Strengthen the credit portfolio of your organization with excellent loan review programs of CEIS Review Inc.

The CEIS Review, Inc. is a name to reckon with in the realm of independent loan review programs, serving the best interests of prestigious banks and preeminent financial institutions with a degree of accuracy, foresightedness and reliability that is unparalleled in the industry. The volatile market conditions and looming recession fears makes it imperative that the banks conduct portfolio stress testing to assess the resiliency of the financial structure and the inherent potential to bounce back after a crisis strikes. Loan review is conducted in conformance to the highest industry standards and by utilizing cutting edge analytical tools with a proven history of delivering the most revealing observations.

CEIS Review is committed to optimally serve the interests of financial institutions worldwide with proven analytical tools and remote probability simulation in loan reviews which will promptly bring to the fore inherent weaknesses in the loan loss reserve validation policies of banks. Institutions that offer credit facilities ranging from community banks to multinational organizations and firms stand to gain from the third party appraisal of the portfolio quality and process.

The core competency of CEIS is to conduct independent portfolio reviews for assessment of credit quality. However, CEIS has diversified in its services providing total credit portfolio quality and process management techniques for assisting manages in stress testing industry sectors. In the capacity of premiere loan review consultants, analysis of total portfolios, loan loss reserve methodology design and validation, credit risk rating system development, credit database creation and analysis, portfolio acquisition review, loan policy maintenance, problem loan advisory, loan and credit workshops and seminars, and credit analysis are also carried out. 

Seasoned loan reviewers who have served in the capacity of senior or executive level managers in money market, regional banks, community banks, and commercial finance companies are employed by CEIS Review. State of the art software assist loan review methodologies tailor made for clients. The programs review the client’s status over a period of one year and factors in about 75% of the client's average outstanding loans and letters of credit. The reviews are carried out ay fixed intervals during the contracted period and enough samples to fulfill the one year coverage target are harvested. Data and remarks pertaining to the previously criticized and classified loans are updated at next scheduled review. Newly criticized or classified loans, delinquencies, non-accruals, restructured transactions, new and renewed commitments which have emerged since the previous review visit are also actively reviewed. 

The sufficiency of the loan loss reserves along with the organization's lending policies and procedures and overall lending process are also scrutinized. The findings are initially presented orally to the managers and finally a written report including an executive summary of the report’s findings and recommendations regarding overall credit and loan portfolio management, portfolio quality and a detailed write-up on each loan reviewed are submitted.

The CEIS Review, Inc. is a preeminent loan review body which can root out the entire array of irregularities in the loan loss reserve methodology by excellent critique of your financial body’s loan lending structure. 

 

 Loan Review Programs by CEIS Review, Please visit us at http://www.ceisreview.com/pages/Services/2/145/General_Loan_Review  

Top 3 approaches to reveal the inherent weaknesses of financial portfolio

The recent recessionary waves have caused much stir in the financial market and have pushed many leading institutions on the brink of going belly up. The inflation, deflation debate continues unhindered without arriving at a logical conclusion gold trading is taking at a pace that has surpassed previous trends. This is a decisive point, particularly for managers of pension funds who need to assess the catalysts that can trigger a negative trend for the fund in peculiar situations. Portfolio stress testing is deemed suitable to ascertain potential outcomes. 

The approaches taken to test resilience to stress are varied. 

• Historical test is a commonly preferred tool. The fund’s current portfolio inclusive of liabilities and assets are projected on to a historical backdrop like a previous stock market plummeting or credit crisis to assess the fund’s performance if such a volatile situation is to hold sway of the market once again. This hassle free approach is wanting of depth as the probability of exactly emulating a given historic crisis seems quite bleak.

• The portfolio’s hidden risks are brutally exposed by another approach that involves hard implementing measures. A particular portfolio risk measure report is populated by static variables like the inherent relation between asset classes or assets. The stress test is conducted by pushing the correlations to the extreme ends of +1 and -1 to bring to light tail scenarios. The potential outcomes are simulated to unearth the probability of considerable negative returns under given correlation values. Volatility is another value that is stress tested to probe the performance of a portfolio when volatility spikes. By combination of variations in volatility to that of the correlation through a series of simulations will review the inherent weaknesses of the portfolio.

• The third approach takes resort to generation of potential scenarios for testing stress prepared ness of the portfolio. This is an effort intensive exercise, but the analysis is not limited to historical crisis only. The reviewer has to form a mental picture based on the current scenarios about the ways in which the events will unfold in the projected future and the impact of such events on the portfolio. You can assume the relative strength of a particular currency against the US dollar in future for-ex trading, the selling off of bonds at a given value, the performance of high priced commodities like oil and gold, and reaction of equities.  The manager can generate a slew of potential outcome scenes to evaluate the consequent impact on the portfolio.

Portfolios should be subjected toperiodical portfolio stress testing to unearth the vulnerable spots and inherent weaknesses to embrace corrective measures to rectify the same and mitigate the effects. It only demands commitment, effort and time on the part of managers to gain a comprehensive understanding.

CRE Portfolio Stress Testing by CEIS Review, Find more information to http://www.ceisreview.com/pages/Services/2/105/Loan_Portfolio_Stress_Testing

Top insights into the loan loss reserve methodology of banks

Loan loss reserve stands for the contra-asset account on a financial institution’s balance sheet which is netted against gross loans. The loan loss reserve is incremented by the value of loan loss provision in every quarter and decremented by the quantity of net charge-offs. 

Need for loan loss reserve validation

The llr methodology is subjected to review to ascertain its compliance to regulatory guidelines, rationality in determining the reserve allocations and ensure reflection of the same through proper statement in the financial institution’s loan policy.

Determining loan loss reserve

The adjustment of bank’s loan loss reserve is carried out every quarter contingent on the projected interest loss in the institution’s net loan portfolio inclusive of performing and nonperforming ones.

Loan loss reserve methodology may vary from bank to bank, but the loan loss reserve pertaining to lesser balance homogenous loans are typically ascertained by factoring in groups of similar loan types that share similar credit attributes. Various analytical models are embraced which investigates in depth the contributing factors, primarily the projected loss severities, experienced loss frequencies and historical delinquency terms. The reserves for loans take into account the portfolio’s inherent losses which are projected to be discerned in the 12 months to follow. 

The commercial loan reserve is graded based on the probability of repayment, basically on a sixteen point scale. The relationship manager entrusted with the loan disbursement allocates the grade by using the scorecards prepared on basis of loan category and which involves subjective and objective measures. A loan review agency then audits the grades. 

Credits in loan loss reserve validation which emerges with a rating of 1 to 11 are declared ‘pass’, credits with rating 12 are assigned ‘pass watch’, 13 gets ‘special mention’, 14 is ‘substandard’, 15 becomes ‘doubtful’, and 16 is ‘loss’. The total of 13, 14, 15 and 16 are collectively defined as ‘criticized’ loans. Further, loan classification also takes place under the header of FAS 114 impaired loans. Loss reserves are then finally established in consideration of the loan type and grade, migration trends and severity of loss. The experience that took place most recently is assigned most weight. 

A third party reviewer conducts analyzing, testing and validation of the methodology that underlies the general and specific loan allocations. The portfolio experience of the past 3 to 10 years are taken into consideration which involves study of loan grades migration, robustness of the loan grading system, alterations in portfolio mix, and loss experience. Further, portfolio risks trends are also analyzed in consideration of the concentrations like loan and collateral types, large loan exposures, loan policy maintenance, and industry and loan grades. Other factors that are pertinent to the portfolio profile such as off balance sheet commitments, delinquency and non-accrual trends and peers loss experience are also factored in. The observations and conclusions provide valuable insights to fortify the loan loss reserve validation and increase timely loan recovery.

Loan Loss Reserve Methodology and Validation (LLR Methodology) by CEIS Review - http://www.ceisreview.com/pages/Services/2/149/Methodology_Validation

Strengthen your institutions’ loan and credit standing with top notch loan review from CEIS Review

CEIS Review has a prestigious presence in the realm of loan review sector, professionally catering to leading commercial and savings banks since 1989. The company prides itself for possessing a fleet of veteran lenders with commendable expertise and experience under their belts. These seasoned loan review consultants are at the helm of tailoring and implementing loan review programs for banks.

The consultants have served in the capacity of senior or executive level management in the domains of money market, regional banks, community banks, and commercial finance companies. This robust and relevant background renders the CEIS Review team highly competent to carry out the entire array of loan review procedures involving review, establishing and validating loan loss reserve methodology, portfolio stress testing, maintaining credit loan policy, issuing advisories on problem loans and conducting loan related seminars.

The consultants independently review the credit standards of banks for accurately assessing the risk profile and provide practical recommendations to improve the quality of portfolios. The grading process will be completely executed in an unbiased, unprejudiced and rational manner. The loan review consultants tailor the program to suit client’s requirements and extensively use software for error free evaluation.

CEIS Review carries out review for client over a span of one year and appraises around 75% of average outstanding loans and letters of credit. Data and remarks are updated regarding the actions initiated for previously criticized and classified loans at each scheduled review. The consultants also critically examine newly criticized or classified loans, delinquencies, non-accruals, restructured transactions, new and renewed commitments which have surfaced since their last review visit. Comprehensive assessment is undertaken to check the sufficiency of allowances set aside for loan and lease losses, lending policies and procedures of the banks.

The company is equipped with contemporary resources and boasts of imposing infrastructure to offer least turnaround time. The consultants also discuss with the account officers before arriving at the final conclusion. The discussions pertain to final grade determination. The discussion schedule is flexible and time efficient to offer least interruption to regular jobs.

Once the review has been satisfactorily conducted, appropriate management is apprised of orally the findings of the assessment. Any unsorted differences, open items, or observations relating to lending and administrative process are also discussed. The detailed report is submitted to bank after the draft has been thoroughly scrutinized by CEIS office. If any material development of interest takes place, the information regarding the same is accommodated in the final report. 

Final report is prepared and presented within four weeks of wrapping up onsite review.  It carries an executive summary of findings along with recommendations pertaining to overall credit and loan portfolio management, portfolio quality and a detailed write-up on each loan reviewed.

CEIS loan review consultants can be hired at very competitive fees. The fee is finalized based on the overall engagement's goals, and in consideration of the potential overall relationship. Undoubtedly, CEIS Review Loan Review service is a superlative and all encompassing program available to commercial lending institutions.

Find more information to http://www.ceisreview.com/

CEIS loan review consultants can be hired at very competitive fees, Find more information to http://www.ceisreview.com/pages/biographies/4/catid/6/CEIS_Consultants . Call us at Toll Free at 888.967.7380.