The 2020 Interagency Guidance on Credit Risk Review Systems established expectations for sound management of credit risk, a system of independent, ongoing credit review and appropriate communication of the institution’s loan portfolio performance to its management and board of directors. All sizes and types of financial institutions must have an effective loan review process in place that aligns with the risk profile of their institution.

The need for independent external loan review. Loans represent the greatest level of risk on the balance sheet; therefore, it is crucial to understand credit risk related to lending activities and the overall credit risk within a loan portfolio. It is an important tool that contributes information to arrive at timely and accurate risk ratings and an integral part of a credit risk management system. While primary responsibility lies with internal credit and lending staff, institutions should regularly engage independent external review personnel who are unbiased and broadly experienced in the industry best practices, trends and regulatory knowledge associated with the institution’s portfolio composition.

A consultative approach by external loan review can assist credit and lending staff in improved identification and management of credit risk as well as present management and board members with findings that assist with its strategic oversight of the lending process and loan portfolio.

Key Takeaways:

• Understand the role of loan review in a financial institution’s credit risk management system
• Learn about regulators’ expectations for independent loan review
• Determine the best scope of loan review for your institution
• Assess your present loan review process against industry standards and grasp methods to improve it

PRESENTERS:

David Reno
Director, Loan Review and Lending Services
Young & Associates Inc.

Dave Reno is a career-long community banker, having begun work as a bank management trainee in 1983. Currently, he focuses on loan review and all areas of credit and lending.

Previously, he served as the Chief Credit and Chief Lending Officer in community banks in the upper Midwest, Southwest and Southeast. As a result of his work in some of those institutions where his expertise was needed to remediate regulatory agency required corrective actions, he gained a superior reputation with a variety of bank regulatory agencies. As a senior executive in banks from $50MM to $500MM, he became knowledgeable of successful banking strategies and tactics, deepened his commitment to customer service, and remained steadfast in the need for compliant processes.

Dave is a graduate of Duquesne University in Pittsburgh, PA, with a Bachelor of Science in Business Administration and a Master of Business Administration in Finance. Dave also graduated from the Graduate School of Banking at the University of Wisconsin at Madison.

Patrick Lilly
Senior Consultant
Young & Associates Inc.

Patrick Lilly has more than 40 years of experience in the banking and credit union industries. Most of that time was associated with loan production and loan production management. His lending expertise runs the gamut from consumer, commercial, construction, and municipal, as well as all manner of government guaranteed lending, structuring, underwriting, and sales production management.

In addition, Pat has over 25 years of involvement in branch management, branch administration, new market, and M&A experience that gives him a unique perspective on the independent community bank and credit union industries. Pat holds certificates in Financial Counseling, Banking Compliance, and Personnel Management from Arizona State University, the Notre Dame Center for Continuing Education, and Credit Union National Association.