Our internal loan review program incorporates a comprehensive analysis of credit quality and loan administration procedures. We typically conduct reviews annually, semi-annually, or up to four times during a twelve-month period. At the conclusion of each review, a comprehensive report will be prepared and presented to the Directors and management.
The number of files analyzed will depend on the size and volume of loans on the books. The scope normally includes a review of all larger credits, a sample of smaller credits, a sample of loans to the bank’s insiders and employees, and past due and watch list loans. All loans will be graded to reflect the credit quality determination reached from the file review and discussions held with lending personnel.
The evaluation of administration procedures in the lending area will include a determination as to the extent of compliance with the bank’s Loan Policy as well as the adequacy of the policy, proper documentation of loan approval practices, and the efficiency of the overall lending function. In addition, we may perform an analysis of the adequacy of the loan loss reserve (ALLL).
Upon request from financial institutions, our company has also been involved in targeted loan reviews that assist banks in preparing for examinations, setting up their own internal loan review program, or correcting problems with loan administration.