Loan Review
The health of a financial institution lies primarily in the health of its loan portfolio, which is its greatest asset and its biggest risk. Lending performance is critical to the Credit Union's future—so both management and Supervisory Committee members must ensure sound lending processes and loan portfolios.
We offer loan review services:
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to examine the existing policies and procedures for vulnerabilities;
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to confirm appropriate and collectible lending practices are being followed; and
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to validate adherence to internal lending policies and regulatory guidelines.
What We
Offer
Consumer & Real Estate Loan Portfolio Review
Consumer lending is the bulk of lending at most Credit Unions, and so they are more susceptible to "preferred lending". Often, loan officers will approve loans outside of policy because the applicant is a long-time member of he Credit Union with a good payment history. While Credit Unions are known for working with their mebers, loans outside of policy should be approved by another member of management and reported to the board, at the minimum.
Member Business Loans & Commercial Lending
Member business loans or lines of credit can be attractive for Credit Unions looking to grow their lending portfolio. At the same time, commercial loans are often a riskier option over consumer lending.
Loan Exceptions
Loan exceptions occur whenever a loan file deviates from policies—such as underwriting exceptions and terms & conditions overrides. Review audits are needed to track the volume and frequency of the exceptions, ensure they are being approved by the Board, and mitigater risk.
Portfolio RIsk Analysis
We consider concentrations of loan types and risk gradings to determine sound lending practices, contingency plans to mitigate losses, and safeguards built into processes. With an overall review of loan portfolio quality, management can understand current risk exposure and potential for future improvements.
Indirect Lending
This relationship can be a very profitable segment of a loan portfolio—but it can also be the most damaging. Strong internal controls and policies are needed to ensure that all parties follow Credit Union regulations.
Employee Loans Review
Credit Unions must adhere to lending methods with strong internal controls to comply with regulatory guidelines when issuing employee loans. Additionally, the Credit Union must demonstrate review practices that include a regular review of all employee loans by the Board.
Loan Modifications & Troubled Debt Restrucuring
Loan modifications and troubled debt restructuring (TDR) can act as constructive tools to help members and the Credit Union. The correct implementation of these procedures helps borrowers during financial struggle and minimizes the credit loan's default costs.
Our auditors can identify when loan modifications or TDR are appropriate. Regular audits support proactive strategic planning for at-risk loans, compliance, and regular reporting that consistently monitors all at-risk and modified loans.