

 

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(2)           The Board’s compliance with paragraph (1) of this Article shall
include the development of Criticized Asset Reports (“CARs”) in a format similar
to that contained in Appendix A of this Order, on all credit relationships and
other assets totaling in aggregate five hundred thousand dollars ($500,000) or
more, criticized as “doubtful,” “substandard,” or “special mention.”  CARs must
be updated and submitted to the Board and the Director monthly.  Each CAR shall
cover an entire credit relationship, and include, at a minimum, analysis and
documentation of the following:

 

(a)           the origination date and any renewal or extension dates, amount,
purpose of the loan, and the originating officer;

 

(b)           the expected primary and secondary sources of repayment, and an
analysis of the adequacy of the repayment source;

 

(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)           results of any FAS 114 impairment analysis performed pursuant to
Article X, paragraph (1)(c) of this Order;

 

(f)            significant developments, including a discussion of changes since
the prior CAR, if any; and

 

(g)           the proposed action to eliminate the basis of criticism and the
time frame for its accomplishment, including an appropriate exit strategy.

 

(3)           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

 

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credit are criticized in any ROE, in any internal or external loan review, or in
any list provided to management by the National Bank Examiners during any
examination, 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 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.  A copy of the findings and approval of
the Board or designated committee shall be maintained in the credit file of the
affected borrower;

 

(b)           the Bank performs a written credit and collateral analysis as
required by paragraph (2)(d) of this Article and, if necessary, the written
program adopted pursuant to paragraph (2)(f) of this Article is revised; and

 

(c)           the Board’s formal plan to collect or strengthen the criticized
asset will not be compromised by the extension of additional credit.

 

ARTICLE VII

 

LOAN PORTFOLIO MANAGEMENT

 

(1)           The Board shall, within sixty (60) days, adopt and the Bank
(subject to Board review and ongoing monitoring) shall implement and thereafter
ensure adherence to a written credit policy to improve the Bank’s loan portfolio
management.  The credit policy shall include, but not be limited to:

 

(a)           requirements that extensions of credit are granted, by renewal or
otherwise, to any borrower only after obtaining current and sufficient credit

 

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information to fully assess the borrower’s and guarantor(s) cash flow, debt
service requirements, contingent liabilities, and liquidity on a global basis,
and only after preparing a documented credit analysis;

 

(b)           a description of the types of credit information required on
borrowers and guarantors including, but not limited to, annual audited
statements, interim financial statements, personal financial statements,
supporting schedules and tax returns.

 

(c)           procedures to validate and analyze income and liquidity sources
for extensions of credit to all borrowers;

 

(d)           adequate training in cash flow preparation and analysis,
particularly from tax returns, for Bank personnel performing credit analyses,
and processes to ensure that additional training is provided as needed;

 

(e)           procedures to ensure that extensions of credit are granted, by
renewal or otherwise, to any borrower only after obtaining and documenting a
current valuation of collateral, with the exception of real estate collateral
which is addressed in Article VIII;

 

(f)            procedures and controls to periodically verify the existence and
lien position of collateral;

 

(g)           procedures which prohibit, on any loan renewal or extension, the
establishment of an interest reserve using any Bank loan proceeds to the same
borrower or guarantor;

 

(h)           procedures which prohibit, on any loan renewal or extension, the
capitalization of accrued interest;

 

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(i)            procedures which establish time frames to resolve credit and
collateral documentation exceptions;

 

(j)            early problem loan identification to assure that credits are
accurately risk rated on at least a monthly basis, pursuant to the risk ratings
definitions contained in the Bank’s credit policy and consistent with regulatory
guidance;

 

(k)           a performance appraisal process, including performance appraisals,
job descriptions, and incentive programs for loan officers, which adequately
consider their performance relative to policy compliance, documentation
standards, accuracy in credit grading, and other loan administration matters;
and

 

(l)            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 portfolio.

 

(2)           Where the Bank deviates from the Bank’s credit policy, exceptions
shall be clearly documented on the loan offering sheet, problem loan report and
other management information systems, and these exceptions shall receive the
prior written approval by the Board or a committee thereof.

 

(3)           Upon completion, a copy of the credit policy shall be forwarded to
the Director for review.

 

ARTICLE VIII

 

 APPRAISALS OF REAL PROPERTY

 

(1)           The Board shall require the Bank to obtain a current independent
appraisal on any loan in excess of $500,000 that is secured by real property
when the borrower has failed to

 

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comply with the contractual terms of the loan agreement and an analysis of
current financial information does not demonstrate the ongoing ability of the
borrower or guarantor(s) to perform in accordance with the contractual terms of
the loan agreement.  Such appraisal shall be ordered within thirty (30) days
following the borrower’s failure to comply with the contractual terms of the
loan agreement, including those loans that are sixty (60) days or more past due.

 

(2)           Within ninety (90) days, the Board shall require and ensure the
Bank develops and implements an appraisal review and analysis process to ensure
that appraisals conform to appraisal standards and regulations.  The appraisal
review and analysis process shall ensure:

 

(a)           that appraisals are performed in accordance with 12 C.F.R.
Part 34;

 

(b)           are consistent with the guidance in OCC Bulletin 2005-6,
“Appraisal Regulations and the Interagency Statement on Independent Appraisal
and Evaluation Functions: Frequently Asked Questions”, dated March 22, 2005; and

 

(c)           are consistent with Advisory Letter 2003-9, “Independent Appraisal
and Evaluation Function”, dated October 28, 2003.

 

(3)           Written documentation supporting each appraisal review and
analysis shall be retained in the loan file along with the appraisal.

 

ARTICLE IX

 

EXTERNAL LOAN REVIEW

 

(1)           The Board shall continue to employ a qualified individual or firm,
independent of the lending function, to perform a loan review of the Bank on at
least an annual basis.  The external loan review engagement shall provide for a
written report to be filed with the Board after each review and shall use a loan
and lease grading system consistent with the guidelines set forth

 

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in Rating Credit Risk, A-RCR, of the Comptroller’s Handbook.  Such reports
shall, at a minimum, include comments and conclusions regarding the
identification of the:

 

(a)           type, rating, and amount of problem loans and other problem
assets;

 

(b)           amount of delinquent and nonaccrual loans;

 

(c)           status of credit related violations of law or regulation;

 

(d)           loans not in conformance with the Bank’s lending policies;

 

(e)           credit underwriting and documentation exceptions;

 

(f)            quality of credit analysis and documentation;

 

(g)           accuracy of internal risk ratings;

 

(h)           overall credit administration practices; and

 

(i)            completeness and effectiveness of problem loan workout plans.

 

(2)           Prior to making any changes to the engagement, or to the
individual or firm employed to perform the loan review, the Board shall submit
the proposed engagement contract and/or the name and qualifications of the
proposed individual or firm to the Director for a written determination of no
supervisory objection.

 

(3)           The Board or a designated committee thereof shall review the
independent loan review reports and ensure that immediate, adequate, and
continuing remedial action is taken upon the findings noted in the reports.

 

(4)           A copy of the reports submitted to the Board, as well as the
documentation of the actions taken by the Bank to collect or strengthen assets
identified as problem credit, shall be maintained in the books and records of
the Bank.  The Board shall forward a copy of the reports, with any additional
comments from the Board, to the Director within thirty (30) days after
completion of the review.

 

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ARTICLE X

 

CONCENTRATIONS OF CREDIT

 

(1)           Within sixty (60) days, the Board shall prepare and submit to the
Director for a prior written determination of no supervisory objection, a
written program (including appropriate revisions to policies and procedures)
designed to manage the risk in the Bank’s commercial real estate (“CRE”) loan
portfolio in accordance with the guidelines in OCC Bulletin 2006-46,
Concentration in Commercial Real Estate Lending, Sound Risk Management Practices
(dated December 6, 2006), and the Commercial Real Estate and Construction
Lending, A-CRE, of the Comptroller’s Handbook, that, at a minimum, includes:

 

(a)           the establishment of CRE concentration limits stratified by type,
market area and other meaningful measures, including a written analysis
supporting each established concentration limit;

 

(b)           monthly monitoring of concentration reports that stratify the CRE
portfolio by product type, market area and other meaningful measures;

 

(c)           strategies and procedures to manage CRE concentrations to conform
with established limits set in Subparagraph (a) of this Article;

 

(d)           Stress testing and/or sensitivity analysis of significant loans to
quantify the impact of changing economic conditions on asset quality, earnings,
and capital; and

 

(e)           identification and reporting to the Board of aggregate loans that
exceed supervisory loan-to-value limits at least quarterly.

 

(2)           Upon receiving a written determination of no supervisory objection
from the Director, the Board shall immediately implement and thereafter ensure
adherence to the program, policies and procedures required by this Article.

 

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ARTICLE XI

 

ALLOWANCE FOR LOAN AND LEASE LOSSES

 

(1)           The Board shall require the Bank to maintain a program for the
maintenance of an adequate Allowance for Loan and Lease Losses (“ALLL”) that is
consistent with the comments on maintaining a proper ALLL found in the FFIEC
Interagency Policy Statement on the ALLL contained in OCC Bulletin 2006-47 dated
December 13, 2006, and the “Allowance for Loan and Lease Losses” booklet of the
Comptroller’s Handbook, and shall incorporate the following:

 

(a)           internal risk ratings of loans;

 

(b)           results of the Bank’s external loan review;

 

(c)           criteria for determining which loans will be reviewed under
Financial Accounting Standard (“FAS”) 114, how impairment will be determined,
and procedures to ensure that the analysis of loans complies with FAS 114
requirements;

 

(d)           criteria for determining FAS 5 loan pools and an analysis of those
loan pools;

 

(e)           recognition of non-accrual loans in conformance with GAAP and
FFIEC policy;

 

(f)            loan loss experience;

 

(g)           trends of delinquent and non-accrual loans;

 

(h)           concentrations of credit in the Bank; and

 

(i)            present and prospective economic and market conditions.

 

(2)           The program shall provide for a review of the ALLL by the Board at
least once each calendar quarter.  Any deficiency in the ALLL shall be remedied
in the quarter it is discovered, prior to the filing of the Consolidated Reports
of Condition and Income, by additional

 

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provisions from earnings.  Written documentation shall be maintained indicating
the factors considered and conclusions reached by the Board in determining the
adequacy of the ALLL.

 

(3)           A copy of the Board’s program, and any subsequent revisions to the
program, shall be submitted to the Director for review.

 

ARTICLE XII

 

CLOSING

 

(1)           Although the Board is by this Order required to submit certain
proposed actions and programs for the review or prior written determination of
no supervisory objection of the Director, the Board has the ultimate
responsibility for proper and sound management of the Bank.

 

(2)           It is expressly and clearly understood that if, at any time, the
Comptroller deems it appropriate in fulfilling the responsibilities placed upon
it by the several laws of the United States of America to undertake any action
affecting the Bank, nothing in this Order shall in any way inhibit, estop, bar
or otherwise prevent the Comptroller from so doing.

 

(3)           Any time limitations imposed by this Order shall begin to run from
the effective date of this Order.  Such time limitations may be extended in
writing by the Director for good cause upon written application by the Board.

 

(4)           The provisions of this Order are effective upon issuance of this
Order by the Comptroller, through his authorized representative whose hand
appears below, and shall remain effective and enforceable, except to the extent
that, and until such time as, any provisions of this Order shall have been
amended, suspended, waived, or terminated in writing by the Comptroller.

 

(5)           In each instance in this Order in which the Board is required to
ensure adherence to, and undertake to perform certain obligations of the Bank,
it is intended to mean that the Board shall:

 

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(a)           authorize and adopt such actions on behalf of the Bank as may be
necessary for the Bank to perform its obligations and undertakings under the
terms of this Order;

 

(b)           require the timely reporting by Bank management of such actions
directed by the Board to be taken under the terms of this Order;

 

(c)           follow-up on any non-compliance with such actions in a timely and
appropriate manner; and

 

(d)           require corrective action be taken in a timely manner of any
non-compliance with such actions.

 

(6)           This Order is intended to be, and shall be construed to be, a
final order issued pursuant to 12 U.S.C. § 1818(b), and expressly does not form,
and may not be construed to form, a contract binding on the Comptroller or the
United States.

 

(7)           The terms of this Order, 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.

 

IT IS SO ORDERED, this  2nd  day of September, 2008.

 

 

/s/ Ronald G. Schneck

 

Ronald G. Schneck

 

Director

 

Special Supervision Division

 

 

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APPENDIX A

CRITICIZED ASSET REPORT

(Date)

 

Borrower(s):

 

 

 

 

Guarantor(s):

 

 

 

 

Balance(s):

 

 

Bank Rating:

 

 

 

 

 

OCC Rating:

 

 

 

 

 

 

 

 

 

 

 

Charged-Off to date:

 

 

 

 

Potential charge-off:

 

 

 

 

 

 

 

 

 

Past Due Amount/#Days:

 

 

Nonaccrual:

 

 

Collateral (description, lien position, appraised value, valuation date):

 

Source of Repayment:

 

Summarize Financial Information on Borrower and Guarantor:

 

PRESENT STATUS (Fully explain any increase in outstanding balance, significant
progress or deterioration, etc.)

 

ACTION PLAN TO ELIMINATE ASSET CRITICISM(S) AND TIME FRAME FOR ITS
ACCOMPLISHMENT:

 

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