SEC Company Response from UNITED COMMUNITY BANKS INC (UCB) (CIK 0000857855) (UCB) — Aug 10, 2011
UNITED COMMUNITY BANKS INC (UCB) (CIK 0000857855)
Date: Aug. 10, 2011 · CIK: 0000857855 · Accession: 0001188112-11-002209
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-35095, 333-174420, 333-175226
Referenced dates: July 14, 2011, July 29, 2011, June 17, 2011
Letter
VIA EDGAR, E-Mail and Federal Express Division of Corporation Finance Attention: Michael R. Clampitt, Senior Counsel File No. 333-174420 Form 10-Q for Fiscal Quarter Ended March 31, 2011 Filed May 4, 2011 File No. 001-35095
Dear Mr. Clampitt:
At the request and on behalf of our client, United Community Banks, Inc. (the “Company”), we provide the below response to the Staff’s comment letter to the Company dated July 14, 2011 and subsequent telephone conferences with the Staff on July 27, 2011 and July 29, 2011 relating to the Company’s Registration Statement on Form S-1, filed with the Commission on June 29, 2011 (File No. 333-175226) (the “Recapitalization Resale Registration Statement”). With respect to the Recapitalization Resale Registration Statement, we are submitting our response in advance of filing an amendment to the Recapitalization Resale Registration Statement as we would like to resolve the issue before we file an amendment.
Additionally, this letter responds to the Staff’s comment letter to the Company dated July 29, 2011, relating to the Company’s Registration Statement on Form S-1 that the Company originally filed with the Commission on May 23, 2011, and that it amended by filing Amendment No. 1 to the Registration Statement on Form S-1 on June 30, 2011 (File No. 333-174420) (as so amended, the “Elm Ridge Resale Registration Statement”), and relating to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2011, filed with the Commission on May 4, 2011 (File No. 001-35095). With respect to the Elm Ridge Resale Registration Statement, the Company is responding to the Staff’s comments by revising the Elm Ridge Resale Registration Statement as set forth below.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 2
The Company’s responses are keyed to correspond to the numbered paragraphs of the Staff’s comment letters, which have been retyped herein in bold for ease of reference. Unless the context requires otherwise, references to we, our, us, United Community Banks, Inc., United or the Company in the response below refer to United Community Banks, Inc. In addition, in the case of all responses to comments, the use of first person pronouns reflect statements of the Company as if it were the signatory of this letter (rather than this firm on its behalf).
RECAPITALIZATION RESALE REGISTRATION STATEMENT
Prospectus Cover Page
1.
We note the non-voting common stock will be sold by the selling shareholders at a price of $9.50 per share, or at privately negotiated prices, until a market develops for the nonvoting common stock. However, shares of non-voting common stock cannot be sold at privately negotiated prices since there is no existing market for such shares. Please revise to disclose that the selling shareholders will sell the non-voting common stock at a price of $x.xx per share until the shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices.
Response:
To address the Staff’s comment regarding the offering price of the non-voting common stock absent a public trading market for such securities, the Company is proposing to disclose a method that the selling shareholders will apply to determine the price at which the non-voting common stock will be sold. Because the non-voting common stock is identical in all respects to the Company’s common stock (except that it is non-voting and converts into common stock), the proposed method for determining the offer and sale price of the non-voting common stock will be based on the offering price of the Company’s common stock at such time. Those revisions were filed with the comment letter response filed by the Company on July 25, 2011. As requested by the Staff by telephone on July 29, 2011, the Company is also proposing disclosure that will clarify that the 15,914,209 shares of non-voting common stock being registered for resale are convertible into 15,914,209 shares of the Company’s common stock, subject to the satisfaction of certain conditions. All of the proposed revisions, including those previously filed with our July 25, 2011 response letter, are shown in the redlined draft attached hereto as Exhibit A. If the proposed revisions shown in Exhibit A satisfy the Staff’s concerns, we will proceed with the filing of an amendment that will incorporate these changes as well as other changes to conform to corresponding changes made in the Elm Ridge Resale Registration Statement to address the Staff’s comments.
Set forth below are the reasons why the Company believes that disclosure of a method for determining the price at which shares of the non-voting common stock will be sold by the selling shareholders complies with applicable law and comports with the Commission’s policy of market transparency.
In response to the Staff’s initial comment, the Company researched the controlling federal statutes, rules and regulations promulgated by the Commission and interpretive releases by the Division of Corporate Finance to determine the legal basis for requiring that securities without a public trading market, which are registered by a registrant for resale by selling shareholders on a continuous or delayed basis, be sold at a fixed price until a market develops for the securities. The Company was not able to find any such requirement.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 3
Rule 415(a)(1)(i) of the Securities Act of 1933, as amended (the “Securities Act”) allows securities to be registered for an offering to be made on a continuous or delayed basis in the future, provided that the registration statement pertains only to “[s]ecurities which are to be offered or sold solely by or on behalf of a person or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary.” The Recapitalization Resale Registration Statement was filed on behalf of the selling shareholders named therein, none of whom is a subsidiary of the Company and the Company is not a subsidiary of any of the selling shareholders. Because the offering qualifies as a secondary offering by selling shareholders under Rule 415(a)(1)(i), the offering is not a primary “at-the-market” offering under 415(a)(1)(x) that may only be accomplished when an active trading market exists for the securities being offered. Accordingly, in a bona fide secondary offering of securities on a continuous or delayed basis, Rule 415 does not require that selling shareholders offer and sell such securities at a fixed price, regardless of whether or not an active trading market for the securities exists.
The Recapitalization Resale Registration Statement is also subject to Item 501 of Regulation S-K, promulgated under the Securities Act, and Schedule A of the Securities Act, each of which outline the required disclosure in a registration statement with respect to the offering price of the securities. Where securities are offered for cash, Item 501(b)(3) of Regulation S-K requires that a registrant disclose the price to the public of the securities; however, “[i]f it is impracticable to state the price to the public, [a registrant may] explain the method by which the price is to be determined.” Schedule A(16) of the Securities Act also permits a registrant to disclose the method for computing the proposed offering price of securities being registered as opposed to disclosing a fixed price at which the securities are proposed to be sold.1
In accordance with Rule 415, Item 501 and Schedule A of the Securities Act, the proposed revisions attached hereto as Exhibit A provide a method for computing the price at which the selling shareholders will sell the Company’s non-voting common stock that is tied to the offering price of the Company’s common stock at such time. The Company’s common stock is listed on the Nasdaq Global Select Market under the symbol “UCBI” and an active trading market for the common stock exists. The non-voting common stock is identical in every way to the Company’s common stock except that it is non-voting and converts into common stock.
ELM RIDGE RESALE REGISTRATION STATEMENT
Prospectus Cover Page
1.
We note your response to comment 4 in our letter dated June 17, 2011. Absent a market price, the securities cannot be offered at privately negotiated prices. Accordingly, please revise to disclose the price at which the securities will be offered and sold.
1 See subpart (16) to Schedule A (Requirements For Registration of Securities Other Than a Security Issued by a Foreign Government or Political Subdivision Thereof) of the Securities Act of 1933, as amended, which states in part, “[t]he price at which it is proposed that the security shall be offered to the public or the method by which such price is computed . . .”
Letter to the Securities and Exchange Commission
August 10, 2011
Page 4
Response:
The requested revision has been made in Amendment No. 2 to the Elm Ridge Resale Registration Statement (the “Amendment”). That and all other revisions made in the Amendment are shown in the redlined draft that we have sent to the Staff by e-mail and Federal Express to facilitate your review.
Recent Developments, page 1
2.
In the event you request acceleration of effectiveness of the registration statement prior to filing the Form 10-Q for the quarter ended June 30, 2011, please revise to disclose the results of operations disclosed in the Form 8-K furnished July 28, 2011.
Response:
On August 9, 2011, the Company filed its Quarterly Report on Form 10-Q/A for the period ended June 30, 2011. The Quarterly Report on Form 10-Q/A for the period ended June 30, 2011 is incorporated by reference into the Amendment. Notwithstanding the foregoing, we have also provided second quarter updates throughout the Amendment.
3.
Please revise to disclose what progress has been made to date, if any, with regard to selling foreclosed properties pursuant to the Problem Asset Disposition Plan.
Response:
As part of the Problem Asset Disposition Plan, $28.9 million of foreclosed properties were sold during the second quarter. Also during the second quarter, we had $22.0 million in new foreclosures resulting in an ending balance of foreclosed properties of $47.6 million at June 30, 2011.
Tax Benefits Preservation Plan, page 11
4.
We note your representation that for purposes of determining your ability to use your deferred tax asset you have not incurred an “ownership change” as defined under Section 382(g) of the Internal Revenue Code. Please file a tax opinion that supports this representation. Refer to Item 601(b)(8) of Regulation S-K.
Response:
The requested revision has been made in the Amendment.
Exhibits
5.
Please file as an exhibit to the registration statement the asset purchase agreement relating to the bulk loan sale that occurred in April 2011.
Response:
The requested revision has been made in the Amendment.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 5
Form 10-Q for Fiscal Quarter Ended March 31, 2011
Notes to Consolidated Financial Statements
Note 5 – Loans and Allowance for Loan Losses, page 11
6.
We note your response to comment 17 in our letter dated June 17, 2011. So that the reader may have a better understanding of the appraisal policies utilized in determining charge-offs on impaired loans and on OREO, please address the following:
•
Tell us and disclose your appraisal policy;
•
Describe the procedures performed at each balance sheet date to determine the fair value of collateral-dependent impaired loans and OREO;
•
Describe, when you receive new appraisals, the type of appraisals received, such as “retail value” or “as is value”;
•
Discuss how partially charged-off loans measured for impairment based on the collateral value are classified and accounted for subsequent to receiving an updated appraisal. For example, disclose whether the loans are returned to performing status or whether they remain as nonperforming;
•
Discuss the typical timing surrounding the recognition of a loan as nonaccrual and recording of any provision or charge-off;
•
Discuss the procedures performed between receipt of updated appraisals to ensure impairment of loans measured for impairment based on collateral value is measured appropriately; and
•
Discuss how you determine the amount to charge-off.
Response:
We have repeated each bullet of the Staff’s bulleted comments below in bold. The Company’s response follows each such bulleted comment:
●
Tell us and disclose your appraisal policy;
o
Response: We have attached the Company’s appraisal policy as Exhibit B hereto.
●
Describe the procedures performed at each balance sheet date to determine the fair value of collateral-dependent impaired loans and OREO;
o
Response: Collateral-dependent impaired loans and OREO are evaluated quarterly and are written-down to 80% of market value as determine by a current appraisal, which is an appraisal that was performed within the last 12 months. This time frame has been selected due to market conditions as a result of economic downturn.
●
Describe, when you receive new appraisals, the type of appraisals received, such as “retail value” or “as is value”;
Letter to the Securities and Exchange Commission
August 10, 2011
Page 6
o
Response: Appraisals and evaluations for real estate secured transactions are required as follows:
New Loans
Appraisals
Evaluations*
Comments
Commercial Real Estate
> $250,000
</= $250,000
Regulatory Requirement. Waivers Not Permitted.
Business Loans
> $1,000,000
</= $1,000,000
Regulatory Requirement. Waivers Not Permitted.
1 – 4 Family Residential
> $250,000
</= $250,000
Regulatory Requirement. Waivers Not Permitted.
Loan Increases and Renewals
Appraisals
Evaluations*
Comments
Commercial Real Estate
> $250,000
</= $250,000
A new appraisal is not required if an existing appraisal that supports the current transaction can be validated. An evaluation >1 year old should be updated with a new evaluation.
Business Loans
> $1,000,000
</= $1,000,000
Same as commercial real estate.
1 – 4 Family Residential
> $250,000
</= $250,000
Status Changes and Downgrades
Appraisals
Evaluations*/Validations
Comments
Downgrades to OREO
> $0.00
Not applicable
Valid appraisals** required prior to taking as OREO. The Regional Credit Officer can waive the pre-foreclosure requirement, but valid appraisals must be provided within 90 days after title is taken as OREO.
Downgrades to Risk Rated 7, 8 and 9
(non-accrual)
None
Single Family >$500,000;
Commercial
>$1,000,000
Existing valid appraisals or within 90 days of downgrade, validation of existing appraisals or new appraisals. Waiver by the Regional Credit Officer permitted.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 7
Routine Monitoring
Appraisals
Evaluations*/Validations
Comments
Commercial OREO if held more than 5 years
> $250,000
</= $250,000
Regulatory Requirement. Waivers Not Permitted.
1 – 4 Family Residential OREO
None
Required annually
Waivers by the Regional Credit Officer permitted.
Risk Rating 7 to 9
None
> $250,000
Required every 60 months. Waivers by the Regional Credi
Show Raw Text
CORRESP
1
filename1.htm
t71298a_corresp.htm
KILPATRICK TOWNSEND & STOCKTON LLP
www.kilpatricktownsend.com
Suite 2800 1100 Peachtree St.
Atlanta GA 30309-4530
t 404 815 6500 f 404 815 6555
www.KilpatrickStockton.com
August 10, 2011
direct dial 404 815 6270
direct fax 404 541 3400
JStevens@kilpatrickstockton.com
VIA EDGAR, E-Mail and Federal Express
U.S. Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 4561
Washington, D.C. 20549
Attention: Michael R. Clampitt, Senior Counsel
Re:
United Community Banks, Inc.
Registration Statement on Form S-1
Filed June 29, 2011
File No. 333-175226
Amendment No. 1 to Registration Statement on Form S-1
Filed June 30, 2011
File No. 333-174420
Form 10-Q for Fiscal Quarter Ended March 31, 2011
Filed May 4, 2011
File No. 001-35095
Dear Mr. Clampitt:
At the request and on behalf of our client, United Community Banks, Inc. (the “Company”), we provide the below response to the Staff’s comment letter to the Company dated July 14, 2011 and subsequent telephone conferences with the Staff on July 27, 2011 and July 29, 2011 relating to the Company’s Registration Statement on Form S-1, filed with the Commission on June 29, 2011 (File No. 333-175226) (the “Recapitalization Resale Registration Statement”). With respect to the Recapitalization Resale Registration Statement, we are submitting our response in advance of filing an amendment to the Recapitalization Resale Registration Statement as we would like to resolve the issue before we file an amendment.
Additionally, this letter responds to the Staff’s comment letter to the Company dated July 29, 2011, relating to the Company’s Registration Statement on Form S-1 that the Company originally filed with the Commission on May 23, 2011, and that it amended by filing Amendment No. 1 to the Registration Statement on Form S-1 on June 30, 2011 (File No. 333-174420) (as so amended, the “Elm Ridge Resale Registration Statement”), and relating to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2011, filed with the Commission on May 4, 2011 (File No. 001-35095). With respect to the Elm Ridge Resale Registration Statement, the Company is responding to the Staff’s comments by revising the Elm Ridge Resale Registration Statement as set forth below.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 2
The Company’s responses are keyed to correspond to the numbered paragraphs of the Staff’s comment letters, which have been retyped herein in bold for ease of reference. Unless the context requires otherwise, references to we, our, us, United Community Banks, Inc., United or the Company in the response below refer to United Community Banks, Inc. In addition, in the case of all responses to comments, the use of first person pronouns reflect statements of the Company as if it were the signatory of this letter (rather than this firm on its behalf).
RECAPITALIZATION RESALE REGISTRATION STATEMENT
Prospectus Cover Page
1.
We note the non-voting common stock will be sold by the selling shareholders at a price of $9.50 per share, or at privately negotiated prices, until a market develops for the nonvoting common stock. However, shares of non-voting common stock cannot be sold at privately negotiated prices since there is no existing market for such shares. Please revise to disclose that the selling shareholders will sell the non-voting common stock at a price of $x.xx per share until the shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices.
Response:
To address the Staff’s comment regarding the offering price of the non-voting common stock absent a public trading market for such securities, the Company is proposing to disclose a method that the selling shareholders will apply to determine the price at which the non-voting common stock will be sold. Because the non-voting common stock is identical in all respects to the Company’s common stock (except that it is non-voting and converts into common stock), the proposed method for determining the offer and sale price of the non-voting common stock will be based on the offering price of the Company’s common stock at such time. Those revisions were filed with the comment letter response filed by the Company on July 25, 2011. As requested by the Staff by telephone on July 29, 2011, the Company is also proposing disclosure that will clarify that the 15,914,209 shares of non-voting common stock being registered for resale are convertible into 15,914,209 shares of the Company’s common stock, subject to the satisfaction of certain conditions. All of the proposed revisions, including those previously filed with our July 25, 2011 response letter, are shown in the redlined draft attached hereto as Exhibit A. If the proposed revisions shown in Exhibit A satisfy the Staff’s concerns, we will proceed with the filing of an amendment that will incorporate these changes as well as other changes to conform to corresponding changes made in the Elm Ridge Resale Registration Statement to address the Staff’s comments.
Set forth below are the reasons why the Company believes that disclosure of a method for determining the price at which shares of the non-voting common stock will be sold by the selling shareholders complies with applicable law and comports with the Commission’s policy of market transparency.
In response to the Staff’s initial comment, the Company researched the controlling federal statutes, rules and regulations promulgated by the Commission and interpretive releases by the Division of Corporate Finance to determine the legal basis for requiring that securities without a public trading market, which are registered by a registrant for resale by selling shareholders on a continuous or delayed basis, be sold at a fixed price until a market develops for the securities. The Company was not able to find any such requirement.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 3
Rule 415(a)(1)(i) of the Securities Act of 1933, as amended (the “Securities Act”) allows securities to be registered for an offering to be made on a continuous or delayed basis in the future, provided that the registration statement pertains only to “[s]ecurities which are to be offered or sold solely by or on behalf of a person or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary.” The Recapitalization Resale Registration Statement was filed on behalf of the selling shareholders named therein, none of whom is a subsidiary of the Company and the Company is not a subsidiary of any of the selling shareholders. Because the offering qualifies as a secondary offering by selling shareholders under Rule 415(a)(1)(i), the offering is not a primary “at-the-market” offering under 415(a)(1)(x) that may only be accomplished when an active trading market exists for the securities being offered. Accordingly, in a bona fide secondary offering of securities on a continuous or delayed basis, Rule 415 does not require that selling shareholders offer and sell such securities at a fixed price, regardless of whether or not an active trading market for the securities exists.
The Recapitalization Resale Registration Statement is also subject to Item 501 of Regulation S-K, promulgated under the Securities Act, and Schedule A of the Securities Act, each of which outline the required disclosure in a registration statement with respect to the offering price of the securities. Where securities are offered for cash, Item 501(b)(3) of Regulation S-K requires that a registrant disclose the price to the public of the securities; however, “[i]f it is impracticable to state the price to the public, [a registrant may] explain the method by which the price is to be determined.” Schedule A(16) of the Securities Act also permits a registrant to disclose the method for computing the proposed offering price of securities being registered as opposed to disclosing a fixed price at which the securities are proposed to be sold.1
In accordance with Rule 415, Item 501 and Schedule A of the Securities Act, the proposed revisions attached hereto as Exhibit A provide a method for computing the price at which the selling shareholders will sell the Company’s non-voting common stock that is tied to the offering price of the Company’s common stock at such time. The Company’s common stock is listed on the Nasdaq Global Select Market under the symbol “UCBI” and an active trading market for the common stock exists. The non-voting common stock is identical in every way to the Company’s common stock except that it is non-voting and converts into common stock.
ELM RIDGE RESALE REGISTRATION STATEMENT
Prospectus Cover Page
1.
We note your response to comment 4 in our letter dated June 17, 2011. Absent a market price, the securities cannot be offered at privately negotiated prices. Accordingly, please revise to disclose the price at which the securities will be offered and sold.
1 See subpart (16) to Schedule A (Requirements For Registration of Securities Other Than a Security Issued by a Foreign Government or Political Subdivision Thereof) of the Securities Act of 1933, as amended, which states in part, “[t]he price at which it is proposed that the security shall be offered to the public or the method by which such price is computed . . .”
Letter to the Securities and Exchange Commission
August 10, 2011
Page 4
Response:
The requested revision has been made in Amendment No. 2 to the Elm Ridge Resale Registration Statement (the “Amendment”). That and all other revisions made in the Amendment are shown in the redlined draft that we have sent to the Staff by e-mail and Federal Express to facilitate your review.
Recent Developments, page 1
2.
In the event you request acceleration of effectiveness of the registration statement prior to filing the Form 10-Q for the quarter ended June 30, 2011, please revise to disclose the results of operations disclosed in the Form 8-K furnished July 28, 2011.
Response:
On August 9, 2011, the Company filed its Quarterly Report on Form 10-Q/A for the period ended June 30, 2011. The Quarterly Report on Form 10-Q/A for the period ended June 30, 2011 is incorporated by reference into the Amendment. Notwithstanding the foregoing, we have also provided second quarter updates throughout the Amendment.
3.
Please revise to disclose what progress has been made to date, if any, with regard to selling foreclosed properties pursuant to the Problem Asset Disposition Plan.
Response:
As part of the Problem Asset Disposition Plan, $28.9 million of foreclosed properties were sold during the second quarter. Also during the second quarter, we had $22.0 million in new foreclosures resulting in an ending balance of foreclosed properties of $47.6 million at June 30, 2011.
Tax Benefits Preservation Plan, page 11
4.
We note your representation that for purposes of determining your ability to use your deferred tax asset you have not incurred an “ownership change” as defined under Section 382(g) of the Internal Revenue Code. Please file a tax opinion that supports this representation. Refer to Item 601(b)(8) of Regulation S-K.
Response:
The requested revision has been made in the Amendment.
Exhibits
5.
Please file as an exhibit to the registration statement the asset purchase agreement relating to the bulk loan sale that occurred in April 2011.
Response:
The requested revision has been made in the Amendment.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 5
Form 10-Q for Fiscal Quarter Ended March 31, 2011
Notes to Consolidated Financial Statements
Note 5 – Loans and Allowance for Loan Losses, page 11
6.
We note your response to comment 17 in our letter dated June 17, 2011. So that the reader may have a better understanding of the appraisal policies utilized in determining charge-offs on impaired loans and on OREO, please address the following:
•
Tell us and disclose your appraisal policy;
•
Describe the procedures performed at each balance sheet date to determine the fair value of collateral-dependent impaired loans and OREO;
•
Describe, when you receive new appraisals, the type of appraisals received, such as “retail value” or “as is value”;
•
Discuss how partially charged-off loans measured for impairment based on the collateral value are classified and accounted for subsequent to receiving an updated appraisal. For example, disclose whether the loans are returned to performing status or whether they remain as nonperforming;
•
Discuss the typical timing surrounding the recognition of a loan as nonaccrual and recording of any provision or charge-off;
•
Discuss the procedures performed between receipt of updated appraisals to ensure impairment of loans measured for impairment based on collateral value is measured appropriately; and
•
Discuss how you determine the amount to charge-off.
Response:
We have repeated each bullet of the Staff’s bulleted comments below in bold. The Company’s response follows each such bulleted comment:
●
Tell us and disclose your appraisal policy;
o
Response: We have attached the Company’s appraisal policy as Exhibit B hereto.
●
Describe the procedures performed at each balance sheet date to determine the fair value of collateral-dependent impaired loans and OREO;
o
Response: Collateral-dependent impaired loans and OREO are evaluated quarterly and are written-down to 80% of market value as determine by a current appraisal, which is an appraisal that was performed within the last 12 months. This time frame has been selected due to market conditions as a result of economic downturn.
●
Describe, when you receive new appraisals, the type of appraisals received, such as “retail value” or “as is value”;
Letter to the Securities and Exchange Commission
August 10, 2011
Page 6
o
Response: Appraisals and evaluations for real estate secured transactions are required as follows:
New Loans
Appraisals
Evaluations*
Comments
Commercial Real Estate
> $250,000
</= $250,000
Regulatory Requirement. Waivers Not Permitted.
Business Loans
> $1,000,000
</= $1,000,000
Regulatory Requirement. Waivers Not Permitted.
1 – 4 Family Residential
> $250,000
</= $250,000
Regulatory Requirement. Waivers Not Permitted.
Loan Increases and Renewals
Appraisals
Evaluations*
Comments
Commercial Real Estate
> $250,000
</= $250,000
A new appraisal is not required if an existing appraisal that supports the current transaction can be validated. An evaluation >1 year old should be updated with a new evaluation.
Business Loans
> $1,000,000
</= $1,000,000
Same as commercial real estate.
1 – 4 Family Residential
> $250,000
</= $250,000
Status Changes and Downgrades
Appraisals
Evaluations*/Validations
Comments
Downgrades to OREO
> $0.00
Not applicable
Valid appraisals** required prior to taking as OREO. The Regional Credit Officer can waive the pre-foreclosure requirement, but valid appraisals must be provided within 90 days after title is taken as OREO.
Downgrades to Risk Rated 7, 8 and 9
(non-accrual)
None
Single Family >$500,000;
Commercial
>$1,000,000
Existing valid appraisals or within 90 days of downgrade, validation of existing appraisals or new appraisals. Waiver by the Regional Credit Officer permitted.
Letter to the Securities and Exchange Commission
August 10, 2011
Page 7
Routine Monitoring
Appraisals
Evaluations*/Validations
Comments
Commercial OREO if held more than 5 years
> $250,000
</= $250,000
Regulatory Requirement. Waivers Not Permitted.
1 – 4 Family Residential OREO
None
Required annually
Waivers by the Regional Credit Officer permitted.
Risk Rating 7 to 9
None
> $250,000
Required every 60 months. Waivers by the Regional Credi