Internal Loan Review
Evaluation of the institutions
lending practices, credit administration, and the quality of the
loan portfolio is our primary focus. The nature, scope, depth,
and frequency of overall coverage will vary based on your
institutions size, complexity, loan types, management practices,
special needs, circumstances, and requests. Our objectives in
the overall performance of this all-important and vital support
function is to:
Provide management with an
early detection mechanism for identifying loans with
well-defined credit weaknesses. In addition, identifying and
material change in underwriting practices and any relevant
trends affecting the collectibility of the loan portfolio and
isolate any potential problems.
the adequacy and adherence to loan policy and procedure,and to
monitor compliance with relevant laws and regulations.
Verify the presence,
accuracy, and integrity of all necessary credit, financial,
legal, covenants, and perfected collateral documentation.
Conduct an independent and
fully comprehensive financial analysis and debt service
Track and report the
portfolio(s) according to their cyclical review periods and/or
within their scopes of assigned coverage.
Render a quantitative
opinion and recommended risk grade that is consistent with
policy, prudent lending practices, and regulatory guidelines.
Review the adequacy and
maintenance of the Allowance for Loan and Lease Losses (ALLL) to
reflect the credit risk in the bank’s portfolio(s). Ensuring
the proper identification of “criticized” assets (“loss,”
“doubtful,” “substandard,” or “special mention”) and reporting
of such assets to coincide with preparation and filling of your
institutions TFR or Call Report
· The ALLL
represents the most significant reporting estimate in an
institutions financial statement. Consequently, requiring
a substantial degree of judgment to quantify its best estimate.
To fulfill this responsibility and solidify its conclusion we
will review the methodology and rational
applied in the process. To insure controls are in place to consistently determine the ALLL in accordance with GAAP, your
institutions stated policy and procedures, management’s best judgment, and relevant supervisory guidelines. Financial ratios
are applied in thep rocess of assessment of
the various portfolios and overall asset quality of homogeneous
loans, balance sheet composition,
off-balance sheet commitments, delinquencies, charge-offs, and
Perform a thorough appraisal
desk review of all sample selected reviewed real estate secured
loans in accordance with Title XI of the Financial Institution
Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), and
the Uniform Standards of Professional Practices (“USPAP”)
Provide an environmental
risk and liability review of Phase I, II, or III under the eight
basic risk categories of environmentally contaminated property.
At the audits
conclusion an exit interview is conducted of our findings for
discussion. Subsequently, a fully comprehensive report is
prepared and disseminated to designated senior management and
the board of directors.
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