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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.

·  Assess 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 analysis.

·   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 portfolio mix.

 ·   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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