Our loan review services are provided by our experienced lending and credit professionals, including former regulators. Loan review services are intended to be an out-sourced service or to augment the Client’s internal resources, and our team can work on-site in the Client’s designated locations or on a remote basis with appropriate, limited access to the Client loan files. Review scope is jointly developed between the Client and us, to ensure meeting the Client’s penetration requirements and to capture the desired loan groupings, such as new loans, specific loan types or products, higher risk loans, credit supports such as SBA, larger relationships, larger individual loans, and collateral types. Review frequency is determined by the Client.
We will review files to determine an accurate risk grade, within the Client’s risk rating definitions, as well as other risk factors such as collateral coverage, cash flow and debt service coverage, global debt service, accrual status, classified loan management, compliance with the Client’s loan policy, ASC 310-10 impairment analysis, regulatory compliance, and loan administration. A high level review of loan documentation is standard, but can be more in depth if requested by the Client. Specific risk factors can be included in a review, such as leveraged lending, HVCRE, covenant testing, construction loan management, risk rating outlook, or other factors.
The Client receives a narrative document for each loan reviewed, which provides detail on loan terms, financial statement spreads, debt service calculations, compliance review, and narrative discussion of the credit, including the borrowers and guarantors. Daily reports are available during the review to assist the Client with addressing any deficiencies, such as missing financial information or other file items, as well as to foster active dialogue during the review. Each Client has a designated Engagement Manager, who will meet with Client staff prior to beginning the review, will review outcomes daily, and will provide a follow up exit meeting with management to discuss any items of note on the review side or by the Client.
Upon completion of the review, we provide a complete set of the individual loan reviews and the reports, as well as an in-depth Management Letter to outline the parameters of the review, data driven results, and our conclusions and recommendations. A Management Letter is provided to the Client Management following each review and, if there are multiple reviews completed in an annual cycle, the final letter will report on the aggregated results. The Management Letter contains peer data obtained from the FFIEC, as well as our own clients, to provide additional perspective. Our Directors are available to attend the Client’s board meeting in person or via telephone to present the Management Letter and provide a discussion forum.
Given the breadth of our client base, we are able to speak to best practices, which can provide the Client with a sounding board, as well as insight into what we are encountering with other engagements and regulatory activities. Our reviews provide an assessment at a point in time; our knowledge and experience can assist Clients in strengthening risk management practices and building a strong financial institution.