Attached files
| file | filename |
|---|---|
| 8-K - PROVIDENT COMMUNITY BANCSHARES, INC. | v206466_8k.htm |
| EX-10.2 - PROVIDENT COMMUNITY BANCSHARES, INC. | v206466_ex10-2.htm |
UNITED
STATES OF AMERICA
DEPARTMENT
OF THE TREASURY
COMPTROLLER
OF THE CURRENCY
|
In
the Matter of:
|
)
|
AA-EC-10-119
|
|
Provident
Community Bank, N.A.
|
)
|
|
|
Rock
Hill, South Carolina
|
)
|
CONSENT
ORDER
WHEREAS, the Acting
Comptroller of the Currency of the United States of America (“Comptroller”),
through his National Bank Examiner, has supervisory authority over Provident
Community Bank, N.A., Rock Hill, South Carolina (“Bank”);
WHEREAS, 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 (“Stipulation and
Consent”), dated December 21, 2010, that is accepted by the Comptroller;
and
WHEREAS, 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.
NOW, THEREFORE, pursuant to
the authority vested in him 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 employees or controlling shareholders
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 immediately
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 actions 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 or via email, to
the following:
|
Director
for Special Supervision
|
with a copy
to:
|
|
|
Comptroller
of the Currency
|
Carolinas
Field Office
|
|
|
250
E Street, S.W.
|
Comptroller
of the Currency
|
|
|
Mail
Stop 7-4
|
212
South Tryon Street, Suite 700
|
|
|
Washington,
DC 20219
|
|
Charlotte,
NC 28281
|
(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 have sufficient training and authority to execute
their duties and responsibilities under this Order.
2
ARTICLE
II
STRATEGIC
PLAN
(1) Within
sixty (60) days, the Board shall forward to the Director for his review,
pursuant to paragraph (5) 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 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
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 shall, 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;
|
|
|
(d)
|
specific
actions designed to improve Bank earnings and accomplish the identified
strategic goals and objectives;
|
|
|
(e)
|
identification
of Bank personnel to be responsible and accountable for achieving each
goal and objective of the Strategic Plan, including specific time
frames;
|
|
|
(f)
|
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
|
|
(g)
|
a
description of the assumptions used to determine financial projections and
growth targets;
|
|
|
(h)
|
an
identification and risk assessment of the Bank's present and planned
future product lines (assets and liabilities) that will be utilized to
accomplish the strategic goals and objectives established in the Strategic
Plan, with the requirement that the risk assessment of new product lines
must be completed prior to the offering of such product
lines;
|
|
|
(i)
|
a
description of control systems to mitigate risks associated with planned
new products, growth, or any proposed changes in the Bank's
markets;
|
|
|
(j)
|
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 established in the Strategic Plan;
|
|
|
(k)
|
a
management employment and succession program to promote the retention and
continuity of capable management;
|
|
|
(l)
|
assigned
responsibilities and accountability for the strategic planning process,
new products, growth goals, and proposed changes in the Bank's operating
environment; and
|
|
|
(m)
|
a
description of systems designed to monitor the Bank's progress in meeting
the Strategic Plan's goals and
objectives.
|
(2) If
the Board’s Strategic Plan under paragraph (1) of this Article includes a sale
or merger of the Bank, the Strategic Plan shall, at a minimum, address the steps
that will be taken and the associated timeline.
4
(3) At
least monthly, the Board shall review financial reports and earnings analyses
prepared by the Bank that evaluate the Bank's performance against the goals and
objectives established in the Strategic Plan, as well as the Bank’s written
explanation of significant differences between actual and projected balance
sheets, income statements, and expense accounts, including descriptions of
extraordinary and/or nonrecurring items. Within ten (10) days of the
completion of its review, the Board shall submit a copy of the reports to the
Director.
(4) At
least quarterly, the Board shall prepare a written evaluation of the Bank's
performance against the Strategic Plan, based on the Bank’s monthly reports,
analyses, and written explanations of any differences between actual performance
and the Bank’s strategic goals and objectives, and shall include 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. Within ten (10) days of completing its evaluation, the Board
shall submit a copy to the Director.
(5) Prior
to adoption by the Board, a copy of the Strategic Plan, and any subsequent
amendments or revisions to the Strategic Plan, shall be forwarded to the
Director for review and prior written determination of no supervisory
objection. Upon receiving a written determination of no supervisory
objection from the Director, the Board shall adopt and the Bank shall
immediately implement and adhere to the Strategic Plan.
(6) The
Bank may not initiate any action that 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
(7) 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 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.
ARTICLE
III
CAPITAL PLAN AND HIGHER
MINIMUMS
(1) The
Bank shall within one hundred and twenty (120) days achieve and thereafter
maintain the following minimum capital ratios (as defined in 12 C.F.R. Part
3)1:
|
|
(a)
|
Tier
1 capital at least equal to eight percent (8%) of adjusted total
assets.2
|
|
|
(b)
|
Total
capital at least equal to twelve percent (12%) of risk-weighted
assets;
|
(2) Within
sixty (60) days, the Board shall forward to the Director for his review,
pursuant to paragraph (4) of this Article, a written Capital Plan for the Bank,
consistent with the Strategic Plan pursuant to Article II, covering at least a
three-year period. At the next Board meeting following receipt of the
Director’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 Capital Plan. While
this order is in effect the Capital Plan shall include:
1 The
requirement in this Order 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
|
|
(a)
|
specific
plans for the achievement and maintenance of adequate capital, which may
in no event be less than the requirements of paragraph (1) of this
Article;
|
|
|
(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;
|
|
|
(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)
|
identification
of the primary sources 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)
|
specific
plans detailing how the Bank will comply with restrictions or requirements
set forth in this Order and with 12 U.S.C. § 1831o, including
the restrictions against brokered deposits in 12 C.F.R. § 337.6;
and
|
|
|
(f)
|
contingency
plans that identify alternative methods to strengthen capital, should the
primary source(s) under paragraph (d) of this Article not be
available.
|
(3) The
Bank may pay a dividend or make a capital distribution only:
7
|
|
(a)
|
when
the Bank is in compliance with the minimum capital ratios identified in
paragraph (1) or this Article;
|
|
|
(b)
|
when
the Bank is in compliance with its approved Capital Plan and would remain
in compliance with its approved Capital Plan immediately following the
payment of any dividend;
|
|
|
(c)
|
when
the Bank is in compliance with 12 U.S.C. §§ 56 and 60;
and
|
|
|
(d)
|
following
the prior written determination of no supervisory objection by the
Director.
|
(4) Prior
to adoption by the Board, a copy of the Capital Plan shall be submitted to the
Director for a prior written determination of no supervisory
objection. Upon receiving a written determination of no supervisory
objection from the Director, the Board shall adopt and the Bank shall
immediately implement and adhere to the Capital Plan. The Board shall
review and update the Bank's Capital Plan at least annually and more frequently
if necessary or if requested by the Director. Revisions to the Bank’s
Capital Plan shall be submitted to the Director for a prior written
determination of no supervisory objection.
ARTICLE
IV
BOARD TO HIRE AND ENSURE
COMPETENT MANAGEMENT
(1) The
Board shall ensure that the Bank has competent management in place on a
full-time basis in all executive officer positions to carry out the Board's
policies; ensure compliance with this Order; ensure compliance with applicable
laws, rules, and regulations; and manage the day-to-day operations of the Bank
in a safe and sound manner.
8
(2) Within
ninety (90) days, the Board (with the exception of any Bank executive officers)
shall prepare a written assessment of the capabilities of the Bank’s executive
officers to perform present and anticipated duties, taking into account the
findings contained in the most recent Report of Examination, and factoring in
the officer's past actual performance, experience, and qualifications, compared
to their position description, duties and responsibilities, with particular
emphasis on their proposed responsibilities to execute the Strategic Plan and
correct the concerns raised in the most recent Report of
Examination. Upon completion, a copy of the written assessment shall
be submitted to the Director.
(3) If
the Board determines that an officer's performance, skills or abilities need
improvement, the Board will, within thirty (30) days following its
determination, require the Bank to develop and implement a written program, with
specific time frames, to improve the officer's performance, skills and
abilities. Upon completion, a copy of the written program shall be
submitted to the Director.
(4) If
the Board determines that an officer will not continue in his/her position, the
Board shall document the reasons for this decision in its assessment performed
pursuant to paragraph (3) of this Article, and shall within sixty (60) days of
such vacancy identify and provide notice to the Director, pursuant to paragraph
(6) of this Article, of a qualified and capable candidate for the vacant
position who shall be vested with sufficient executive authority to ensure the
Bank's compliance with this Order and the safe and sound operation of functions
within the scope of that position's responsibility.
(5) Prior
to the appointment of any individual to an executive officer position, 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 executive officer. However, the failure
to exercise such veto power shall not constitute an approval or endorsement of
the proposed officer. 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.
9
(6) The
Board shall perform, at least annually, a written performance appraisal for each
Bank executive officer that establishes objectives by which the officer’s
effectiveness will be measured, evaluates performance according to the
position's description and responsibilities, and assesses accountability for
action plans to remedy issues raised in Reports of Examination or audit
reports. Upon completion, copies of the performance appraisals shall
be submitted to the Director. The Board shall ensure that the Bank
addresses any identified deficiencies in a manner consistent with paragraphs (4)
and (5) of this Article.
ARTICLE
V
LOAN PORTFOLIO
MANAGEMENT
(1) Within
sixty (60) days, Board shall 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)
|
a
description of the types of credit information required from borrowers and
guarantors, including (but not limited to) annual audited statements,
interim financial statements, personal financial statements, and tax
returns with supporting schedules;
|
|
|
(b)
|
procedures
that require any extension of credit (new, maturity extension,
modification, or renewal), including lot loans, is made only after
obtaining and validating current credit information about the borrower and
any guarantor sufficient to fully assess and analyze the borrower’s and
guarantor’s cash flow, debt service requirements, contingent liabilities,
and global liquidity condition, and only after the credit officer prepares
a documented credit analysis;
|
10
|
|
(c)
|
procedures
that require any extension of credit (new, maturity extension,
modification, or renewal), including lot loans, is made only after
obtaining and documenting the current valuation of any supporting
collateral, perfecting and verifying the Bank’s lien position, where
applicable, and that reasonable limits are established on credit advances
against collateral, based on a consideration of (but not limited to) a
realistic assessment of the value of collateral, the ratio of loan to
value, and overall debt service requirements;
|
|
|
(d)
|
procedures
to ensure that loans made for the purpose of constructing or developing
real estate include (but are not limited to) requirements
to:
|
|
|
(i)
|
obtain
and evaluate detailed project plans; detailed project budget; time frames
for project completion; detailed market analysis; and sales projections,
including projected absorption rates;
|
|
|
(ii)
|
conduct
stress testing of significant project and lending; and
|
|
|
(iii)
|
obtain
current documentation sufficient to support a detailed analysis of the
financial condition of borrowers and significant
guarantors.
|
|
|
(e)
|
a
requirement that borrowers and/or guarantors maintain any collateral
margins established in the credit approval process;
|
|
|
(f)
|
procedures
that prohibit the capitalization of accrued interest, payment of taxes or
payment of principal on any extension of credit (new, maturity extension,
modification, or renewal);
|
11
|
|
(g)
|
procedures
that prohibit, on any loan renewal, extension or modification, the
establishment of a new interest reserve using the proceeds of any Bank
loan to the same borrower or guarantor;
|
|
|
(h)
|
procedures
to ensure that all exceptions to the credit policy shall be clearly
documented on the loan offering sheet, problem loan report, and other MIS;
and approved by the Board or a committee thereof before the loan is funded
or renewed;
|
|
|
(i)
|
credit
risk rating definitions consistent with applicable regulatory
guidance;
|
|
|
(j)
|
procedures
for early problem loan identification, to ensure that credits are
accurately risk rated at least monthly;
|
|
|
(k)
|
procedures
governing the identification and accounting for nonaccrual loans that are
consistent with the requirements contained in the Call Report
Instructions; and
|
|
|
(l)
|
prudent
lending and approval limits for lending officers that are commensurate
with their experience and qualifications, and that prohibit combining
individual lending officers’ lending authority to increase
limits.
|
(2) The
Board shall ensure that Bank personnel performing credit analyses are adequately
trained in cash flow analysis, particularly analysis using information from tax
returns, and that processes are in place to ensure that additional training is
provided as needed.
(3) Within
sixty (60) days the Board shall establish a written performance appraisal and
salary administration process for loan officers that adequately considers
performance relative to job descriptions, policy compliance, documentation
standards, accuracy in credit grading, and other loan administration
matters.
(4) The
Board shall, at least on an annual basis, review the policy developed pursuant
to this Article, and revise it as appropriate.
12
ARTICLE
VI
LOAN
REVIEW
(1) The
Bank shall maintain an effective, independent, and on-going loan review program
to review, at least quarterly, the Bank's loan and lease portfolios, to assure
the timely identification and categorization of problem credits. The
program shall provide for a written report to be filed with the Board promptly
after each review, and the program shall employ a loan and lease rating system
consistent with the guidelines set forth in "Rating Credit Risk" and "Allowance
for Loan and Lease Losses," Booklets A-RCR and A-ALLL, respectively, of the
Comptroller's
Handbook. Such reports shall include, at a
minimum:
|
|
(a)
|
the
loan review scope and coverage parameters;
|
|
|
(b)
|
conclusions
regarding the overall quality of the loan and lease
portfolios;
|
|
|
(c)
|
the
identification, type, rating, and amount of problem loans and
leases;
|
|
|
(d)
|
the
identification and amount of delinquent loans and
leases;
|
|
|
(e)
|
credit
and collateral documentation exceptions;
|
|
|
(f)
|
loans
meeting the criteria for non-accrual status;
|
|
|
(g)
|
the
identity of the loan officer(s) of each loan reported in accordance with
subparagraphs (b) through (f);
|
|
|
(h)
|
the
identification and status of credit-related violations of law, rule, or
regulation;
|
|
|
(i)
|
concentrations
of credit; and
|
|
|
(j)
|
loans
and leases in nonconformance with the Bank's lending and leasing policies,
and exceptions to the Bank's lending and leasing
policies.
|
(2) At
least annually, and periodically throughout the calendar year, the portfolio of
lot loans shall be reviewed for appropriate risk ratings, underwriting,
modification activity and allowance for loan and lease loss
provisions. The first review shall be performed within sixty (60)
days after the Directors sign this Consent Order and must include the entire lot
loan portfolio.
13
(3) A
written description of the program required by Paragraph (1) of this Article
shall be forwarded to the Director immediately upon implementation.
(4) The
Board shall evaluate the loan and lease review report(s) and shall ensure that
immediate, adequate, and continuing remedial action, as appropriate, is taken
upon all findings noted in the report(s). The Board shall also ensure
that the Bank preserves documentation of any actions to collect or strengthen
assets identified as problem credits.
ARTICLE
VII
ALLOWANCE FOR LOAN AND LEASE
LOSSES
(1) The
Board shall require and the Bank shall implement and thereafter adhere to a
program for the maintenance of an adequate Allowance for Loan and Lease Losses
("ALLL"). The program shall be consistent with the comments on
maintaining a proper ALLL found in the Interagency Policy Statement on the ALLL
contained in OCC Bulletin 2006-47 (December 13, 2006) and with "Allowance for
Loan and Lease Losses," booklet A-ALLL of the Comptroller's Handbook, and
any subsequent regulatory releases, and shall incorporate the
following:
|
|
(a)
|
internal
risk ratings of loans;
|
|
|
(b)
|
results
of the Bank's independent 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 generally accepted accounting
principles (“GAAP”) and regulatory
guidance;
|
14
|
|
(f)
|
loan
loss experience;
|
|
|
(g)
|
trends
of delinquent and non-accrual loans;
|
|
|
(h)
|
concentrations
of credit in the Bank; and
|
|
|
(i)
|
present
and projected 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 filing the Consolidated Reports of Condition
and Income, by additional provisions from earnings. Written
documentation shall be maintained of the factors considered and conclusions
reached by the Board in determining the adequacy of the ALLL and made available
for review by Bank Examiners.
(3) A
copy of the Board's ALLL program, and any subsequent revisions to the program,
shall be submitted to the Director.
ARTICLE
VIII
CRITICIZED
ASSETS
(1) Within
sixty (60) days, the Board shall adopt and the Bank (subject to Board review and
ongoing monitoring) shall implement and thereafter ensure adherence to a written
program designed to protect the Bank's interest in those assets criticized in
the most recent Report of Examination (“ROE”), in any subsequent ROE, by any
internal or external loan review, or in any list provided to management by the
National Bank Examiners during any examination as “doubtful,” “substandard,” or
“special mention.” The program shall include the development of
Criticized Asset Reports (“CARs”) identifying all credit relationships and other
assets totaling in aggregate one hundred thousand dollars ($100,000) or more,
criticized as “doubtful,” “substandard,” or “special mention.” The
CARs shall be updated and submitted to the Board and the Directors
monthly. Each CAR shall cover an entire credit relationship and
include, at a minimum, analysis and documentation of the
following:
15
|
|
(a)
|
the
origination date and any renewal or extension dates, amount, purpose of
the loan, and the originating and current loan
officer(s);
|
|
|
(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 current collateral
valuation;
|
|
|
(d)
|
an
analysis of current and complete credit information, including cash flow
analysis where loans are to be repaid from operations;
|
|
|
(e)
|
results
of any FAS 114 impairment analysis;
|
|
|
(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.
|
(2) The
Bank may not extend credit, directly or indirectly, including renewals,
modifications or extensions, to a borrower whose loans or other extensions of
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 and until each of the following conditions is
met:
16
|
|
(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, modifying or extending 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 a
centralized file as well as in the credit file of the affected borrower
and made available for review by National Bank
Examiners;
|
|
|
(b)
|
the
Bank performs a written credit and collateral analysis as required by
paragraph (1)(d) of this Article and, if necessary, the proposed action
referred to in paragraph (1)(g) of this Article is revised, as
appropriate; 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
IX
CONCENTRATION RISK
MANAGEMENT
(1) Within
sixty (60) days, the Board shall adopt and the Bank (subject to Board review and
ongoing monitoring) shall implement and thereafter ensure Bank adherence to a
written concentration management program consistent with OCC Bulletin 2006-46
(December 6, 2006). The program shall include, but not necessarily be
limited to, the following:
|
|
(a)
|
policy
guidelines that address the level and nature of exposures acceptable to
the institution and that set concentration limits, including limits on
commitments to individual borrowers and appropriate
sub-limits;
|
|
|
(b)
|
ongoing
risk assessments to identify potential concentrations in the portfolio,
including exposures to similar or interrelated groups or
borrowers;
|
|
|
(c)
|
portfolio
management, to include internal lending guidelines and concentration
limits that control the Bank's overall risk exposure and a contingency
plan to reduce or mitigate concentrations in the event of adverse market
conditions.
|
17
|
|
(d)
|
periodic
market analysis, to provide management and the Board with information to
assess whether the lending strategy and policies continue to be
appropriate in light of changes in market conditions;
|
|
|
(e)
|
management
information systems, to provide sufficient timely information to
management to identify, measure, monitor, and manage concentration risk;
and
|
|
|
(f)
|
board
and management oversight of concentrations, to include:
|
|
|
(i)
|
policy
guidelines and an overall lending strategy, including actions required
when the Bank approaches the concentration limits in its
guidelines;
|
|
|
(ii)
|
procedures
and controls to effectively adhere to and monitor compliance with the
Bank's lending policies and strategies;
|
|
|
(iii)
|
regular
review of information and reports that identify, analyze, and quantify the
nature and level of risk presented by concentrations;
|
|
|
(iv)
|
periodic
review and approval of risk exposure limits; and
|
|
|
(v)
|
procedures
which require the development of an action plan, approved by the Board, to
reduce the risk of any concentration deemed
imprudent.
|
(2)
The Board shall forward a copy of any analysis performed on existing or
potential concentrations and any action plan approved by the Board to reduce the
risk of exposure to any concentration deemed imprudent after the analyses
required by paragraph (1) of this Article to the Director within ten (10) days
following such analysis or the Board’s approval of such action
plan.
18
ARTICLE
X
LIQUIDITY RISK MANAGEMENT
PROGRAM
(1)
Within sixty (60) days, the Board shall revise and maintain a comprehensive
liquidity risk management program which assesses, on an ongoing basis, the
Bank's current and projected 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, and include:
|
|
(a)
|
A
contingency funding plan that, on a monthly basis, forecasts funding
needs, and funding sources under different stress scenarios which
represent management's best estimate of balance sheet changes that may
result from a liquidity or credit event. The contingency
funding plan shall include:
|
|
|
(i)
|
specific
plans detailing how the Bank will comply with restrictions or requirements
set forth in this Order and 12 U.S.C. §1831o, including the
restrictions against brokered deposits in 12 C.F.R. §337.6 (which
plans may be subject to revision as may be appropriate upon the adoption,
if any, of currently-proposed changes to 12
C.F.R.337.6);
|
|
|
(ii)
|
the
preparation of reports which identify and quantify all sources of funding
and funding obligations under best case and worst case scenarios,
including asset funding, liability funding and off-balance sheet funding;
and
|
|
|
(iii)
|
procedures
which ensure that the Bank's contingency funding practices are consistent
with the Board's guidance and risk
tolerances.
|
19
(2)
The Board shall submit a copy of the comprehensive liquidity risk management
program, along with the reports required by this Article, to the Director for
review.
ARTICLE
XI
CALL REPORTS -
REFILE
(1)
Within thirty (30) days, the Board shall adopt and cause the Bank to implement
policies and procedures, in accordance with the Instructions for Preparation
of Consolidated Reports of Condition and Income, to ensure that all
official and regulatory reports filed by the Bank accurately reflect the Bank's
condition as of the date that such reports are submitted. Thereafter
the Board shall ensure Bank adherence to the policies and procedures adopted
pursuant to this Article.
(2)
Upon completion of the policies, the Board shall submit a copy of the policies
to the Director.
ARTICLE
XII
VIOLATIONS OF
LAW
(1)
The Board shall require and the Bank shall immediately take all necessary steps
to correct any identified violation of law, rule, or regulation cited in the
most recent Report of Examination, any subsequent Report of Examination, or
brought to the Board’s or Bank’s attention in writing by management, regulators,
auditors, loan review, or other compliance efforts. Within ninety
(90) days after the violation is cited or brought to the Board’s attention, the
Bank shall provide to the Board a list of any violations that have not been
corrected. This list shall include an explanation of the actions
taken to correct the violation, the reasons why the violation has not yet been
corrected, and a plan to correct the violation by a specified
date.
20
(2)
Within sixty (60) days of the date of this Order, the Board shall adopt and the
Bank (subject to Board review and ongoing monitoring) shall implement and
thereafter ensure adherence to:
|
|
(a)
|
specific
procedures to prevent future violations as cited in the most recent Report
of Examination; and
|
|
|
(b)
|
general
procedures addressing compliance management that incorporate internal
control systems and education of employees regarding laws, rules, and
regulations applicable to their areas of
responsibility.
|
(3)
Upon adoption, the Board shall forward a copy of these policies and procedures
to the Director.
ARTICLE
XIII
ADMINISTRATIVE APPEALS AND
EXTENSIONS OF TIME
(1)
If the Bank requires an extension of any timeframe within this Order, the Board
shall submit a written request to the Director asking for relief. Any
written requests submitted pursuant to this Article shall include a statement
setting forth in detail the special circumstances that require an extension of a
timeframe within this Order.
(2)
All such requests shall be accompanied by relevant supporting documentation, and
any other facts upon which the Bank relies.
ARTICLE
XIV
OTHER
PROVISIONS
(1)
Although the Bank is 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 and the completeness and accuracy of the Bank’s books and
records.
21
(2)
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 this Order shall in any way inhibit, estop, bar, or
otherwise prevent the Comptroller from so doing.
(3)
Except as otherwise expressly provided herein, any time limitations imposed by
this Order shall begin to run from the effective date of this
Order.
(4)
The provisions of this Order are effective upon issuance of this Order by the
Comptroller, through his authorized representative whose signature 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, or amended as
mutually agreed to by the Bank and the Comptroller.
(5)
In each instance in this Order in which the Board or a Board committee is
required to ensure adherence to and undertake to perform certain obligations of
the Bank, including the obligation to implement plans, policies or other
actions, it is intended to mean that the Board or Board committee
shall:
|
|
(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 on any non-compliance with
such actions.
|
22
(6)
This Order is intended to be, and shall be construed to be, a final order issued
pursuant to 12 U.S.C. § 1818, 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 21st day of
December, 2010.
|
|
|
|
Henry
Fleming
Director
for Special Supervision
|
Date
|
23