AGREEMENT BY AND BETWEEN

 

The First National Bank of Ottawa

Ottawa, Illinois

and

The Comptroller of the Currency

 

    The First National Bank of Ottawa, Ottawa, Illinois ("Bank") and the Comptroller of the Currency of the United States of America ("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 has found unsafe and unsound banking practices relating to loan risk ratings and the Allowance for Loan and Lease Loss methodology, as well as violations of law at the Bank.

 

    In consideration of the above premises, 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 this Agreement.

 

 

 

 

 

    (3)         This Agreement shall be construed to be a "formal written agreement" within the meaning of 12 C.P.R. §§ 5.3(g)(4) and 5.51(c)(6)(ii).  See 12 U.S.C. § 1831i.

 

    (4)         This Agreement shall be construed to be a "written agreement" within the meaning of 12 U.S.C. § 1818(u)(l)(A).

 

    (5)         All reports or plans which the Bank or Board has agreed to submit to the Assistant Deputy Comptroller pursuant to this Agreement shall be forwarded to:

 

       Assistant Deputy Comptroller

       Peoria Field Office

       211 Fulton Street, Suite 604

      Peoria, IL 61602

 

 

 

(1)   The Bank is prohibited from making  an extension of credit, including the payment of overdrafts, directly or indirectly to any insider  unless the extension of credit is:

 

 

 

 

 

 

	(a)	the primary consideration is the strength of the borrower's primary source of repayment (i.e., the probability of default rather than  the risk of loss);
	(b)	if the primary source of repayment is cash  flow  from  the borrower's operations, the determination of the strength of the borrower's cash  flow is limited to analysis of the borrower's historical and projected financial statements, past performance, and future prospects in light  of conditions that have  occurred;
	(c)	collateral, non-government guarantees, and other  similar credit  risk mitigants that affect  potential loss in the event  of default (rather than  the probability of default) are taken into consideration only  if the primary source of repayment has weakened and the probability of default has increased;

	(d)	collateral values should reflect a current assessment of value  based  on actual  market conditions and project status;
	(e)	credit  risk ratings are reviewed and updated whenever relevant new information is received, but no less frequently than annually; and
	(f)	the credit  risk rating  analysis is documented and available for review by the Board  and the OCC  upon  request.

 

 

 

 

 

 

    (2)    The Board shall  adopt  or revise, implement, and thereafter ensure adherence to written policies and procedures to ensure that all official and regulatory reports filed  by the Bank accurately reflect an adequate ALLL  balance as of the date that such  reports are submitted.

 

 

 

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

 

 

    (2)    Any  time limitations imposed  by this Agreement shall begin to run from the effective date ofthis Agreement. Such time requirements may be extended in writing by the Assistant  Deputy Comptroller for good cause upon written application by the Board.

 

    (3)    The provisions of this Agreement shall be effective  upon execution by the parties hereto and its provisions shall continue in full force and effect unless or until such provisions are amended  in writing  by mutual  consent of the parties to the Agreement or excepted, waived,  or terminated in writing  by the Comptroller.

 

    (4)    In each instance  in this Agreement 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:

 

    (5)    This Agreement is intended  to be, and shall be construed to be, a supervisory "written agreement entered  into with the agency" as contemplated by 12 U.S.C.  § 1818(b)(l), and expressly does  not fom1, and may  not be construed to form, a contract binding on the Comptroller or the United States. 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(b)(l), 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. The Bank  also expressly acknowledges that  no officer or employee of the Office of the Comptroller of the Currency 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. The terms  of this Agreement, 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.

 

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