Document:

Exhibit
10.33

 

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

COMPTROLLER OF THE CURRENCY

 

	
  In the
  Matter of:

  	
  )

  	
   

  
	
  TeamBank,
  National Association

  	
  )

  	
   

  
	
  Paola, Kansas

  	
  )

  	
   

  

 

STIPULATION AND CONSENT TO THE ISSUANCE

OF A CONSENT ORDER

 

The
Comptroller of the Currency of the United States of America (“Comptroller”)
intends to initiate cease and desist proceedings against TeamBank, National
Association, Paola, Kansas (“Bank”) pursuant to 12 U.S.C.
§ 1818(b) through the issuance of a Notice of Charges for unsafe and
unsound banking practices relating to supervision of the Bank.

 

The
Bank, in the interest of compliance and cooperation, consents to the issuance
of a Consent Order, dated September 2, 2008 (“Order”);

 

In
consideration of the above premises, the Comptroller, through his authorized
representative, and the Bank, through its duly elected and acting Board of
Directors, hereby stipulate and agree to the following:

 

ARTICLE I

 

JURISDICTION

 

(1)           The
Bank is a national banking association chartered and examined by the
Comptroller pursuant to the National Bank Act of 1864, as amended,
12 U.S.C. § 1 et  seq.

 

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

 

(3)           The
Bank is an “insured depository institution” within the meaning of
12 U.S.C. § 1818(b)(1).

 

(4)           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.

 

 

ARTICLE II

 

AGREEMENT

 

(1)           The
Bank, without admitting or denying any wrongdoing, hereby consents and agrees
to the issuance of the Order by the Comptroller.

 

(2)           The
Bank further agrees that said Order shall be deemed an “order issued with the
consent of the depository institution” as defined in 12 U.S.C.
§ 1818(h)(2), and consents and agrees that said Order shall become
effective upon its issuance and shall be fully enforceable by the Comptroller
under the provisions of 12 U.S.C. § 1818(i). 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(i), 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.

 

(3)           The Bank also expressly acknowledges that no
officer or employee of the Comptroller 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.

 

ARTICLE III

 

WAIVERS

 

(1)                                 The
Bank, by signing this Stipulation and Consent, hereby waives:

 

(a)                                  the
issuance of a Notice of Charges pursuant to 12 U.S.C. § 1818(b);

 

(b)                                 any
and all procedural rights available in connection with the issuance of the
Order;

 

2

 

(c)                                  all
rights to a hearing and a final agency decision pursuant to 12 U.S.C.
§ 1818(i), 12 C.F.R. Part 19

 

(d)                                 all
rights to seek any type of administrative or judicial review of the Order; and

 

(e)                                  any
and all rights to challenge or contest the validity of the Order.

 

ARTICLE IV

 

OTHER ACTION

 

(1)           The
Bank agrees that the provisions of this Stipulation and Consent shall not
inhibit, estop, bar, or otherwise prevent the Comptroller from taking any other
action affecting the Bank if, at any time, it deems it appropriate to do so to
fulfill the responsibilities placed upon it by the several laws of the United
States of America.

 

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

 

	
             /s/
  Ronald G. Schneck

  	
   

  	
      September 2, 2008

  
	
  Ronald G. Schneck

  	
   

  	
    Date

  
	
  Director

  	
   

  	
   

  
	
  Special Supervision Division

  	
   

  	
   

  

 

3

 

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/ Robert
  Blachly

  	
   

  	
   September 2,
  2008

  
	
  Robert Blachly

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Patrice S. Hall 

  	
   

  	
   September 2,
  2008 

  
	
  Patrice S. Hall, PhD

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Connie D. Hart

  	
   

  	
   September 2,
  2008

  
	
  Connie D. Hart

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Jay
  Hastert

  	
   

  	
   September 2,
  2008 

  
	
  Jay Hastert

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Robert
  Howell

  	
   

  	
   September 2,
  2008 

  
	
  Robert Howell

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Carolyn
  S. Jacobs 

  	
   

  	
   September 2,
  2008 

  
	
  Carolyn S. Jacobs

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Sandy
  Moll

  	
   

  	
   September 2,
  2008 

  
	
  Sandy Moll

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Don L.
  Morris

  	
   

  	
  September 2,
  2008

  
	
  Don L. Morris

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   /s/ Norma
  Stephens 

  	
   

  	
  September 2,
  2008

  
	
  Norma Stephens

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   /s/ Deanna
  Sue Wilson 

  	
   

  	
   September 2,
  2008 

  
	
  Deanna Sue Wilson

  	
   

  	
  Date

  

 

4Exhibit 10.34

 

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

COMPTROLLER OF THE CURRENCY

 

	
  In the
  Matter of: 

  	
  )

  	
   

  
	
  Colorado
  National Bank 

  	
  )

  	
   

  
	
  Colorado
  Springs, Colorado

  	
  )

  	
   

  

 

CONSENT ORDER

 

The
Comptroller of the Currency of the United States of America (“Comptroller”),
through his National Bank Examiner, has supervisory authority over Colorado
National Bank, Colorado Springs, Colorado (“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 3, 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 

 

 

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.

 

2

 

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;

 

3

 

(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, 

 

4

 

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 

 

5

 

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;

 

(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.

 

6

 

(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 

 

7

 

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 

 

8

 

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

 

9

 

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:

 

10

 

(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.

 

11

 

(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 three hundred thousand dollars ($300,000) 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 subsequent renewals or extensions, 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 

 

12

 

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

 

13

 

credit 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;

 

14

 

(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 

 

15

 

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 

 

16

 

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.

 

17

 

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.

 

18

 

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 

 

19

 

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:

 

20

 

(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 3rd day of September, 2008.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Ronald G.
  Schneck

  	
   

  
	
  Ronald G.
  Schneck

  	
   

  
	
  Director

  	
   

  
	
  Special
  Supervision Division

  	
   

  

 

21

 

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:

 

22

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