DLS Consulting
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Loan Review

DLS Consulting, PLLC offers independent reviews of asset quality, loan underwriting and credit administration. The objectives of the review are:

  • To provide senior management and the board of directors with an objective and timely assessment of the overall quality of the loan portfolio.

  • To determine acceptability of underwriting standards and policies.

  • To determine that policies are being followed.

  • To ensure that key documentation is adequate.

  • To promptly identify loans with potential credit weaknesses.

  • To appropriately grade or adversely classify loans, especially those with well-defined credit weaknesses that jeopardize repayment, so that timely action can be taken and credit losses can be minimized.

  • To identify relevant trends that affect the collectability of the portfolio and isolate segments of the portfolio that are potential problem areas.

  • To assess the adequacy of and adherence to internal credit policies and loan administration procedures and to monitor compliance with relevant laws and regulations.

  • To evaluate the activities of lending personnel including their compliance with lending policies and the quality of their loan approval, monitoring, and risk assessment.

  • To ensure that approvals are based on accurate information.

  • To improve loan officer knowledge and awareness.

  • To provide management with accurate and timely credit quality information for financial and regulatory reporting purposes, including the determination of an appropriate ALLL.

The scope typically includes reviewing all large lending relationships and a sample of smaller loans, reviewing past due, problem and non-performing loans, reviewing existing policies and policy changes, discussing cash flow analysis, loan ratings and credit exceptions with loan officers and conducting an exit review with senior management. The audit includes reviewing loan files to assess the:

  • Credit quality, including underwriting and borrower performance.

  • Sufficiency of credit and collateral documentation.

  • Proper lien perfection.

  • Proper approval by the loan officer and loan committee(s).

  • Adherence to any loan agreement covenants.

  • Compliance with internal policies and procedures (such as nonaccrual, TDR and classification or grading policies) and laws and regulations.

  • Appropriate identification of individually impaired loans, measurement of estimated loan impairment, and timeliness of charge-offs.

Results of the loan review are reported to the Board of Directors or designated committee in a report addressing asset quality, problem loan reporting and credit administration. On-going reviews include follow-up on bank responses and remedial action to address prior findings.

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