Policy for Monitoring the Credit Quality of Governmental Units

Purpose

The Board of Directors (the “Board”) of the New Hampshire Municipal Bond Bank (the “Bank”) has adopted this policy to provide a framework for monitoring the credit quality of Governmental Units participating in the Bank’s loan portfolio.  The purpose of this policy is to ensure that the Bank remains informed regarding the financial condition of all Governmental Units, provides the Board with regular updates on portfolio credit quality, and monitors compliance with applicable Internal Revenue Service (IRS) requirements.

Goal

To maintain the overall credit strength of the Bank’s portfolio and ensure the timely payment of debt service obligations.

Objectives

To achieve this goal, the Bank shall:

• Maintain a summary of the credit quality of all borrowers under the 1978 and 2005 Resolutions.
• Request and review annual audited financial statements from each borrower to assess current financial condition and credit quality.
• Provide the Board with an annual summary report on the credit quality of the Governmental Units within the portfolio.
• Monitor compliance with federal tax requirements to preserve the tax-exempt status of the Bank’s bond issues
• Maintain and periodically review monitoring procedures to ensure their effectiveness.
• Identify potential credit concerns on a timely basis and provide appropriate recommendations to the Board.