Credit risk management of troubled assets can become an all-consuming task for financial institutions, pulling energy and resources away from opportunities for growth while draining customer and board confidence.
Identify weaknesses in your institution’s underwriting or documentation and develop strategic improvements to reduce systemic risk, monitor loans and activity, and identify problem loans early on with our guidance.
Credit Risk Management
Deploy risk management strategies that focus on strategic sample selection, applying techniques and practices employed by federal and state banking agencies, and ongoing feedback regarding strategic portfolio management practices.
Our approach includes:
- Evaluation of your institution’s underwriting policies
- Assessment of application of those policies across a variety of credit types
- Review of governance and reporting
- Assessment of compliance with regulatory guidance and internal policies
Supplement your organization’s credit risk management activities and identify weaknesses in underwriting or documentation by developing a loan review program.
Our reviews include recommendations for procedural improvements to help reduce systemic risk and identify problem loans early, providing time so action plans can be established to prevent future losses.
Loans are specifically evaluated for:
- Risk ratings to assess overall credit quality
- Files reviewed for appropriate information, documentation, evidence of servicing, monitoring, and organizational quality
- Compliance with internal policies and procedures
- Opportunities for best practices based on regulatory and industry practices
Review Allowance for Loan and Lease Losses (ALLL) Methodologies
Receive an independent, unbiased view of your ALLL methodology, as well as actions that might enhance current practices with a detailed review of your policies and procedures for complying with interagency guidance and generally accepted accounting principles (GAAP).
For information regarding the Current Expected Credit Losses (CECL) standard and guidance on the implementation process, review our CECL Implementation Consulting solutions.
Acquisition Due Diligence Support
Receive a comprehensive review of credit risk management activities and portfolio management of targets through dedicated loan reviews.
Procedures and System Audit Testing
Commercial loans, especially secured loans with time-sensitive items, require ongoing monitoring to meet all obligations.
Evaluate your institution’s tickler systems and sample a variety of loans to determine whether data is entered and tracked according to defined procedure.
Reviews cover key areas such as:
- Monitoring borrower and guarantor financial information
- Monitoring loan covenants or other early warning variables
- Monitoring financial health of lead lenders, loan participants, or key suppliers’ insurance, both by date and amount
- Collateral, including Uniform Commercial Code (UCC) perfection and renewal, property tax payments, appraisal updates, and property inspection updates
- Loan repricing