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EXHIBIT
31”
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Encore Bank
Special Assets Committee Meeting
130 a.m, Wodnesday, December 2, 2009
9 Greenway Plaza, Honaton, Texas
I Minutes. ‘The following are the minutes of the above-captioned meeting.
2, Attendees.
a, Members
in attendance.
Jim D'Agostino — Chairman
Preston Moore
Carmen Jordsa
John Lingor
Andy Creal
Tom Rey
Bob Brown
Paul Nidasio
dames Flyon
Jim Hamilton — Secretary
5. Members not in attondance.
None.
G Management and others In attendance.
Daryl Frevert
‘Russ Macaluso
4 Byckground,
a, ‘The Board has appointed an Asset Classification Committee to conduct internal
asset reviews and make decisions fox the classification of assets and the
establishment of reserves in accordance with an approved Asset Classification
Policy.
Senior tnauagement and the Asset Classification Comotittes created a Special
Assets Committee (SAC) ow August 5, 2009 for the purpose of managing troubled
loans and distressed assets. The membership of SAC is listed above.
e, The Special Assets Committee meets weekly to conduct business coming before
the Committee, and SAC reports to the Asset Classification Committee.
4 Call to Order.
a Mr. D’Apostine called the meeting ta order,
Nehcorpisaitomeljhmniitantspeciat Asscts Comeatiter Minutes. 12.02.2009, Brn 1doc Page | of$
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‘Mb. D’ Agostino stated that the next inceting of the Special Assets Conunittes was
scheduled for Wednesday December $, 2009 af 8:30 a.m. CST. The Chairman
asked the Comumitive members ifthere were any objections to the proposed.
meeting date, There being none, the Secretary was instructed by the Chairaian to
make all necessary arrangements to facilitate the next meeting.
5, Anproval of Mists
a, ‘The first itom of busiacss to come before the meeting was the approval of the
calnates of the Special Assets Committee meeting held on November 25, 2009.
The Chaieman asked if there were any objections to approval of the minutes. There.
being none, upon motion duly made aud seconded, the minutes of tho prios meeting,
were approved and thy Chairman proceeded to the next order of business,
6 New Business,
a. Mr. D'Agostino asked if there was aay new business, announcements or comments
that Committee members wished to make,
Mr, Lingor announced that the Spesial Assets Com:nittve will be meeting on a
weekly basis at the request of Mr. Moore and other Committes ameinbers, The
Chairman asked if there was any ather new business. There beiag none, the
Chairman proceeded io the uext order of business,
4.
a aes (Mike Durkin/Loan Officer). Mr. Lingor invited Mr.
fo. and Mar, Durkin to shave their impressions of the current status of the foatt
to! Me. Durkin described origination of the foan, the finenctal status of
the borrower and its primary principal/guarantor, and the nature of the coliateral
which is a completed and furnished spec home in Naples with a list price of
approximately $5.5 million and a vacant residential lot. Mr. Durkin expressed his
opinion that the borrower nay bo considering surrender of the collateral by deed-
in-liew in exchange for a favorable compromise and settlement of the debt,
wi NidasiofLoan Officer). Mr. Nidasio
tade a brief presentation to Comnmiltes segarding management of the credit.
Committee asked if there Hinued to be the possibility af.
oe.
inting a swap with
Suporior Bank of Bncore’s posure for the exposure, Mr.
Nidaslo stated that be continues to broach the subject, but Superior Bank seems to
have little interest, At the request of Committee, Mr. Nidasto confirmed that he will
continue to pursue the swap in future discussions,
Pant! Nidasio/Loan Officer} Mr. Nidasio informed
Committee that it has beon difficultto communicate with the agent, Superior Bank,
about resolution of this roubied credit until mors cecently when Superior suggested a
workout plan with refinancing. Mr. Nidasio informed Coninittee that his message ta
Superior Bank continues to be that Encore wants fo be talten out of the credit, does.
NebeorptsO
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not wish to participate in refinancing, and recotinends foreclosure of the collateral
under a settlement agreement. Committee authorized renewed offerts by Mr, Nidasia
to negotiate a viable settlement that is in the best interests of the Bank.
@aul Nidasio/Loan Officer). Mr. Nidasio reported that Dr. gas
renewal note huss been prepared and it will be delivered this week for execution. Mr.
Nidasio conjectured that the renewal anc reduction should tske place in the very near
future,
ae (Paul Nidasio/L.oan Officer), Mr, Nidasio reported that
the taxes fiave bec paid.on the property pledged as collaterat and there are no Hens
on the property at this time, Mr. Nidesio confirmed that he continnes to pursne a
settiemont of th (Gant witly a.saly of the collateral and a compromised
settlement, Mi, Neadisie added that there is reason to beliove that a potential buyer
may bid on the property prior to year-end, Comunittes authorized Mr. Nidasio to
nogotiate a sale of the colfateral,
Biya li Holdings. LLC. (Bob Brown/Loan Officer). Mr, Lingor asked Mr. Brown to
Bive a synopsis of the current status of the Blyn loan and recommend a workout
strategy far discussion. Mr. Brown delivered the Blyn loan synopsis and then
speculated on upcoming events in, tho first quarter of 2010. Mv. Brown stated that the
terms af the latest Blyn loan renewal inchided a Jamary, 2010 pay down of $450,006
aud maturity of the lonu on March 15,2010. Mr. Brown indicated that recent
meetings with a principal of the borrower encourage him thot the January pay dows
will be made, Mr, Brown indicated that there is a trial date set for May £0, 2016 that
involves the botrower and the ship yard where the borrower's vessel is puder
renovation. Mr. Brown discussed the legal remedies sought and the ramifications for
our borrower if it wits ox loses this case. Despits a recent marine appraisal of the
ship, the Committee instrroted that either Bob Brown or Jin Flyun obtain more
information. about the collateral by making a visnal inspection. Mr, Lingor added to
those insteuctions that every effort be made to inspect equipment that was purchased
for the ship’s conovation which is currently in storage and not installed on the ship,
Me. D’ Agostino added that every effort should be made to perfect s security interest
iu thot equipment without delay.
Review of Socond Mortgage/SBO Loans.
a. (Russ Macaluso/Recovery Officer), Mr. Macaluso requested
approval to chntge-off the borrower's PMT loan and pursue collection by fiting suit
after domand is made. The amount to be charged off ts $78,046.25. Committee
approved the recommendation,
come. . (Russ Macaluso/Recovery Officer), Mr. Mucaluse requested
approval to chatge-off the borrower's PMT loan and pursue collection by filing suit
after demand is made. The amount to be charged off1s $44,304.31, Committee
approved the recommendation,
a
1 borrower
, (Russ Macaluso/Recovery Office). Mr. Macaluso stated that
appears lo bo paying the first mortgage and it appears that the value of
the home exceeds the total of the first mortgage loan and Encore home improvement
loan, Mc, Macaluso stated that demand was made and the borrower has been
unresponsive. Nit. Macaluso vequested approval to past for foreclosure the
Nobcorp&0t\homelkonekan\Special Assets Committe Mluutes.£2.02,2009. Draft Loc Page3 of
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borrower's Encore home improvement foun which has a current outstanding balance
of $18,201.65, Committee approved the eccommendation.
(Buss Macaluso/Recovery Officer), Mr. Macaluso requested
‘approval to charge-olf the borrower's PMT Soan and pursue collection by filing suit
after demand is.made, The anount to be charged off is $46,325.56. Committee
approves the recommendation.
(Russ Maculuso/Recovery Officer}. Mr. Macaluso requested
appeaval to chat'ge-off the borrower's PMT loan and pursue collection by filing suit
after démand is made. The amount to be charged off is $36,759.54, Coramittee
approved the recommendation.
(Russ Macatuso/Recovery Officer), Mi, Macalusa requested approval to
charge-off the bortower’s HELOC loan-end pursup collection by filing suit-after
domand is made. The emountte be charged off is $99,668.85, Commiittes approved
the recommendation,
oitvage Loss-Pralcetions. (Daryl Preveit). Mr. Fievert stated second
mortgage losses: in December are $357,000-with probable yecoverias of $50,000 to
$75,000. Wir, Frevert pigjected 2010 second mortgnge losses of $330,000 In January,
$293,000 in February, attd $65,000 in March. Mr, Frevert informed Cornmiliee that
second mortgage losses in 2008 were $2,2 milton and projected second mortgage
losses in 2009 will be $2.5 million. Second mortgage losses in 2009 are on track to
be $19,000 under plan, Committee accepted Mt, Frevert’s comments and
eucouraged continned close monitoring of the portfolio.
S§BO Portfolio Management, (Dacyl Frevert), Mr. Lingor stated that there ave.
thirtect SRO loans tht have been past due more than 365 days, Most of toss loans
ware serviced hy Countrywide, now Bank of America. Mc. Lingor asked Me. Frevert
to conmnent on the matter. Mr. Frovert said that he would present a mors detailed
analysis af the next SAC mesting based. upon information he expected to obtain ata.
mecting later this week with a representative from 1 of A. Mr, Provert stated that he
intended to.ask for 1) a detailed Joan histary and curent losn-statiis for onelt loan and
2) an individual action plaa for cach foan over the next 60 to 90 days with
confirmation of active collection or initiation of foreclosure proceedings. Mr.
D’Agostino asked Mr, Frevert to determine if ack of these severely past due loan
have been marked-to-market aud are actively in the process of collection, Mr.
Frevert affirmed his intention to seek clarity aud resolution to these long-standing
past dues,
Othor Business.
Mr. Lingor confined that he aud Mr, Meore will be in Florida Monday, December 7
and Toesday, Decentber 8, 2009 to review the Florids PARs prior to their submission
to the Asset Classification Committee,
‘The Chairman asked Hf thors was any other business. ‘here heing none to come
before the Committee, the Chairasn proceeded to the next order of business,
\chonrphot\honelfhomilton\Special Assets Committee Minates.[2,022009, Draft Ltloe Page
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My. D'Agostino asked if there were any other announcements, comments or
questions. There being none, the Chairman proceeded to the next order of business.
10. Special, AS ssets Commitice Action. After further review and discussion, the Comm ites
affirnra d the recommendations previously mentioned upon 4 motion duly made ond
seconded.
u Adio ment, Tho Chairman then asked if there was any further business to come before
the meeting, Thore being none, npon ination duly made and seconded, the meeting was
adjourned at 10:30 a.m.
12. Signaturgs.
Submitted: Approved:
itdanltnr DiAy tio
nies Eexecutive Officer
{obcorpfs Mhonic\ibanifeantGp cols! Aasals Cosmnitter: Minutes, 12.02.2009, Brat Lalo:
Boge SoS
ENBKO09657
Confidentiat
Preview
08/30/2013 03:25:50 PM 713-755-1451 Page 1/6 EXHIBIT 31” 08/30/2013 03:25:50 PM 713-755-1451 Page 2/6 Encore Bank Special Assets Committee Meeting 130 a.m, Wodnesday, December 2, 2009 9 Greenway Plaza, Honaton, Texas I Minutes. ‘The following are the minutes of the above-captioned meeting. 2, Attendees. a, Members in attendance. Jim D'Agostino — Chairman Preston Moore Carmen Jordsa John Lingor Andy Creal Tom Rey Bob Brown Paul Nidasio dames Flyon Jim Hamilton — Secretary 5. Members not in attondance. None. G Management and others In attendance. Daryl Frevert ‘Russ Macaluso 4 Byckground, a, ‘The Board has appointed an Asset Classification Committee to conduct internal asset reviews and make decisions fox the classification of assets and the establishment of reserves in accordance with an approved Asset Classification Policy. Senior tnauagement and the Asset Classification Comotittes created a Special Assets Committee (SAC) ow August 5, 2009 for the purpose of managing troubled loans and distressed assets. The membership of SAC is listed above. e, The Special Assets Committee meets weekly to conduct business coming before the Committee, and SAC reports to the Asset Classification Committee. 4 Call to Order. a Mr. D’Apostine called the meeting ta order, Nehcorpisaitomeljhmniitantspeciat Asscts Comeatiter Minutes. 12.02.2009, Brn 1doc Page | of$ EXHIBIT Confidential Cay ENBKOOSGE3 . 08/30/2013 03:25:50 PM 713-755-1451 Page 3/6 ‘Mb. D’ Agostino stated that the next inceting of the Special Assets Conunittes was scheduled for Wednesday December $, 2009 af 8:30 a.m. CST. The Chairman asked the Comumitive members ifthere were any objections to the proposed. meeting date, There being none, the Secretary was instructed by the Chairaian to make all necessary arrangements to facilitate the next meeting. 5, Anproval of Mists a, ‘The first itom of busiacss to come before the meeting was the approval of the calnates of the Special Assets Committee meeting held on November 25, 2009. The Chaieman asked if there were any objections to approval of the minutes. There. being none, upon motion duly made aud seconded, the minutes of tho prios meeting, were approved and thy Chairman proceeded to the next order of business, 6 New Business, a. Mr. D'Agostino asked if there was aay new business, announcements or comments that Committee members wished to make, Mr, Lingor announced that the Spesial Assets Com:nittve will be meeting on a weekly basis at the request of Mr. Moore and other Committes ameinbers, The Chairman asked if there was any ather new business. There beiag none, the Chairman proceeded io the uext order of business, 4. a aes (Mike Durkin/Loan Officer). Mr. Lingor invited Mr. fo. and Mar, Durkin to shave their impressions of the current status of the foatt to! Me. Durkin described origination of the foan, the finenctal status of the borrower and its primary principal/guarantor, and the nature of the coliateral which is a completed and furnished spec home in Naples with a list price of approximately $5.5 million and a vacant residential lot. Mr. Durkin expressed his opinion that the borrower nay bo considering surrender of the collateral by deed- in-liew in exchange for a favorable compromise and settlement of the debt, wi NidasiofLoan Officer). Mr. Nidasio tade a brief presentation to Comnmiltes segarding management of the credit. Committee asked if there Hinued to be the possibility af. oe. inting a swap with Suporior Bank of Bncore’s posure for the exposure, Mr. Nidaslo stated that be continues to broach the subject, but Superior Bank seems to have little interest, At the request of Committee, Mr. Nidasto confirmed that he will continue to pursue the swap in future discussions, Pant! Nidasio/Loan Officer} Mr. Nidasio informed Committee that it has beon difficultto communicate with the agent, Superior Bank, about resolution of this roubied credit until mors cecently when Superior suggested a workout plan with refinancing. Mr. Nidasio informed Coninittee that his message ta Superior Bank continues to be that Encore wants fo be talten out of the credit, does. NebeorptsO iia meljraution\Special Assis Commitiee Miunics, 12.02.2009, Drait ideo Page 2085 ENBKO03654 Confidential 08/30/2013 03:25:50 PM 713-755-1451 Page 4/6 not wish to participate in refinancing, and recotinends foreclosure of the collateral under a settlement agreement. Committee authorized renewed offerts by Mr, Nidasia to negotiate a viable settlement that is in the best interests of the Bank. @aul Nidasio/Loan Officer). Mr. Nidasio reported that Dr. gas renewal note huss been prepared and it will be delivered this week for execution. Mr. Nidasio conjectured that the renewal anc reduction should tske place in the very near future, ae (Paul Nidasio/L.oan Officer), Mr, Nidasio reported that the taxes fiave bec paid.on the property pledged as collaterat and there are no Hens on the property at this time, Mr. Nidesio confirmed that he continnes to pursne a settiemont of th (Gant witly a.saly of the collateral and a compromised settlement, Mi, Neadisie added that there is reason to beliove that a potential buyer may bid on the property prior to year-end, Comunittes authorized Mr. Nidasio to nogotiate a sale of the colfateral, Biya li Holdings. LLC. (Bob Brown/Loan Officer). Mr, Lingor asked Mr. Brown to Bive a synopsis of the current status of the Blyn loan and recommend a workout strategy far discussion. Mr. Brown delivered the Blyn loan synopsis and then speculated on upcoming events in, tho first quarter of 2010. Mv. Brown stated that the terms af the latest Blyn loan renewal inchided a Jamary, 2010 pay down of $450,006 aud maturity of the lonu on March 15,2010. Mr. Brown indicated that recent meetings with a principal of the borrower encourage him thot the January pay dows will be made, Mr, Brown indicated that there is a trial date set for May £0, 2016 that involves the botrower and the ship yard where the borrower's vessel is puder renovation. Mr. Brown discussed the legal remedies sought and the ramifications for our borrower if it wits ox loses this case. Despits a recent marine appraisal of the ship, the Committee instrroted that either Bob Brown or Jin Flyun obtain more information. about the collateral by making a visnal inspection. Mr, Lingor added to those insteuctions that every effort be made to inspect equipment that was purchased for the ship’s conovation which is currently in storage and not installed on the ship, Me. D’ Agostino added that every effort should be made to perfect s security interest iu thot equipment without delay. Review of Socond Mortgage/SBO Loans. a. (Russ Macaluso/Recovery Officer), Mr. Macaluso requested approval to chntge-off the borrower's PMT loan and pursue collection by fiting suit after domand is made. The amount to be charged off ts $78,046.25. Committee approved the recommendation, come. . (Russ Macaluso/Recovery Officer), Mr. Mucaluse requested approval to chatge-off the borrower's PMT loan and pursue collection by filing suit after demand is made. The amount to be charged off1s $44,304.31, Committee approved the recommendation, a 1 borrower , (Russ Macaluso/Recovery Office). Mr. Macaluso stated that appears lo bo paying the first mortgage and it appears that the value of the home exceeds the total of the first mortgage loan and Encore home improvement loan, Mc, Macaluso stated that demand was made and the borrower has been unresponsive. Nit. Macaluso vequested approval to past for foreclosure the Nobcorp&0t\homelkonekan\Special Assets Committe Mluutes.£2.02,2009. Draft Loc Page3 of Confidential ENBKQO3655 08/30/2013 03:25:50 PM 713-755-1451 Page 5/6 borrower's Encore home improvement foun which has a current outstanding balance of $18,201.65, Committee approved the eccommendation. (Buss Macaluso/Recovery Officer), Mr. Macaluso requested ‘approval to charge-olf the borrower's PMT Soan and pursue collection by filing suit after demand is.made, The anount to be charged off is $46,325.56. Committee approves the recommendation. (Russ Maculuso/Recovery Officer}. Mr. Macaluso requested appeaval to chat'ge-off the borrower's PMT loan and pursue collection by filing suit after démand is made. The amount to be charged off is $36,759.54, Coramittee approved the recommendation. (Russ Macatuso/Recovery Officer), Mi, Macalusa requested approval to charge-off the bortower’s HELOC loan-end pursup collection by filing suit-after domand is made. The emountte be charged off is $99,668.85, Commiittes approved the recommendation, oitvage Loss-Pralcetions. (Daryl Preveit). Mr. Fievert stated second mortgage losses: in December are $357,000-with probable yecoverias of $50,000 to $75,000. Wir, Frevert pigjected 2010 second mortgnge losses of $330,000 In January, $293,000 in February, attd $65,000 in March. Mr, Frevert informed Cornmiliee that second mortgage losses in 2008 were $2,2 milton and projected second mortgage losses in 2009 will be $2.5 million. Second mortgage losses in 2009 are on track to be $19,000 under plan, Committee accepted Mt, Frevert’s comments and eucouraged continned close monitoring of the portfolio. S§BO Portfolio Management, (Dacyl Frevert), Mr. Lingor stated that there ave. thirtect SRO loans tht have been past due more than 365 days, Most of toss loans ware serviced hy Countrywide, now Bank of America. Mc. Lingor asked Me. Frevert to conmnent on the matter. Mr. Frovert said that he would present a mors detailed analysis af the next SAC mesting based. upon information he expected to obtain ata. mecting later this week with a representative from 1 of A. Mr, Provert stated that he intended to.ask for 1) a detailed Joan histary and curent losn-statiis for onelt loan and 2) an individual action plaa for cach foan over the next 60 to 90 days with confirmation of active collection or initiation of foreclosure proceedings. Mr. D’Agostino asked Mr, Frevert to determine if ack of these severely past due loan have been marked-to-market aud are actively in the process of collection, Mr. Frevert affirmed his intention to seek clarity aud resolution to these long-standing past dues, Othor Business. Mr. Lingor confined that he aud Mr, Meore will be in Florida Monday, December 7 and Toesday, Decentber 8, 2009 to review the Florids PARs prior to their submission to the Asset Classification Committee, ‘The Chairman asked Hf thors was any other business. ‘here heing none to come before the Committee, the Chairasn proceeded to the next order of business, \chonrphot\honelfhomilton\Special Assets Committee Minates.[2,022009, Draft Ltloe Page € ofS ENBKO03656. Confidential 08/30/2013 03:25:50 PM 713-755-1451 Page 6/6 My. D'Agostino asked if there were any other announcements, comments or questions. There being none, the Chairman proceeded to the next order of business. 10. Special, AS ssets Commitice Action. After further review and discussion, the Comm ites affirnra d the recommendations previously mentioned upon 4 motion duly made ond seconded. u Adio ment, Tho Chairman then asked if there was any further business to come before the meeting, Thore being none, npon ination duly made and seconded, the meeting was adjourned at 10:30 a.m. 12. Signaturgs. Submitted: Approved: itdanltnr DiAy tio nies Eexecutive Officer {obcorpfs Mhonic\ibanifeantGp cols! Aasals Cosmnitter: Minutes, 12.02.2009, Brat Lalo: Boge SoS ENBKO09657 Confidentiat