Risk Ratings and Restructuring

COVID-19 continues to evolve with unimaginable ramifications to individuals and businesses around the world.  The outbreak has caused increasing global business and economic disruptions.  The spread of this disease and its resulting economic impact is unprecedented.

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Time to incorporate a remote loan file review?

This blog was initially posted in January 2019. Presently the corona virus is creating the need to minimize unnecessary contact and create appropriate social distance. Financial institutions have begun to implement reduced branch access and other measures to limit personal physical contact. Unfortunately, we are also beginning to experience the economic impact of the virus as many businesses are no longer able to provide the product or service in their traditional way. Financial institutions will need to continue third-party provided audit services. We believe loan review is a service that can be remotely delivered and provided for continued portfolio risk management. Integrity Loan Review is ready to assist you with a remote loan review for your organization.

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HVCRE Update – December 2019

On December 13, 2019, the Agencies published the final rule regarding HVCRE (High Volatility Commercial Real Estate) which becomes effective on April 1, 2020. The primary intent of the revision was to create consistency with the statutory definition of HVCRE exposure. The revision will also provide for consistency in the reporting requirements for the Call Report and FR Y-9C.

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Happy Thanksgiving from your friends at Integrity Loan Review!

We Thank Thee

For flowers that bloom about our feet;
For tender grass, so fresh, so sweet;
For song of bird, and hum of bee;
For all things fair we hear or see,
Father in heaven, we thank Thee.
For blue of stream and blue of sky;
For pleasant shade of branches high;
For fragrant air and cooling breeze;
For beauty of the blooming trees,
Father in heaven, we thank Thee.

– Ralph Waldo Emerson

Institutional Knowledge

New financial calculator:   $50.00

Box of pencils:   $5.00

CECL software program:   $15,000

Institutional Knowledge:   PRICELESS 

Community based financial institutions are a tremendous asset to the areas they serve. Typically, the financial institution is a pillar of the community through the volunteer hours of the staff, financial contributions to local organizations and professional expertise. Business bankers in these communities work closely with their customers to understand their financial needs and help them plan for a successful future. Many times, the banker and business owner have additional shared interests within the community that furthers the professional and personal relationship. 

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Mountain Biking and Portfolio Management

This September will be the 37th running of the Chequamegon Fat Tire 40, an annual mountain bike race between Hayward and Cable, WI. Entrants consist of both the competitive set and avid riders who consider this sort of thing fun.

I began mountain biking in college when mountain biking was considered a fringe sport. The sport includes the challenge of technical trails and time riding in the woods, which I have continued to enjoy. I have had my share of bumps and bruises (to both my pride and my body) over the years resulting from this sport.

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Covenant Monitoring

Loan covenants are an essential part of commercial lending.  They provide a framework of understanding for the borrower to meet the requirements of the lender.  The covenants can include financial reporting requirements, performance-based covenants and operating covenants.  The first two are considered affirmative covenants while the last is generally considered a negative covenant.  The loan covenants are included within the loan agreement as a part of the overall loan documentation.  The specific requirements for the delivery of financial reporting or the testing of loan covenants should be explicitly included in the loan agreement and consistent with the approval of the credit facility.

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Loan Policy – A Cultural Evolution

Every financial institution has a culture and more specifically, a credit culture.  This culture can be arrived at in many ways, through the leadership, policies, practices and other intangibles that employees may not even be aware of.  Interestingly, culture is rarely documented as a specific item but rather it is a collaboration of the various policies and procedures and undocumented practices the financial institution has in place to run their business.    It is the culture that sets the tone for how things get done in the financial institution, how customers are treated, how employees are treated and how the financial institution is managed.  It is my experience that separate from their policies and procedures, high performing financial institutions have created a culture where everyone knows what the expectations are, and everyone works to achieve them for the betterment of the financial institution.

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