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Have you taken the time recently to consider the benefits of your loan review? Financial institutions must continually examine their loan review processes to determine their effectiveness. A recent article from Bank Director offers some ideas for banks to consider as they assess the quality of their loan reviews.

  • Don’t bank on credit quality assessments. Credit quality assessments should be considered a trailing indicator as many of these reports are not always timely or comprehensive.
  • Make security a priority. If reviews are performed remotely, ensure your technology is secure so your bank is not at risk.
  • Work together. Make sure your team members are working with your reviewer to prevent duplication of work and reduce errors.
  • Use smart sampling procedures to soften concentrated exposure.
  • Consider alternative review sources. External review sources can offer larger banks additional new ideas and approaches. Small banks should consider adding internal staff to handle the everyday issues that develop.
  • Assess the strength of your loan documentation. Test it against the weakness of the risk grade.
  • Consider more than cost when choosing a loan reviewer. Be sure to ask them about their procedures to ensure they provide you with information that is new and helpful to your institution.

Read the full article from the Bank Director.