CEIS Review – Best Choice for Commercial Lending Institutions

CEIS Review Inc. is an independently owned consulting firm catering to the needs of commercial lending institutions along with savings bank communities.  

Our Services  

• Loan review
• Loan loss reserve methodology and validation
• CRE portfolio stress testing
• portfolio acquisition review
• CRE concentration analysis
• Credit related process review
• Structured finance review
• Credit loan policy maintenance
• Problem loan advisory
• Credit analysis
• Regulatory relations
• Credit database formation
• Loan and credit seminars

Our Clients

Mostly, we are approached by banks which have above average portfolio quality. We are hired mostly for loan review services that are meant to maintain the credit standards of their organization. There are also banks which want to improve the quality of their portfolios. CEIS also works for such institutions. We assist these institutions in coming to exact conclusion of their risk profiles. Consequently, we also provide practical suggestions for the improvement of their portfolio.

While our main focus is independent portfolio reviews to evaluate credit quality, CEIS also ventures out to help managers in stress testing industry sectors. We provide total credit portfolio and process management techniques, 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.

According to the top management executive: “Our commitment includes state of the art methodology to ensure top quality products at a cost efficient base. Additionally, we are committed to our customers’ success and growth and to the success and growth of our very experienced staff.”

CEIS Partners

We have Sageworks, Invictus Consulting Group and BanqLogix as our review partners.

Sageworks - a financial information company - provides financial analysis and risk management applications to thousands of accounting firms and financial institutions in the U.S. and internationally.

Invictus Consulting Group is an independently owned consulting firm delivering the most accurate, insightful and accessible bank sustainability and strategic planning information and consultancy services to the financial services sector. 

BanqLogix provides ASC 310-30 (fka SOP 03-3) and 310-20 (fka SFAS 91) proprietary software and related consulting and accounting services involving acquired loan portfolios including the determination of Gain on Bargain Purchase or Goodwill and components of the Portfolio Mark.

As part of an open market or FDIC assisted acquisition, the acquiring bank will obtain loan reviews from CEIS Review whose analyses are utilized by BanqLogix, creating synergies between the two organizations. 

Try CEIS Review as it is a good idea to hire an independent review firm to maintain the safeguards of the company and its portfolios.  

Find more information to http://www.ceisreview.com or Feel free to call us at 888-967-7380

Loan Review – Crucial Aspect for Organizations in Transient Socio-Economic Scenario

Loan review has got significant importance especially in this age of turbulent economics. It has therefore become imperative for institutions to remain in know of the potential risks of their portfolio. In order to do so, it is very important to detect as early as possible expected troubles through regular and recurring evaluations of asset quality, internal controls, and administrative procedures.  

Importance of loan review

It was in late 2006, that the FFIEC issued a revised Interagency Policy Statement on the Allowance for Loan and Lease Losses. The policy states that it is "essential that institutions maintain effective loan review systems". This has been emphasized because of the important role played by the critical risk ratings and portfolio assessment in management's assessment of reserve adequacy.

Professional loan reviewers

In tune with these strict guidelines, there are many professional agencies that provide thorough and extensive loan reviews. They employ many techniques to conduct this review including ALLL methodology and validation. Mostly, they also house seasoned professionals who are actively associated with money market, regional banks, community banks, and commercial finance companies and hold senior or executive level management experience.

Process for loan review   

Typically, the programs take about a year along with 75% of the client's average outstanding loans and letters of credit. Now-a-days, the programs have become software assisted and hence customized.  

The reviews are divided into specific intervals and during each visit data and remarks of the previously classified and criticized loans are updated. Having done that, professionals review newly criticized or classified loans, delinquencies, non-accruals, restructured transactions, new and renewed commitments since the prior review visit, and when and if relevant, other borrower related credit exposures.

The adequacy of the allowance for loan and lease losses is also tested. The process also involves documenting the organization’s lending policies, procedures and overall lending process.

In order to make each visit the most fruitful, the agency informs the client before the actual on-site visit. It gives the client time to be prepared with all the necessary documents and materials. This then helps expedite the entire process of review in an effective and meaningful way. The review normally starts with the criticized and classified loans, leading to other delinquent and non-accrual accounts and finally ending up with the scrutiny of other accounts that may satisfy the requirements of the engagement.   

   

Communication

The crucial part of any thorough loan review is the effective communication. Having assessed the credit files, internal loan reports and loan documents, it is very necessary that the outcome is communicated to the client in a very precise and clear manner. This requires thorough discussions in meetings. The professionals take every extra care that discussions are enriching, precise and absolutely worth holding for the benefits of the client. 

Credit Analysis – An Important Task to Assess the Borrower’s Capacity to Repay

As the term is self explanatory, credit analysis is a method through which professionals calculate the creditworthiness of a business or organization. It basically defines company’s ability to pay its obligations. This process can be used to assess the company’s ability when it issues bonds through its audited financial statements. Sometimes, even banks need to take credit review of a small business before it decides to give or renew a commercial loan.

Various techniques to conduct credit analysis

There are various methods with which this process can be undertaken. Some of them are: ratio and trend analysis, creation of projections, and a detailed analysis of cash flows. The individual or the agency undertaking this process also takes into consideration an examination of collateral and other sources of repayment as well as credit history and management ability.

By taking into considerations these points, analysts essentially tires to predict whether the borrower in question is capable enough to repay the acquired loan. All these factors will be taken into consideration before granting the loan with primary focus being the cash flow of the borrower.   

Debt service coverage ratio is very important yardstick against which a credit analyst reviews the loan. Typically, this analysis would have the analyst measuring the cash generated by a business before interest expense and excluding depreciation and any other non-cash or extraordinary expenses. Usually, commercial bankers prefer the debt service coverage of at least 120 percent. To put it simply, the debt service coverage ratio should be 1.2 or higher to prove that there is an extra cushion and that business is strong enough to afford its debt requirements.   

Post credit audit

Having analyzed the risks involved in granting the loan, the immediate action on part of the credit analyst is to convey the decision to the client. Mostly, it is conveyed through letter or e-mail. 

In case, the credit analyst is not available, the information then is sent out to the personal banker who will then inform the client about the decision made. If the decision is in negative, there is an option of appeal in some situations. However, it would be the responsibility of the applicant to come up with the valid documents to support her argument with regards to inappropriate decision. So, basically credit analysis is the process undertaken to analyze the ability of the borrower to repay. If the analyzing entity decides against the borrower, there is always an option to choose another company and borrow the required money.

To learn more about credit analysis, credit review and credit audit call us at Toll Free at 888.967.7380.

Loan Portfolio due Diligence Gives Holders Clarity of Inherent Risks in Portfolio

Loan portfolio due diligence is very important for any person who wants to have clarity of her financial risks and credits. Hence, for any servicing company that provides this service along with acquisition review of the loan portfolio, it becomes very important they maintain certain standard procedures and methods.

Due diligence therefore is a very important part of any financial transaction such as financing secured by a mortgage loan portfolio, purchases of mortgage companies and financial institutions with servicing portfolios, and acquisitions of mortgage loan portfolios or mortgage servicing rights.

Reasons to have loan portfolio due diligence

One of the reasons why it is beneficial for banks to have this review is that it provides clear vision regarding the target’s credit risk before closing. It is all the more important when target is supposed to be weak and there is a limitation to information and time. The failure of proper assessment may jeopardize buyer’s prospects to generate profit.

Another benefit of undertaking this process is that it gives a great boost to the entire process of decision making. The correct and methodical valuation gives these things:

• Inherent credit risk
• The outlook for future performance of different segments

This in turn makes room for more detailed discussions among management and directors for proposing the offer to the target and estimating the pro forma impact on capital ratios and earnings from the acquisition.

The thorough acquisition review also frees human resources in the financial institutions. These resources then can be utilized in other matters such as mergers and all.  

Benefits of loan portfolio due diligence

Taking thorough loan portfolio due diligence may uncover a multitude of financial and operating risks to the client including significant bank account outages, potential unpaid taxes or hazard insurance, incomplete or incorrect loan fields, improper adjustable rate mortgage changes, re-purchase risk, losses due to improperly managed loan default, loans missing mortgage insurance, and investor penalties.

Generally, professional companies providing the due diligence service also provides acquirers with valuations of other financial assets and liabilities acquired in a bank transaction, including depositor intangible assets, time deposits, and trust preferred securities. The experienced companies make sure that the reviews comply with underlying agency and investor requirements, and with federal requirements for mortgage loan servicing. They aim to review servicing practices to determine whether the servicer is performing in accordance with industry-accepted prudent servicing standards, and whether it is applying best practices.