Your community bank has been consistently 2–rated and complimented by your friendly examination team during several years of good earnings. Then you followed your residential and commercial construction and developer customers into the lending swamp that was 2007 and 2008, and suddenly business also was not so good for longtime commercial loan customers. When your examiners arrived again to look back, their tone changed to "Shoulda, Coulda." You should have identified your risks and exposure earlier and you could have taken action sooner to stop your earnings slide. The inadequacies identified by the examiners in hindsight include inadequate management and Board supervision, overconcentration in real estate lending, inadequate policies and credit and risk management practices, and inadequate liquidity planning. The Exit Meeting message: Those 1 and 2 component ratings from before are now 3 and 4 ratings. Your bank is in "troubled condition", you need more capital and an enforcement action will be forthcoming.

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