Credit Related Services
v Review existing department structure and staffing of credit function and underwriting process and provide recommendations for changes – keeping in mind size and complexity of the bank. Assess capabilities of existing lenders, credit analysts, loan documentation and loan administration staff to identify areas of competence and shortfalls. Evaluate and recommend changes in responsibilities for existing staff or identify specific skills a d competencies to focus on for realignment of staff duties and /or for prospective new hires.
v Review of Loan Policy and related materials for alignment with the bank’s existing and targeted lending activities and compliance with regulatory guidance. Recommend appropriate updates and changes / enhancements for approval by board of directors. Summarize, in writing, the changes / enhancements recommended and reasons for those changes.
v Review of Appraisal Policy and appraisal practices to confirm appropriateness relative to the bank’s lending activities and compliance with interagency regulatory guidelines. Assess appraisal ordering and appraisal review practices. Evaluate bank’s criteria for selecting approved appraisers and documentation to support selections. Provide templates for appraisal reviews and documenting appraiser approval. Provide specific training in ordering and reviewing appraisals. Provide training for credit analysts and loan officers on how to evaluate the content of appraisal reports for acceptable information content and quality – including common “red flags” to be aware of.
v Review of primary loan systems and integration with lending process. These systems include credit underwriting software, loan documentation software and loan tickler systems for tracking financial statements, insurance, loan policy exceptions, etc. Assist in designing and setting up an efficient work flow to improve timeliness of responses to credit requests and improve the delivery speed and accuracy of necessary loan documents. Assist with developing and automating the delivery of loan-related reports that are essential for loan portfolio management (loan pipeline reports, new loans closed, loans repaid, past dues, concentrations, loan risk grades, problem loan status, OREO, loan charge-offs and recoveries, etc.).
v Evaluate credit-related reporting to senior management and the board of directors. Review and recommend content, format, frequency, and distribution. Assist in developing most efficient sources of that information (level and trend of loan delinquencies, material new loans made, material loans repaid, watch list and problem loans, loan policy exceptions, loan losses and recoveries, etc.) and automating the production and delivery of those reports.
v Review and evaluate the organization and content of existing physical credit files. To include providing a detailed template for credit file organization, detailed checklists for required credit file documentation and content and a post-ante review of the reorganized files upon completion by bank staff. This provides lenders and credit staff with a consistent format to organize essential credit information and provides loan support and documentation staff with a reference for required documents. An additional benefit is that it demonstrates to bank regulators, auditors and independent loan review vendors that the bank is committed to maintaining complete and timely information on borrowers (and also makes it much easier for the bank’s regulators and auditors to review files – which helps them to do their work more quickly).
vReview existing loan loss reserve methodology and process. Evaluate existing process for determining adequacy of loan loss reserve and assist in allocating responsibility for ALL process – Finance v. Credit v. Hybrid. Review existing data presentation / format. Assist in design of data collections from loan system reports (loan growth, trends in delinquencies, new problem loans, loans with loan policy exceptions and loan charge-offs, etc.) as well as provide resources and templates for collecting market-related economic data essential for evaluating the likely trend of future problem loans and loan losses.
vEvaluate loan review needs, including recommendations for frequency, scope and depth of necessary review. Assist in the retention of a competent loan review firm and defining scope of review and specific samples for review. Assist bank management in obtaining and evaluating bids from loan review vendors. An alternative is to have Stone Pillar provide a review of the bank’s 25-50 largest loan relationships to identify existing and potential emerging risk exposures.
vEvaluate the bank’s existing loan risk rating model and recommend improvements or changes. Conduct sampling review to test for accuracy of loan risk ratings assigned relative to the existing risk rating model’s criteria. (The accuracy of internal loan risk grades is essential for proactive management of the loan portfolio and is ALWAYS a “hot button” for bank regulators).
vCredit underwriting training. Provide credit analysts and lenders with customized training to properly evaluate commercial and industrial and commercial real estate loan requests. Provide analytical templates for evaluation of borrowers’ balance sheet strength, income statement measures, cash flow and collateral values.
v Evaluate problem loan / OREO workout strategies for asset quality resolution at lowest cost / highest recovery. This may include evaluation of “bulk sale” transactions (including solicitation and evaluation of bids from multiple potential buyers), recommendations for loan modification and forbearance agreements, and assistance with selection of appropriate legal counsel for specific situations.