We will establish high quality, profitable relationships and provide excellent service to clients in our geographic markets. In conjunction with our Community Reinvestment Act (CRA) program, the Bank will explore and understand the legitimate credit needs of the communities it serves and will assist clients and prospective clients across income levels to enhance economic growth particularly focused on our designated communities. Our emphasis is on establishing relationships with consumers in our markets as opposed to transactional banking.

We will have the discipline to operate within our established lending guidelines even at the expense of volume, keeping in mind that underwriting guidelines may be changed from time to time in consideration of economic conditions, portfolio mix, and overall portfolio quality by product type. The priorities of the bank in order of importance are:

1. Asset Quality
2. Profitable Relationships
3. Prudent Growth 

It is understood that some balance must always be maintained between these 3 priorities, but never lose sight of the fact that strong asset quality is the primary priority of this institution. 

The Bank has an established policy of making sound loans to all qualified applicants regardless of race, color, national origin, religion, sex, marital status, age, receipt of public assistance, handicap, familial status, or the borrower’s good-faith exercise of rights under the Consumer Credit Protection Act. All management officials are expected to implement this policy by dissemination to all loan officers and to any other individuals who might be able to receive loan applications. All loan application forms and procedures must be reviewed at least semi-annually to ensure that this policy of equal opportunity in lending is being carried out and that no loan applicant shall suffer any form of discrimination because of race, color, national origin, religion, sex, marital status, age, the receipt of public assistance, handicap, familial status, or the borrower’s good-faith exercise of rights under the Consumer Protection Act. Everyone has the right to file a written application, and will receive notice of approval/disapproval within thirty days of lender receiving a completed application.

The Bank is owned by its shareholders, which elect the Board of Directors to oversee its interests.  The Board has many responsibilities including ensuring that appropriate plans and policies are adopted and adhered to, and that operations are effectively monitored.   Additionally, the Board is charged with analyzing and determining that the credit needs of the community the Bank serves are met.

The Board is accountable for the Bank’s credit policies.  It reviews the policy annually and reviews reports on the Bank’s loan performance at each meeting.  The Board has designated the Chief Credit Officer as having responsibility to administer the credit policy.  Administering the policy includes editing the policies and procedures and monitoring compliance thereof.

The loan policy is a dynamic document that is to be constantly reviewed.  As such, there will be times when the policy needs to be reviewed to assure that it continues to harmonize with the Bank’s Mission Statement, Lending Philosophy, and long-range plans and strategies.  As a lender you should recommend changes as you feel the need.  The changes will be reviewed and implemented when appropriate.  Note, however, that all changes to policy will be distributed through the Credit Administration Department.  No changes are to be made other than those published by Credit Administration.

If the borrower is unknown to you, verify identity with a picture I.D. Additionally, you are to gather and review any documents required by the U.S.A. Patriot Act. Furthermore, it is your responsibility to understand the borrower's financial position and strategy, which includes source of down payment when required and ownership of collateral offered.

Consumer loans should be generally limited to those counties with which the Bank maintains branch offices. Secondary consideration should also be given contiguous counties to those with branch offices (for example: adjoining counties).

See General Credit Policy > Geographic Limitations for more information on our market areas.

All loans should have reasonably identified purposes that are recorded in the loan document file.

Loans are generally made only when a specific source of repayment can be identified and agreed on by the bank and the borrower. Most loans should have a secondary source of repayment. Remember that loans are repaid with cash. When loans are made, the primary consideration should always be the repayment of the borrower and not the value of the collateral. The purpose, repayment source and the term of the loan should be aligned. 

Most loans should have a definite term for repayment. The maximum maturities have been outlines by specific loan type in specific underwriting standards. However, it is understood that from time to time it is reasonable to approve a loan with a single payoff as opposed to monthly payments over time (for example: agricultural loans or similar). 

When making single payment loans, the lender should be reasonably certain that the loan will be paid in full at maturity through some identified designated source of repayment. This designated source of repayment, such as crop sale proceeds or the sale of an asset, should be so stated in the loan file to justify the single pay status and should be verified. If the customer is unable to pay the loan at maturity, the accrued interest should be paid and the remaining balance amortized over the applicable term for the product type. When exceptions are required, decisions should be based on nature of collateral and source of client income (for example: cash secured, sale in process). 

Minimally acceptable credit documentation is to include the loan application and a credit bureau report. The loan application will be processed via DecisionPro (DPro) with the credit bureau being generated and housed within the system files. The loan application will be housed within DPro and/or the loan files maintained by Loan Servicing. It is expected that a copy of the signed application will be included in the loan filed managed by Loan Servicing for all closed loans. This is in addition to any documentation that may also be housed in DPro.

For most loans, a verification of income will be obtained. In assessing a potential client's suitability, a review of any income or assets (other than the property that secures the subject loan) that the client will rely on to repay the loan should be undertaken. Any items relied upon in the assessment and estimate of DTI will be verified to third-party corroborating evidence (which can include the Bank's records or core system data). Judgment should be exercised by the approving officer as to the sufficiency of income verification within the spirit of this policy and sound underwriting practices.

Verifications of income will typically be in the form of a W-2, a recent pay stub, or an applicant's most recent tax return. Additionally, for existing clients, reference to deposit account activity may be used for Social Security, or Disability direct deposits.

A current credit bureau report is required on all new consumer credit requests regardless of the last application date. The credit report must be generated internally by the bank (for example: cannot be accepted from client or other source).

Applications that have an invalid social security number (SSN) (for example: beginning in 9, fails verification by credit bureau, etc.) will be denied.

If the applicant is self-employed, stable monthly income should normally be derived through the use of the the 2 most recent years' Federal Income Tax Returns or similar financial information. An applicant is considered to be self-employed if they own more than 25% of the business where they are employed. Note: borrowers who use rental income as qualifying income should produce Schedule E of the personal tax return or copies of leases if required to qualify DTI wise. Other third-party documentation will also help in validating these types of income (for example: CPA Statements, bank statements). 

Loan approvals for HELOC's and lot loans shall be valid for 60 days, with all other consumer loan types valid for 30 days. After these timeframes, applications would need to be reapproved and re-priced under current guidance.

Debt-to-income (DTI) ratios should be calculated on all applications with the exception of those secured by cash equivalent collateral. The monthly housing expenses should be considered and include:

• Mortgage payments
• Real estate taxes
• Hazard insurance premiums
• Mortgage insurance premiums
• Homeowners' association dues 
• Any other expenses required to be paid with the mortgage

Total monthly debt service should not exceed 45% of income for most loan types. In some cases, a DTI of more than 45% may be acceptable when other supporting factors are present as described in the override definitions.

Total monthly debt service includes the monthly houses expense, installment debt payments, and all open revolving accounts. Alimony and child support payments are removed from cash flow before calculating the total monthly expense ratio unless documentation confirms that payments are terminating within 3 months. For single payment loans, regular lines of credit, and other personal lines, the payment is assumed to be the amount required to amortize the available commitment over the maximum term required by loan type.

When estimating an applicant's DTI, we consistently treat all borrowers equally and fairly in order to comply with Fair Lending. As directed by division procedures, if a borrower's income is nontaxable, underwriters will make adjustments. As "adjusted gross income" will be developed for the borrower by adding an amount equivalent to 25% of the nontaxable income to the borrower's total income. Nontaxable income will be listed in the Compensation Income Types as "Tax-Exempt" in Dpro.

Nonrecurring income, such as most capital gains or one-time sales proceeds, should not be utilized to calculate DTI. Likewise, non-recurring expenses or losses that can be clearly defined and documented may be excluded from the calculation of DTI.

In some cases, the Bank may approve an applicant when they have a credit score below the 630 minimum with the addition of a second applicant. A co-signer should not be added to an application to support the DTI unless they are in a familial relationship. All borrowers would need to benefit from the loan proceeds.

The separate DTI calculation on a co-signer or guarantor is designed to help the Bank avoid “co-signer” loans (for example: in the case of a car loan, when one person is added to an application solely to help another individual on the application that does not qualify in some way), which has proven over time to be an unacceptable credit risk. Co-signer loan applications are sometimes seen where another party is added after the initial loan application is received to garner an approval or lower interest rate on a combined basis even though the added individual cannot service the debt. Another indication of a potential co-signer loan could be duplicate applications received (based on SSN) in the past 30 days which contains the same collateral, deal structure, and no co-signer.

Note that the separate DTI analysis is not relevant to joint applications whereby the combined application should be considered. Joint applications, as defined under Reg. B, income would be combined in the DTI estimation process.

For applicants that have a limited credit history, in some cases the Bank may approve the application if the applicant has a good pay history with the Bank, and either one of the following is true:

1. The LTV is 75% or less OR
2. The new payment does not exceed 120% the previous loan with no delinquencies in the last 12 months

Stable monthly income is considered to be that which the applicant will receive on a regular basis over time. Income sources include part-time or second-job income, overtime and bonus income and commissions. Each of these sources must have been received without interruption for 2 years and be expected to continue in the future. Additional income sources include retirement income, social security income, interest and dividend income or rental income. Alimony, child support, and/or maintenance payments, if disclosed by the applicant, can be considered as sources of income if they are expected to be received for 3 years from the date of application*. When including public assistance income, such as from Section 8 Housing Choice Voucher Program, Temporary Assistance for Needy Families, Social Security Disability Income (SSDI) or Supplemental Security Income (SSI) in the DTI estimate, amounts reported as net income will be grossed-up in Dpro as directed by division procedures. 

There are underwriting considerations that could justify using debt-to-income ratios higher than those stated. Compensating factors justifying exceptions include large down payments, a demonstrated ability to accumulate savings and maintain a good credit history, a strong net worth with good liquidity, and a potential for increased earnings. Loans approved with debt-to-income ratios higher than stated herein should be accompanied with a lender's written explanation of compensating factors. 

*Under current law, the applicant may choose whether or not to have this type of income included. The decision to include or exclude alimony income should be indicated on the application.

Discrimination on the basis of sex and familial status is prohibited by the Fair Housing Act and Equal Credit Opportunity Act. Women applying for credit with the bank that are on maternity are considered on “Temporary Leave”. During the maternity/temporary leave time period, the Borrower’s income may be reduced or completely interrupted. However, the bank must determine the borrower’s capacity to repay the mortgage and other monthly obligations based on usual income flows.  Therefore, pre-leave income is to be used for underwriting the loan request and documented in file. If the income is reduced, liquid assets can be used as a supplement to income for qualification. 

A credit history is required on all applicants. The repayment history is to be closely evaluated. A history of slow payments, collections, repossessions, creditor lawsuits, defaults, undisclosed debts, garnishments, liens, bankruptcies, and/or foreclosures will be considered grounds for loan denial. Capital City Bank will provide an opportunity for applicants to provide an explanation in writing of any major derogatory credit information.

Credit experience is also something the Bank will evaluate as we seek to understand he client's credit score and overall credit worthiness. As such, the Bank will consider a report to be a "thin file" when the applicant's credit history has less than 4 trade lines. Within DecisionPro (DPro), the policy evaluation for this line item will recommend an approval when the applicant's credit report has 4 or more trade lines, and a decline when less than four are present. 

Excessive minor derogatory information, such as payments as late as 60 days past due or 3 payments more than 30 days past due on a specific loan or trade line should be considered. The Bank will review the Borrower's overall pattern of making payments rather than take issue with a few isolated occurrences. However, if there is a pattern of slow payments with other creditors but satisfactory performance with the Bank, the general pattern of slow payments are not to be ignored.

Credit reports showing late histories on a previous mortgage, low Equifax Beacon (Beacon) score, or bankruptcy indicate a higher risk of default. Likewise do applicants with a history of debt consolidations. Approvals for these applicants are to be accompanied with a written explanation of compensating factors justifying approval by the lender.

The Bank will review applicants with a bankruptcy based on the reported date noted in the credit bureau and viewed in light of the parameters noted in the override definitions in the appendices to this policy. Normally applicants that are currently in bankruptcy, or have a bankruptcy reported date less than 5 years from application date, will be denied unless meeting the acceptable override reasons noted in this policy (Appendix B).

Since all consumer applications are expected to be entered into DPro with the credit history generated in the process, this will typically occur as part of routing the application. Credit bureaus on existing clients may be used if dated within 30-days of application review.

Consumer loan applications will be entered into DPro, typically by frontline associates (for example: Personal Bankers, Loan Officers, Administrative Assistants) or applicants directly using Originate. An updated credit history report is required for each new consumer credit request.  Once submitted for underwriting, DPro will pull the credit bureau as part of the system underwriting and recommendation process. The policy approval parameters within DPro (and as approved by Bank management and Board), require a minimum Beacon score of 630 for all applicants(see Appendix A).

In some cases, the Bank may require a higher Beacon score depending on the product type; however, the Board mandated minimum score shall be 630 for direct consumer loans. In the event an applicant may not have a credit score (for example: no score or zero returned), the application will be declined due to our credit score requirement. However, if the application is being approved as an override, there is a need to price the loan consistently. In those cases, approval may be based on credit history with the Bank as well as other factors noted during the review process. When there is a co-applicant with a score attached, the co-applicant's score may be used in the decision making process. When an application is approved with these conditions, the loan is to be priced under the 3 options below:

1. Applicant has good credit history with the Bank (specifically a history of timely payments, deposit relationship with lack of overdrafts/NSF or other negative events, and similar), price using an assumed 700 credit score. 
   • The historical timeframe for review may vary depending on the applicant's situation, noting relevancy in the notes to the application (for example: older loan history with us may mean we look further back. Conversely, for deposit accounts a recent history of 6 months or more may be appropriate). 
2.  Applicant has good credit history elsewhere or there are other compelling reasons (for example: policy compliant override reasons available as per this document), price using an assumed 680 credit score. 
   • Identifying a good credit history elsewhere would be dependent upon credit references or other knowledge gained and documented to support the decision. Historical time frame considerations would be similar to that noted in 1. above. 
3. When co-applicant has a score, use the co-applicant's score to price and decision the loan. 

The borrower should have been employed at least 2 years with the present employer and have 2 years of continuous residence in the local area and at his or her present address.  When all other factors are favorable, this policy can be waived if the lender determines that recent moves were legitimately caused by a promotion, the borrower’s business obligations, family growth, or other acceptable reason.

Capital City Bank has discretion when making loans on real estate which is inconsistent with the neighborhood/market area. This creates heightened risk to the Bank due to the inability to aptly measure value and marketability (for example: value conclusion is weakened due to the like-kind sales or other data). Examples would be a home with airstrip, residence with commercial gymnasium, or warehouse located in a residential area. There are locations within the Bank footprint which have no zoning/land use restrictions or neighborhoods where the Restrictive Covenants have expired, are not enforced/inactive, or do not exist. As such, these examples could be legally conforming uses but are inconsistent with neighborhood trends, market acceptance, and reasonable marketability.

When reviewing a HELCO application, reference should be made to the Bank's procedural guidance as found within the HELOC FAQ's. For collateral valuation for a purchase money HELOC (for example: a HELOC used to finance 100% of the home purchase), the LTV will be based on the lower of the purchase price or the appraised value. For all other HELOC applications, including those where the client may have purchased the home in the last 12-months, the LTV should be based on the valuation technique as found in the HELOC FAQ's.

When reviewing a junior lien HELOC application, the Bank has set maximum combined loan to value limits (CLTV):

• 80% CLTV when combined loan amount is less than or equal to $1.0 MM
• 75% CLTV when combined loan amount is more than $1.0 MM and less than or equal to $1.5 MM
• 70% CLTV when combined loan amount is more than $1.5 MM and less than or equal to $2.0 MM
• Combined loan amount limit of $2.0 million (for example: first and second cannot exceed $2.0

The Bank currently uses the DecisionPro (DPro) loan platform for the origination of consumer, and indirect auto loans. The system provides integrated loan application, underwriting, and loan document preparation and is configured in a manner to align with Bank strategic goals and control parameters.

Through the use of established user profiles, policy parameters, product configurations, rate tables and other elements, the Bank is able to adequately control and document the consumer lending function in accordance with existing regulation and Bank policies. The system also provides for key portfolio monitoring, with reporting capabilities such as override reporting, portfolio analysis, and individual loan assessment as a supplement to the monitoring reports and queries available from the core system (Jack Henry).

On a periodic basis, the configuration of policy and rate table settings will be validated within DecisionPro (DPro) through a sample selection and review process. The testing will be conducted by Credit Administration and will consist of a review of a sample of applications consisting of approvals and denials with the following verified:

• Was all the information collected and entered as needed?
• Is the Beacon score present on the credit report?
• Is the debt ratio calculated correctly?
• Was the system recommended decision arrived at correctly?
• Did the reports accurately portray the applications? In other words, if it is an override, does it show on the override report correctly? 
• If the application is declined, did the correct adverse action code print on the denial letter?
• If the application was approved and booked, does the correct information show in the bank's data system (for example: did DecisionPro handoff to LaserPro correctly and did LaserPro interface to Jack Henry correctly?)
• If the application was entered in Originate, did it interface with DPro correctly?
• Did the risk-based pricing table arrive at the appropriate rate based on the parameters entered?
• Other factors that may have a significant impact on the system. 

Associates who process a consumer credit request will communicate with the Central Underwriting Department to obtain a credit decision for the client via DecisionPro (DPro). Central Underwriting will make a decision on the request and communicate with the lender. The lender may override the decision based on their lending limits for HELOC's only. Otherwise, overrides to decision or pricing can only be approved by Central Underwriting, Credit Administration, or Executive Leadership. In some cases, where time is of the essence or credit risk is assessed as low, associates with lending authority may be allowed to decision a request directly within DPro after communication with Central Underwriting.

All underwriters will meet monthly following the final issuance of the override and data quality reports to discuss any variances from policy. Individual underwriters will be challenged to correct any deficiency in documentation of the loans for which they have made the decision. While deviations will occur they must be well documented in writing and not just given an override reason. These findings will be reported to the Fair Lending Committee. If necessary, lending authority may be reduced or removed. 

Lending limits will be monitored and granted by Credit Administration.  All associates have a duty to stay within their limits even if DecisionPro (DPro) would allow an approved credit request outside their limits.

Overrides will be monitored due to the significant impact on risk to the Bank. Policy overrides are used to adhere to the underwriting standards of this credit policy for certain factors as noted in the appendix. 

In general, there are 2 types of overrides noted in the Bank's current consumer application workflow: 

1. System overrides - these occur when DecisionPro (DPro)makes a recommended decision and the user overrides the recommendation. These system overrides are not considered to be policy overrides when made in accordance with the reasons noted within this policy and fully documented in the loan application. 
2. Policy overrides- these occur when a loan application has a decision that does not meet the policy criteria and is considered to be a policy exception. These exceptions should be avoided as the Bank is seeking to have very few policy exceptions. These exceptions will be reported and subject to executive management and Board monitoring. 

In general, the following apply: 

A lender may not override the system (with the exception of HELOCs within their lending authority), but will need to obtain approval from Central Underwriting, Credit Administration, or Executive Management. Overrides may be a decline above the cutoff (high-side) or an approval below the cutoff (low-side). High-side overrides are credit requests that may prove to be profitable for the Bank but are denied for one reason or another usually because of policy. Low-side overrides below policy cutoff must be defended by the approving officer with compensation factors because of the additional default risk the Bank incurs. DecionPro (DPro) contains override reasons that are acceptable and requires the selection of appropriate reasons in order to complete the override process. See Appendix B - Override Reason and Examples tab.

In all cases, the override must be justified and documented. Abuse of this policy may include, but is not limited to, suspension of lending authority. When selecting override reasons, it is best practice to select the one primary reason that is the most appropriate instead of selecting multiple reasons. Each reason selected must be accompanied by detailed notes in the application on why the reason is appropriate. When multiple reasons are selected, determination of whether it is a policy override or not will be based on the strongest, best defended reason chosen. 

If a client is a fraud victim, they may place an alert on their credit report. This alert usually contains the client's contact information such as phone numbers or email addresses. It is essential that the lender or underwriter contact the client using the information listed on the report and verify they are in fact he individual who applied for credit. If you receive an alert, please review the Identity Theft Program Procedures. It may be necessary to complete the ID Verification Red Flag Discrepancy Form when a discrepancy cannot be resolved. This form is used when you find address discrepancies, alerts/notifications/warnings from Consumer Reporting Agencies (CRA), suspicious documents, suspicious personal identifying information, or unusual use of or suspicious activity related to the account. This form must be sent to the Financial Crimes Unit.

There are 2 types of fraud alerts that may be seen on a credit file: 

1. Initial Fraud Alert 
2. Extended Fraud Alert. 

The consumer only needs to make a telephone call to a CRA to place an initial Fraud Alert on their file and it will remain for 90 days. The Extended Fraud Alert will remain for 7 years but the CRA may require evidence where the consumer was victimized. Contacting one CRA to place a fraud alert will make all CRA's aware of the alert.

Active duty military consumers have the opportunity to place this alert on their credit file for 12 months by contacting a CRA. The consumer must have been called to active duty and is assigned away from their usual duty station. Associates must verify the identity of these consumers before proceeding with any type of credit transaction. As mentioned above, if you receive an alert, please review the Identity Theft Program Procedures. It may be necessary to complete the ID Verification Red Flag Discrepancy Form when a discrepancy cannot be resolved. This form is used when you find address discrepancies, alerts/notifications/warnings from Consumer Reporting Agencies, suspicious documents, suspicious personal identifying information, or unusual use of or suspicious activity related to the account. This form must be sent to the Financial Crimes Unit.

Withdrawn applications  

It is expected that most applications should be decisioned in a short amount of time and communicated to the client. In some situations the client may contact the lender prior to a decision being communicated. These applications should be given a withdrawn status as long as no decision is communicated and documented accordingly. If a conditioned application has been communicated to the client for additional information and the client states they wish to withdraw at that time or later, it is considered a denial since the conditions were not met. Withdrawn applications will be monitored as the volume is expected to be minimal.

Incomplete Applications 

Applications that are incomplete, with applicants who have not provided information requested by the Bank and needed for the proper review/underwriting of the request, will be declined for incompleteness (for example: not withdrawn or otherwise removed, but placed in a decline status).

Applications not receiving the approval of a lender or underwriter must have the status changed to "Denied" and generate an adverse action letter. When applications are processed in DecisionPro (DPro), Central Underwriting will create and mail the adverse action letter based on the underwriter's decision. In general, consumer loan adverse action letters must be mailed within 30 days of the application date. There may be circumstances extending this period such as counteroffers or pending documentation received from third parties. Anytime an application has not had a decision rendered within 30 days, the file should be documented within DPro noting the reasons for the delay (for example: awaiting additional documentation). Normally, an application should be approved or denied within 30 days; however, there are times when items needed prior to the final decision take longer. In these cases, the Bank will send a letter to the applicant noting that the application is still in progress, pending receipt of items needed, and to document the current status.

If an application is countered, the lender must revisit the credit request within a reasonable amount of time and make a decision, usually 10 days, so the Bank maintains compliance using adverse action documents (for example: issuance of a counteroffer letter, which will include any relevant adverse action language). If the conditions are not met, the application will remain in counter status as the counteroffer letter has been posted. If the applicant accepts the counter, the loan should have the final conditions entered and the final decision made.

In accordance with the FACT Act revised in 2011, the Bank complies with the Act by providing credit score disclosures to all consumer applicants whose credit report is used in whole or part to grant credit to a borrower. The disclosure, "You Credit Score and the Price You Pay for Credit", is generated via DecisionPro (DPro) under the Credit Score Exception Notice (ALL APPS), and must be provided to the applicant at or before consummation of the loan. If the loan application is denied, an adverse action notice will replace the requirement to provide this disclosure, with the exception of the Notice to Home Loan Applicant on the applicable loans.

Applications that are approved but never funded will retain the status of Approval with the status changed to “Not Accepted”.

All efforts must be made to prevent entering duplicate applications for the same credit request. DecisionPro (DPro) has an alert function to warn of potential duplicate applications. If there is a technical issue with an application, please contact Credit Administration for assistance. Creating duplicate applications will not resolve a technical issue. Multiple applications for the same credit request may also adversely affect the client’s credit scores if a credit history is downloaded multiple times.

The Bank requires a minimum loan amount of $2,500 on all loan products offered. Overrides of this requirement are not to be made. Clients seeking to borrow less than the minimum amount should be offered products like the Consumer Line of Credit (CLOC) whereby they may draw less than the minimum under a line arrangement. 

As noted in product guidance, home equity lines of credit have a minimum loan amount requirement of $10,000. Renewals of pre-existing smaller loans below the minimum should either be fully amortized out or moved into a CLOC.

The Bank has set maximum loan limits for the CLOC ($5,000), for Overdraft Protection (ODP) lines ($10,000), and for HELOCs ($500,000). No override is available for the  ODP line. To override the HELOC limit, executive approval is required and would be considered a policy exception.

When a consumer provides any CRA with an identity theft report and identifies that information as being the result of a crime, the CRA must block the information from showing on a credit file. Credit Administration will receive a notification once the CRA has blocked the fraudulent information. Once received, Credit Administration will contact the Loan Servicing department to flag the account as non-reporting to the credit bureau, alert the Collections department manager of the identity theft possibly leading to non-repayment, complete the ID Verification Red Flag Discrepancy Form, and contact the Financial Crimes Unit.

The payment history of our client’s Capital City Bank loan accounts is reported to each Consumer Reporting Agency monthly. Specifically, we report to Experian, Equifax, and Trans Union. Capital City Bank reports the payment history of the primary client and co-maker or joint applicant on all consumer type loans. We are required to report accurate information, but occasionally, there is an unintentional error reported to the CRA’s. Other situations may include charge-off or bankruptcy accounts that are later collected. The client has the ability to report this error directly to an associate at Capital City Bank or contact the CRA where the report originated. In either case, the Fair Credit Reporting Act gives the CRA or financial institution 30 days to correct the error upon receipt of the notice of dispute. Once a notice of dispute is received, it is our responsibility to research the disputed information, and promptly update any inaccurate information with the consumer reporting agencies.

If the client wishes to dispute a Capital City Bank trade line through the CRA, they must contact that specific CRA. A unique confirmation number is given with a personal credit report that is needed when the client contacts the CRA with a dispute. Any reports generated by Capital City Bank as part of a credit application will not be helpful to the client and should not be given out.

Once a dispute is filed through the CRA by the consumer, Credit Administration will receive the ACDV (automated credit dispute verification) through the Consumer Data Industry Association’s website called E-Oscar. Credit Administration will have 30 days to research and correct the dispute through E-Oscar or the CRA will automatically modify the trade line based on the client’s dispute.

If the client (or Bank associate on a client’s behalf) wishes to dispute a Capital City Bank trade line directly with us, they must contact an associate in Collections, providing details in writing (preferably an e-mail) outlining the nature of the dispute and why revision by the Bank should be considered. Specific information regarding the cause for the difference in view will be required as well as identification as to whether the cause was client, Bank, or other third party related with the specific timing of events involved.

The Fair Credit Reporting Act states the client must identify the specific information being disputed, explain the basis for dispute, and include all supporting documentation required by the Bank. An investigation will be performed. Within 30 days from the date of dispute, the client will be contacted with the results of our investigation or a request for additional information. If a correction is needed, an AUD (automated universal data form) will be entered into E-Oscar to request an update to one or more of the CRA’s.

Collection of consumer loans, commercial loans, and real estate loans is the primary responsibility of the Collections Department. Client contact for collection efforts by lenders should be discussed with the assigned collections associate. Occasionally, specific lenders will be responsible for the collection efforts of their clients. A list of those lenders will be maintained by the Collections Department. This responsibility shall range from calling on delinquent accounts to the pursuit of legal remedies.

If contact or an acceptable repayment plan is not established, a demand letter is to be sent explaining the consequences of nonpayment. This letter details the amount to be paid, the months for which payment is due, the time given to resolve the delinquency, and the Bank’s intention to start legal proceedings if the default is not resolved. If further collection effort seems unlikely to resolve the default in a reasonable time frame, then the account is sent for the initiation of legal proceedings.

The Collections Department will operate as the single point of contact for all consumer primary dwelling closed-end loans that become delinquent or whereby the client seeks contact with the Bank for workout reasons. This does not mean that the relationship manager cannot be involved, only that the Bank will provide clients with a centralized, single contact point.

When it is necessary to repossess collateral, it should only be done when reasonable efforts to collect have been exhausted. Repossession causes customer ill will, is expensive, and often results in substantial loss when the collateral is sold. On the other hand, postponing repossession when it is obvious that no more payments are going to be made increases the Bank’s losses without saving the Bank any time or effort.

After the borrower has been in default for more than 10 days for failure to make a required payment and the Collection Department Manager or Collection Supervisor decides that repossession may be required, the bank should send the borrower (and any co-makers or guarantors) a notice of right to cure through the regular mail. Then the Bank should wait at least 7 days from the date of the letter (depending on estimated mail time) before repossessing the collateral.

The Bank will not commit a breach of the peace during the process of repossession. If the customer will not release the collateral voluntarily, replevin procedures should be considered. In other cases a judgment will be needed. In all cases, the Bank must proceed carefully.

The Bank should hold the repossessed collateral for at least a 10-day redemption period and should send a 10-day letter to the customer (and any co-makers or guarantors). The debtor can waive his rights to the collateral by signing an appropriate written statement. The debtor does, however, have a right of redemption by tendering fulfillment of all obligations. The Bank, as a matter of policy, will hold the collateral for at least a 10-day redemption period.

In the case of vehicles, once the collateral is clear to sell, it is generally maintained at an auction location to be sold. The current market and conditions of the vehicle will determine the price. The collateral is taken to auction where it is sold to the highest bidder. There may be times when sealed bids may be taken from the public (for example: based on age or specialty of the collateral). In these cases, three bids are required and the highest bid is awarded. The Bank does maintain the right to refuse and bid / re-advertise for additional bids.

When the foreclosure of a closed-end consumer dwelling loan may be the possible outcome, the Bank’s Collections Department will manage the process in accordance with established procedures. For these loan types, foreclosure will not normally begin prior to the loan being 120+ days past due as required by regulation.

This is a subjective reason and lenders should use good judgment when selecting this reason. The client should have a primary (active) checking and/or savings account with the Bank with minimal overdraft and returned items. The deposit level should be related to the loan level.

Example: A client applied for a $20K home equity line of credit. Good banking relationship would be a good option if the client maintains $1K in a primary checking account and a savings account with an average balance of $1K with no overdraft/NSF or other red-flags. Balances should be thought of relative to the loan exposure.

This option is used best when collateral is liquid in nature such as cash, marketable securities, CSV life insurance, or similar. In all cases, the LTV should be at or below policy thresholds.

Good collateral should not be used for a single family residence or any loan with a high LTV.

Example: A client applied for an investment account secured loan and the DTI or Beacon are not within policy, but since it is well secured and monitored, “Good Collateral” is a good choice.

A score is considered “good” when it is 725 or above.

Example: A good time to use this reason is if the client is barely out of policy with one or 2 of the criteria listed below, but has a Beacon score of 725 or above.

• LTV
• DTI – due to the importance of DTI this should only be slightly out of guidance in order for Good Credit Score to be the best override reason.
• Time at job or residence is too short

The client should not be out of policy with all of these criteria. Also, we recommend using 2 override reasons when selecting this reason to strengthen the support as to why we overrode the application.

If the applicant has existing or paid off loans with no late payments (or very rare) and the outlook for the future is for continued good performance. This would be an appropriate choice when an applicant might otherwise be denied for limited credit history.

Example: The approval of a new loan should always include a thorough review of an existing relationship. If an applicant is declined for having a limited credit history (thin file), and has maintained a satisfactory repayment history with the Bank, this may be a good reason to select.

The applicant should be employed with the same employer for five or more years, or worked within the same profession. An application should not be approved solely on the time at employment, but rather this reason should be used in conjunction with another reason, such as, good credit score, low debt to income, or good banking relationship.

Example: If an applicant is declined for the loan due to bankruptcy on file, but has shown stability since and held a stable job for more than five years, this is a good reason to choose. However, we do recommend choosing a second reason to further support why this loan was approved.

The applicant should have lived in one location for at least 5 years. An application should not be approved solely on the time at residence, but rather this reason should be used in conjunction with another reason, such as, good credit score, low debt to income or good banking relationship.

Example: This is a good reason to choose if an applicant has shown stability by living in one location (rent or own) for 5 or more years, but we do recommend choosing a second reason to further support why this loan was approved.

Loans are approved with DTI less than or equal to 45%. When using this override reason its best if the DTI is 35% or less. This override reason would NOT apply to Beacon score or bankruptcy declines.

Example: The source of repayment is one of the strongest override reasons. If an application is declined for LTV or thin file, but the DTI is strong and well documented, this would be the best reason selected.

Loan to value varies based on the collateral, but “low” loan to value is best used when the LTV or CLTV is 15% less than policy requirements.

Example: If the LTV on a HELOC is 65% (15% less than policy) and the client has the ability to repay the loan, this would be the best reason selected. In order to strengthen the documentation of the approval, a second override reason may also be warranted. While LTV is important, the source of repayment is the most critical.

If the loan qualifies for the insurance program, this is a valid reason to choose, but should be used in conjunction with another reason, such as, good banking relationship, low debt to income, good credit score, etc. A loan should not be approved on this reason alone, especially if the DTI is elevated.

Example: HELOC’s with a LTV over 100% but the client meets all the other underwriting criteria, Insurance program should be one of 2 reasons selected for an override.

In the event the client has a credit report with a low Beacon score, judgments, charge offs or any other negative factor, but there is a reasonable explanation for the issue. This reason should be well documented in the Dpro notes.

Example: In the event the applicant had financial difficulties and in the past had charge offs that have since been repaid but their score remains low, “Satisfactory Credit Explanation” would be a good reason selected. The explanation should be well documented in the Dpro notes.

This reason should be selected if the application is for an existing loan and the client does not have a DTI or Beacon score that meets policy or if the term has been extended in order to lower the payment amount and there were no mitigating factors. The client may still have a good repayment history with the Bank, but the DTI and/or term is non-compliant.

Usually if this is the reason for the decision override, it will also be the reason for the rate override (if warranted).

Example: This reason is mainly accepted when renewing an existing loan. The DTI is non-compliant due to financial difficulties, but we will renew the loan for the client with the possibilities of concessions.

This reason should be selected for an applicant that has a DTI over 45%, or no score, but has a high net worth and meets other underwriting characteristics. These applicants will typically be retired applicants or similar, having ample investment accounts and liquidity, but limited taxable income. Notes to the application should note review of appropriate corroborating evidence as part of the approval.

Example: An applicant with a 50% DTI that is declined by DecisionPro (DPro) as their taxable income is not sufficient to support a lower ratio; however, it is noted that they have significant investment accounts (both retirement and/or non-retirement and/or liquidity to service or retire the debt if needed.

For the most part, these override reasons are the opposite of the above noted approval overrides reasons. 

• Bankruptcy – normally, applicants that are currently in bankruptcy, or have a bankruptcy reported date of 5 years or less from the application date, will be denied. In some cases, the bankruptcy may not be noted on the credit report, and DecisionPro (DPro) might recommend an approval. In those cases, or where there are no other material mitigating factors present, this denial reason would be appropriate.
• Excessive Obligations – This override reason may be appropriate when the applicant has a high level of debt that may not be reported on credit bureau (such as business obligations that are supported by consumer income) or other debt burdens that may indicate repayment is at risk.
• Foreclosure or Repossession – Applicant’s with active foreclosures, repossessions, or tax liens, or a history of such that would present a risk to the repayment of the loan, may be declined utilizing this reason. In some cases, Dpro may recommend an approval as these items do not always impact the credit score or other parameters as you might expect.
• High Loan to Value and/or Insufficient Collateral – Use of these reasons will depend on the collateral of the loan and whether or not there are mitigating factors present (such as shorter term, good DTI). In general, an LTV or CLTV is considered to be high when it is 15% above policy or 100% or more (whichever is higher).
• Length at Residence and/or Length of Employment – Use of these reasons may be warranted when an applicant has an unproven earning capacity as indicated by short-term employment or numerous changes in residence. Usually this reason would be used in conjunction with other reasons and not on its own.
• Out of Lending Area – The Bank, by policy, does not lend to out of market area applicants as defined in the General Credit Policy.
• Poor Banking Relationship – This reason would be appropriately used for an existing client’s application where the Bank has experienced delinquency, overdrafts, or other poor performance indicators.
• Derogatory Credit – This reason could be appropriate when an applicant has recent (for example: six months or less) poor payment performance on the credit bureau, with the Bank, or otherwise, that has not fully impacted their credit score to a degree that would result in a recommended decline by Dpro.
• Terms Unacceptable – This reason would be appropriate for applicants seeking terms that are not offered by the Bank, such as extended amortization or other repayment schedules that are not in line with the Bank’s lending policies or risk management objectives.
• Proportion of balances to credit lines are too high on bank/other revolving accounts – Should be used only when the applicant has revolving accounts within $100.00 or 10% of the maximum value of the credit line.
• Source of income – Should be used when the source of income is not an allowable source, specifically from a marijuana related business.

Adjusting to Published Rate Guidance 

If the rate needs to be adjusted to mirror guidance and DecisionPro (DPro) doesn’t account for a discount or premium or if DPro incorrectly calculates the rate due to missing information and it needs to be adjusted to reflect the published guidance.

Example: DPRO does not price a loan correctly due to a missing data element, and returns the default rate of interest (currently set to a unique rate of 14.99%). The lender must adjust the rate to guidance. Anytime the rate has to be changed to match guidance, “Adjusting to Published Rate Guidance” is the best reason.

Another example would be for loans that may have a noteworthy portion of unsecured exposure where a weighted average rate may be utilized in pricing the loan. If a loan is secured by collateral that is below the loan amount, the rate offered may be the weighted average of the rate on the collateral type and an unsecured loan of similar structure. For example, if real estate loan with LTV of over 100%:

• Real estate value ($75) / loan amount ($100) = 75%
• Real estate product rate (7%) * 75% = 5.25%
•  Unsecured portion ($25) / loan amount ($100) = 25%
• Unsecured rate (10%) * 25% = 2.50%
• Weighted average rate offered = 5.25% + 2.50% = 7.75%

This should be used within reason and when material. For example, small loans (less than $25,000) or when unsecured exposure is less than 10% of loan, would be considered immaterial. Calculation to be specifically noted in the “Notes” in DPro and the override reason selected should be “Adjusting to Published Guidance”. If, in the future, the loan was fully secured, the rate will not be automatically adjusted. In these cases, the client should re-apply to have the loan underwritten and re-priced under the new conditions.

An associate of the Bank has applied for a loan and has received a lower rate as approved by Central Underwriting and policy.

Example: Any associate loan with an adjustment to the rate outside of typical guidance.

An associate of the Bank has applied for a loan and has received a lower rate as approved by Central Underwriting and policy.

Example: The most common reason would be for promotions or other temporary offerings.

When the client is required to have insurance the rate is increased 1.5% to account for the higher risk level.

Example: If the client has a LTV of 100% on a HELOC the loan will be priced 1.5% over the market rate.

The interest rate has to be lowered so the calculated APR is below the usury limitations.

Example: Once payments are calculated the “what if” calculator will show the APR and the APR must be less than the legal maximum for each state. If the APR exceeds these limits the lender must adjust the either the rate or fees to lower the APR to be within guidance.

The interest rate has to be lowered so the calculated APR is below the usury limitations.

Example: Once payments are calculated the “what if” calculator will show the APR and the APR must be less than the legal maximum for each state. If the APR exceeds these limits the lender must adjust the either the rate or fees to lower the APR to be within guidance.

This override reason allows approving officers to lower rates from published price guidance to match competing offers on consumer loans under the following process:

• Requesting loan officer (for example: loan officer taking the application) will be able to lower the rate offered to manage a competitive situation.
• Details of competitive offer to be added to the “Notes” in DecisionPro (DPro), describing the situation and the adjustment.
• Rate change to be concurred by senior officer – specifically, community president, executive, or Credit Administration. Concurrence to be noted in DPro application. If agreed via email, that should be attached in DPro as well.

Example: A qualified applicant has a price quote on a car loan with a competitor that is lower than what the Bank has on offer as per the risk based pricing guide. The officer may lower the rate to match the competing offer, noting who the competitor was and why the rate is being lowered. Review of rate change by that officer’s manager required and also documented in the loan application.

In order to ensure that all compensating factors have been considered, a second review of a declined application is in order. This review should be conducted by another officer who is not familiar or has no prior knowledge of the application reviewed. Each second review will follow consistent guidelines that will address various aspects of the application and measure compliance with associated regulations. Additionally, this process will address the officer’s attention to the application and whether the lender treated the applicant the same as those applicants approved by the lender.

The procedures attached and incorporated into this document will be performed for all HELOC applications that are declined. Also, in instances where DecisionPro (DPro) returns a recommended approval, but is subsequently declined, the application will then require a second review. The second reviewer shall concur or challenge the decline. In the event the second reviewer uncovers compensating and mitigating factors, the reviewer shall discuss these matters with the declining officer with the goal being a reversal of the decline decision to approve. Additionally, the applicant should be provided individual assistance with their application, and where necessary, will be referred to a lender in their market area.

It is the function of the delegated second reviewer to confirm that equal opportunity was provided to the applicant to make the loan. 

The reviewer’s role is to conclude the below considerations were evident in the underwriting, or whether follow up with the applicant might be beneficial, or to draw the same conclusion as the initial declining lender. In the latter, the Adverse Action Notice will be provided to the applicant.

• Is the applicant’s loan request for a product not offered by the Bank?
  • If yes, is there a specific loan program within the Bank that could be considered to meet the applicant’s credit needs and qualifications?
  • If no, could exceptions to underwriting standards authorized by Bank policy be considered in order to meet the applicant’s credit needs and qualifications?
• Were all factors considered in the underwriting process?
• Was the applicant offered the opportunity to explain all deficiencies?
• If the potential decline was based on weak (insufficient) credit, if within lending guidelines, was the applicant given the opportunity to obtain a co-borrower?
• If the potential decline was based on collateral, was the customer given the opportunity to provide additional collateral?
• If the potential decline was based on insufficient real estate value, did someone with knowledge of appraisals review the appraisal to ensure it reflected the true value of the property?
• Were all factors considered in granting this credit request?