Exhibit 10.1

 

AMENDMENT TO THE OCTOBER 2014 AGREEMENT
BY AND BETWEEN

Polonia Bank, Huntingdon Valley, Pennsylvania
and

The Comptroller of the Currency

 

 

 

Polonia Bank, Huntingdon Valley, Pennsylvania (“Bank”) and the Comptroller of
the Currency of the United States (“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, through his authorized representative, and the Bank, by and
through its duly elected and acting Board of Directors, executed a formal
agreement on October 21, 2014 (“2014 Agreement”). The 2014 Agreement remains in
full force and effect, except as otherwise set forth herein.

 

The Comptroller, through his national bank examiners and other staff of the
Office of the Comptroller of the Currency (“OCC”), has conducted an examination
of the Bank and has found unsafe or unsound banking practices relating to
consumer compliance and compliance management.

 

The Comptroller, through his authorized representative, and the Bank, by and
through its duly elected and acting Board of Directors, mutually agree that an
amendment to the 2014 Agreement is warranted. This amendment to the 2014
Agreement (“Amendment”) supplements, but does not replace the 2014 Agreement.
Specifically, Articles II, III, IV, V, VI, VII, VIII, IX, and X of the 2014
Agreement shall remain in effect without modification; Articles I and XI of the
2014 Agreement shall be replaced with Articles I and XIII of this Amendment,
respectively, which are incorporated into the 2014 Agreement as if fully set
forth therein; and Articles XI and XII of this Amendment shall supplement the
2014 Agreement as set forth below and are incorporated into the 2014 Agreement
as if fully set forth therein.

 

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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 the 2014 Agreement and this
Amendment.

 

ARTICLE I
JURISDICTION

 

(1) The Bank is a federal savings association examined by the OCC pursuant to
the Home Owners’ Loan Act of 1933, as amended, 12 U.S.C. § 1461 et seq. and is a
“Federal savings association” within the meaning of 12 U.S.C. § 1813(b) and an
“insured depository institution” within the meaning of 12 U.S.C. §§ 1813(c) and
1818(b)(1).

 

(2) The Comptroller is “the appropriate Federal banking agency” regarding the
Bank pursuant to 12 U.S.C. §§ 1813(q) and within the meaning of 1818(b).

 

(3) The 2014 Agreement and this Amendment shall each be construed to be a
“written agreement entered into with the agency” within the meaning of 12 U.S.C.
§ 1818(b)(1).

 

(4) The 2014 Agreement and this Amendment shall each 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).

 

(5) The 2014 Agreement and this Amendment shall each be construed to be a
“formal written agreement” within the meaning of 12 C.F.R. § 5.3(g)(5) or 12
C.F.R. § 5.51(c)(7), unless the OCC informs the Bank otherwise.1

 

 

_____________________________

1 Effective July 1, 2015, the OCC issued a final rule that integrates its rules
for national banks and federal savings

 

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(6) The 2014 Agreement and this Amendment shall each be construed to be a
“written agreement” within the meaning of 12 U.S.C. § 1818(u)(1)(A).

 

ARTICLE XI
COMPLIANCE MANAGEMENT

 

(1) Within ninety (90) days of the date of this Amendment, the Board shall
submit to the Assistant Deputy Comptroller for a prior written determination of
no supervisory objection a revised written compliance management program to
ensure the Bank maintains a program that appropriately measures, monitors and
controls the Bank’s compliance risks. The revised program shall include, at a
minimum:

 

(a)a qualified and competent individual responsible for implementation and
administration of the Bank’s compliance management program, and who shall
provide effective oversight for adherence to compliance requirements throughout
all areas of the Bank;    

(b)compliance policies and procedures that are consistent with regulatory
requirements and that provide standards and guidance for all business lines
throughout the Bank;    

(c)processes to ensure periodic review of and appropriate updates to compliance
policies and procedures to address changes in applicable laws and regulations;
     (d)a compliance risk assessment process that includes qualitative and
quantitative factors for measuring risk;

 

 

 

associations (FSAs) relating to policies and procedures for corporate activities
and transactions (licensing rules). Specifically, the final rule consolidates
most licensing provisions for FSAs into the existing national bank rule in part
5 and eliminates parts 116, 146, 152, 159, 174 and the corresponding provision
in parts 143, 144, 145, 150, 160, and 163. See 80 Fed. Reg. 28346 (May 18,
2015).

 

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(e)an effective monitoring and testing process to provide for ongoing assessment
of compliance efforts throughout all areas of the Bank;    

(f)measures to ensure compliance testing results are reported directly to the
Board with an action plan for addressing any identified deficiencies, including
the individual or individuals responsible for implementing corrective action and
the timeline for implementation;    

(g)an escalation process and accountability measures for failures to implement
corrective action;    

(h)clear reporting lines and responsibilities for compliance management,
including reporting lines and responsibilities of business line individuals
designated with responsibility for meeting the Bank’s compliance requirements;
   

(i)an ongoing review and assessment of the individuals responsible for meeting
the Bank’s compliance requirements, with consideration of the Bank’s compliance
risk assessment and the results of independent compliance audits, to ensure
designated individuals have the experience, qualifications and competence to
effectively maintain the program and identify, monitor and control compliance
risks;    

(j)the development and implementation of a bank-wide compliance training program
tailored to match each employee’s roles, responsibilities and duties, that
includes an ongoing evaluation of training needs, assesses the adequacy of
training performed, identifies training gaps, and tracks training completed; and
     (k)a customer complaint tracking and resolution process.

 

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(2) Within thirty (30) days of receipt of the Assistant Deputy Comptroller’s
written 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 revised compliance management program.

 

ARTICLE XII

MORTGAGE BANKING LOOKBACK REVIEW

 

(1) Within thirty (30) days of the date of this Amendment, the Board shall
ensure that the Bank has engaged an independent third party, in accordance with
OCC Bulletin 2013-33, Use and Review of Independent Consultants in Enforcement
Actions, to perform a comprehensive lookback review of all loans originated by
the FHA department (sold and portfolio) for the calendar years 2012, 2013, and
2014 to determine the Bank’s compliance with the Real Estate Settlement
Procedures Act of 1974, 12 U.S.C. § 2601, et seq. (“RESPA”), and/or RESPA’s
implementing regulations at 12 C.F.R. Part 1024 (“LBR”). The LBR must include at
a minimum:

 

(a)a determination of whether:

 

(i)early disclosure processes and practices are consistent with the requirements
of 12 C.F.R. §§ 1024.7(a), (b);

 

(ii)content and form of the Good Faith Estimates (“GFEs”) are consistent with
the requirements of 12 C.F.R. § 1024.7(d) and the instructions set out in
Appendix C to 12 C.F.R. Part 1024; and

 

(iii)revisions to the GFE are documented as required by 12 C.F.R. §1024.7(f) and
where the Bank documents that “changed circumstances” are the reason a revised
GFE was or is to be provided, there are in fact “changed circumstances”
affecting settlement costs or the loan as defined at 12 C.F.R. § 1024.2(b);

 

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(b)a summary and loan/customer level detail of any violations of RESPA and 12
C.F.R. Part 1024; and

 

(c)an appropriate validation process.

 

(2) Within one-hundred and twenty (120) days of the date of this Amendment, the
Board shall forward to the Assistant Deputy Comptroller the results of the LBR.

 

(3) The Bank shall maintain and have available for examiner review documentation
supporting the results of the LBR.

 

(4) Within one-hundred and fifty (150) days of the date of this Amendment, the
Bank shall submit to the Assistant Deputy Comptroller for a written
determination of no supervisory objection a written Remediation Plan for
resolving any issues and/or violations identified in the LBR that minimizes the
Bank’s reputation and compliance risks and protects consumer interests. The
Remediation Plan shall include at a minimum:

 

(a)the method and timing of any reimbursements due to affected customers
identified in the LBR;

 

(b)a detailed program outlining the policies, procedures and review processes
the Bank will adopt to ensure its ongoing compliance with RESPA and its
implementing regulations at 12 C.F.R. Part 1024, as well as the rules for
Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act
(Regulation X) and the Truth In Lending Act (Regulation Z) at 12 C.F.R. Part
1024 and Part 1026;2 and

 

(c)individuals designated with responsibility for implementing the program and
measures for accountability.

 

 

_____________________________

2 See 78 Fed. Reg. 79730 (Dec. 31, 2013); 80 Fed. Reg. 8767 (Feb. 19, 2015); 80
Fed. Reg. 43911 (July 24, 2015) ("Effective July 24, 2015, this final rule
delays the effective date from August 1, 2015, until October 3, 2015, for the
final rules amending 12 CFR parts 1024 and 1026 published December 31, 2013, at
78 FR 79730, and February 19, 2015, at 80 FR 8767; and for amendatory
instruction 5 amending Supplement I to 12 CFR part 1026, appearing on page 65325
in the Federal Register on November 3, 2014.”).

  

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(5) With thirty (30) days of receipt of the Assistant Deputy Comptroller’s
written determination of no supervisory objection to the Remediation Plan, the
Board shall adopt and the Bank, subject to Board review and ongoing monitoring,
shall implement and thereafter ensure adherence to the Remediation Plan.

 

(6) The Board shall ensure that the Bank has policies, processes, personnel, and
control systems to ensure implementation of and adherence to the procedures
developed pursuant to this Article.

 

ARTICLE XIII
OTHER PROVISIONS

 

(1) Although the Bank is by the 2014 Agreement and this Amendment required to
submit certain proposed plans, actions and programs for the review or prior
written determination of no supervisory objection of the Assistant Deputy
Comptroller, the Board has the ultimate responsibility for proper and sound
management of the Bank.

 

(2) The Board shall ensure that the Bank has sufficient processes, personnel,
and control systems to effectively implement and adhere to all provisions of the
2014 Agreement and this Amendment.

 

(3) In the event any regulation or guidance currently applicable to Federal
savings associations referenced in the 2014 Agreement or this Amendment is
rescinded and/or amended, revised, replaced or superseded because the OCC
determines to make other regulations or guidance applicable to Federal savings
associations as part of the OCC’s regulatory integration process, or otherwise,
the Bank shall comply with such successor regulations and/or subsequent
guidance.

 

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(4) The provisions of the 2014 Agreement became effective upon its execution and
this Amendment is effective upon its execution by the Comptroller, through his
authorized representative whose hand appears below, and the Board, and both the
2014 Agreement and this Amendment shall remain effective and enforceable, except
to the extent that, and until such time as, any provisions of the 2014 Agreement
or this Amendment shall have been amended, suspended, waived, or terminated in
writing by the Comptroller, through his authorized representative.

 

(5) Except as otherwise expressly provided herein, any time limitations imposed
by Articles II, III, IV, V, VI, VII, VIII, IX, and X of the 2014 Agreement
continue to run from the effective date of the 2014 Agreement, and any time
limitations imposed by this Amendment shall begin to run from the effective date
of this Amendment.

 

(6) If the Bank requires a waiver or suspension of any provision or an extension
of any timeframe within the 2014 Agreement or this Amendment, the Board shall
submit a written request to the Assistant Deputy Comptroller asking for relief.
Any written request submitted pursuant to this Article shall include a statement
setting forth in detail, with relevant supporting documentation, the special
facts and circumstances that support the waiver or suspension of any of any
provision or an extension of a timeframe within the 2014 Agreement or this
Amendment.

 

(7) The 2014 Agreement and this Amendment are each intended to be, and shall be
construed to be, a “written agreement entered into with the agency” within the
meaning of 12 U.S.C. § 1818(b)(1), and expressly do not form, and may not be
construed to form, a contract binding on the Comptroller or the United States.

 

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(8) 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 the 2014 Agreement or this Amendment shall in any way
inhibit, estop, bar or otherwise prevent the Comptroller from so doing.

 

(9) The terms of the 2014 Agreement and this Amendment, 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.

 

(10) All reports, programs or plans that the Bank or Board has agreed to submit
to the Assistant Deputy Comptroller pursuant to the 2014 Agreement and this
Amendment shall be forwarded, by overnight mail or via email, to the following:

 

Assistant Deputy Comptroller Comptroller of the Currency Philadelphia Field
Office

1150 Northbrook Drive, Suite 303

Trevose, PA 19053

 

 

 

 

IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller as his
representative, has hereunto set her hand on behalf of the Comptroller.

 

 

 

 

          /s/ Julie A. Thieman     November 10, 2015   Julie A. Thieman     Date
  Assistant Deputy Comptroller      

  

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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/ Eugene Andruczyk   November 10, 2015 Eugene Andruczyk   Date             /s/
Frank J. Byrne   November 10, 2015 Frank J. Byrne   Date                    
Joseph Callahan   Date             /s/ Wayne Courtright   November 10, 2015
Wayne Courtright   Date             /s/ Joseph Svetik   November 10, 2015 Joseph
Svetik   Date             /s/ Robert J. Woltjen   November 10, 2015 Robert J.
Woltjen   Date

 

 

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