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National Bank Appeals Process:
Appeal of Memorandum of Understanding - (First Quarter 2003)
Background
A
bank appealed the OCC's decision not to terminate an informal
enforcement action (action).
The action was placed on the bank to address concerns
regarding credit administration issues and a high level of
criticized assets that were not being dealt with in a satisfactory
manner. The appeal
stated that each of the items in the action had been addressed with
changes in policies and procedures made and implemented. The last report of
examination stated that the bank was in full compliance with the
MOU. In addition, a
letter from the supervisory office absolved the bank from any
reporting requirements under the action.
Discussion
While
the supervisory office acknowledged that the bank was in compliance
with all of the articles of the action and had been absolved from
the reporting requirements, the decision to keep the under the
action was primarily to:
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Make sure that it continued to address the existing asset quality
problems, and
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Ensure that the initiatives implemented as a result of the action
became an integral component of the credit
culture.
Conclusion
Considering
all of the dimensions of the action coupled with the current asset
quality concerns, the ombudsman determined that the existing
informal action was not the best vehicle to address the current
concerns. Therefore,
the supervisory office terminated the action and replaced it with a
written commitment from the board of directors. The directorate committed to
continue the same lending practices that brought the bank into
compliance with the former action and dedicated their best efforts
to reduce classified assets to an acceptable level. Each of the members of the
board signed the new resolution.
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