SlideShare a Scribd company logo
CEIS REVIEW QUARTERLY
REPORT Q2-2015
ON MY MIND – CEIS PRESIDENT, JOE
HILL
 Community banks in our client base are nearly all showing
growth
 While the growth of loans have increased, the qualities of our
clients’ portfolios have not deteriorated
 This is important to highlight because this across-the-board
loan growth has been caused by an easing in the underwriting process which
brings with it a potential rise in credit risk within portfolios. This is not the case
for CEIS’s clients.
IN THE SPOTLIGHT – JOHN P. MACUKAS
 Managing Director
 Overseas Leveraged Lending and Structured Finance
engagements
 Manages a team that overseas the due diligence process for
these engagements
 Full bio available: http://www.ceisreview.com/biographies/CEIS-
Management
REGULATORY RELEASES
 Recent releases which pertain to our clients
 OCC - Thomas Curry addressed efforts to ease the burden of regulation on
community banks.
 OCC - Financing Small Multifamily Rental Properties
 Interagency - Final Rule on Minimum Requirements for Appraisal Management
Companies
CREATING A EFFECTIVE CREDIT POLICY
 A credit policy is the main way in which a Board of Directors can
establishes the culture of the bank
 What the bank identifies as its appetite for risk
 What levels decision-making discretion is delegated
 How the bank will measure, monitor, control and report
inherent risks in its loan portfolio
 Credit Policies must be comprehensive, strictly enforced
and kept up to date with modern times.
 Without these objectives the Policy will almost always fail
LEGISLATE A POLICY WITH CLARITY
1. Policy, Not Procedure
 Each credit policy is generally unique per institution
 It should not focus so closely on “how to” guidelines and more so
on what the rules should be when defining the needs of the bank
2. Clarity
 Policies must contain clear language so that its law is not just lines
drawn in the sand
 This facilitates the enforceability of the policy
 Resist the temptation to adopt softer regulations so to attract
better business
 Trade flexibility for an exception clause instead
KEEPING YOUR CREDIT POLICY CURRENT
AND ORGANIZED
3. Keeping it Current
 Make sure that the policies are kept up to date with the latest
regulatory guidelines
 Remove dated material from you policies
 If clauses in the policy are obsolete or inaccurate, it makes the entire
policy harder to enforce or simply to be used as a guide
4. Organization
 Keep a living copy on your network that is constantly updated with the
contemporary changes
 Have every page of the policy carry the date of the last update, to
show when changes have been implemented
 Pay attention to the pagination of your document, as pages are
removed and added there can be inconsistencies in the document
MAKE YOUR POLICY ACCESSIBLE AND BE
WARY OF AMENDMENTS
5. Access
 Minimal access will discourage staff from regularly using the Credit
Policy
 Allow privileges to people with jobs that require consulting the policy
while still keeping its contents private to the majority
 Make your document searchable on the computer so time won’t be
wasted navigating the multi-hundred page document
 An index is also incredibly helpful for the above objective
6. Amendments
 Limit their frequencies, there are only rare cases in which Amendments
are necessary
 Frequent changes can bring integrity and direction into question
 It is a time consuming procedure for the Board of Directors
EXCEPTIONS AND WRITING YOUR
POLICY
7. Exceptions
 A much better option than amendments
 Exceptions can test the quality of the Credit Policy, if the same exceptions
continually need to be made, maybe a change should be considered
 Minimal exceptions may indicate a bank’s policies are tight enough
 Allow insight into the current state of the market, and the bank’s position
8. Writing your policy
 Consider the pros and cons of looking for an independent writer to draft your
policy
 The more complex your operations, the more necessary a consultant will
become
 A consultant’s policy may not be unique and be a “one size fits all policy”
CONCLUSION
 As Banking becomes more competitive, effective
management increases in difficulty
 It is important that the BoD and Management are
upfront and provide clear guidelines for their staff
 The Credit Policy is a key factor in communicating these
guidelines
 A well written Credit Policy means a well-run, and
successful bank
 A unsatisfactory Credit Policy can have a direct impact on
a banks ability to thrive.

More Related Content

Similar to CEIS Review Q2 2015

PwC Publication: TRID industry landscape 042216
PwC Publication: TRID industry landscape 042216PwC Publication: TRID industry landscape 042216
PwC Publication: TRID industry landscape 042216
Tom Gere
 
Trid industry landscape 042216
Trid industry landscape 042216Trid industry landscape 042216
Trid industry landscape 042216
Tom Gere
 
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
accenture
 
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
accenture
 
Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...
Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...
Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...
Sanjoy Sen
 
Steelbridge Compliance Brochure
Steelbridge Compliance BrochureSteelbridge Compliance Brochure
Steelbridge Compliance Brochure
dniknejad
 
2017 Top Issues - DOL Fiduciary Rule - January 2017
2017 Top Issues - DOL Fiduciary Rule - January 20172017 Top Issues - DOL Fiduciary Rule - January 2017
2017 Top Issues - DOL Fiduciary Rule - January 2017
PwC
 
Puzzlebox comp 2010
Puzzlebox comp 2010Puzzlebox comp 2010
Puzzlebox comp 2010
BalancedComp, LLC
 
Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...
Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...
Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...
theitchik
 
Part - II Policy Formulation for CDA R11
Part - II Policy Formulation for CDA R11Part - II Policy Formulation for CDA R11
Part - II Policy Formulation for CDA R11
jo bitonio
 
IFRS [Autosaved].pptx
IFRS [Autosaved].pptxIFRS [Autosaved].pptx
IFRS [Autosaved].pptx
wjassociates1
 
MTBiz April-June 2013
MTBiz April-June 2013MTBiz April-June 2013
MTBiz April-June 2013
Mutual Trust Bank Ltd.
 
ALCO Process - Funds Management
ALCO Process - Funds ManagementALCO Process - Funds Management
ALCO Process - Funds Management
enelson13
 
Beyond Budgeting Vs Traditional Budgeting
Beyond Budgeting Vs Traditional BudgetingBeyond Budgeting Vs Traditional Budgeting
Beyond Budgeting Vs Traditional Budgeting
Kavee Rajiah
 
Business cases made_simple
Business cases made_simpleBusiness cases made_simple
Business cases made_simple
Amit Rastogi
 
Policy Formulation for AR Cooperatives
Policy Formulation  for AR CooperativesPolicy Formulation  for AR Cooperatives
Policy Formulation for AR Cooperatives
Jo Balucanag - Bitonio
 
12 ways to enhance financial performance
12 ways to enhance financial performance12 ways to enhance financial performance
12 ways to enhance financial performance
Grant Thornton LLP
 
Financial_business analysis
Financial_business analysisFinancial_business analysis
Financial_business analysis
Olawale Olayinka
 
Financial policy and digitalization / Azerbaijan
Financial policy and digitalization / AzerbaijanFinancial policy and digitalization / Azerbaijan
Financial policy and digitalization / Azerbaijan
Iasef Babashov
 
Policies And Procedures
Policies And ProceduresPolicies And Procedures
Policies And Procedures
duffyri
 

Similar to CEIS Review Q2 2015 (20)

PwC Publication: TRID industry landscape 042216
PwC Publication: TRID industry landscape 042216PwC Publication: TRID industry landscape 042216
PwC Publication: TRID industry landscape 042216
 
Trid industry landscape 042216
Trid industry landscape 042216Trid industry landscape 042216
Trid industry landscape 042216
 
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
 
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
Top Ten Challenges for Investment Banks 2015: Regulation: Challenge 1
 
Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...
Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...
Sanjoy Sen - Lee Kuan Yew School of Public Policy - Talk on "How New Regulati...
 
Steelbridge Compliance Brochure
Steelbridge Compliance BrochureSteelbridge Compliance Brochure
Steelbridge Compliance Brochure
 
2017 Top Issues - DOL Fiduciary Rule - January 2017
2017 Top Issues - DOL Fiduciary Rule - January 20172017 Top Issues - DOL Fiduciary Rule - January 2017
2017 Top Issues - DOL Fiduciary Rule - January 2017
 
Puzzlebox comp 2010
Puzzlebox comp 2010Puzzlebox comp 2010
Puzzlebox comp 2010
 
Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...
Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...
Grant Thornton Banking Regulation: unravelling the regulatory spaghetti - mar...
 
Part - II Policy Formulation for CDA R11
Part - II Policy Formulation for CDA R11Part - II Policy Formulation for CDA R11
Part - II Policy Formulation for CDA R11
 
IFRS [Autosaved].pptx
IFRS [Autosaved].pptxIFRS [Autosaved].pptx
IFRS [Autosaved].pptx
 
MTBiz April-June 2013
MTBiz April-June 2013MTBiz April-June 2013
MTBiz April-June 2013
 
ALCO Process - Funds Management
ALCO Process - Funds ManagementALCO Process - Funds Management
ALCO Process - Funds Management
 
Beyond Budgeting Vs Traditional Budgeting
Beyond Budgeting Vs Traditional BudgetingBeyond Budgeting Vs Traditional Budgeting
Beyond Budgeting Vs Traditional Budgeting
 
Business cases made_simple
Business cases made_simpleBusiness cases made_simple
Business cases made_simple
 
Policy Formulation for AR Cooperatives
Policy Formulation  for AR CooperativesPolicy Formulation  for AR Cooperatives
Policy Formulation for AR Cooperatives
 
12 ways to enhance financial performance
12 ways to enhance financial performance12 ways to enhance financial performance
12 ways to enhance financial performance
 
Financial_business analysis
Financial_business analysisFinancial_business analysis
Financial_business analysis
 
Financial policy and digitalization / Azerbaijan
Financial policy and digitalization / AzerbaijanFinancial policy and digitalization / Azerbaijan
Financial policy and digitalization / Azerbaijan
 
Policies And Procedures
Policies And ProceduresPolicies And Procedures
Policies And Procedures
 

Recently uploaded

The Genesis of BriansClub.cm Famous Dark WEb Platform
The Genesis of BriansClub.cm Famous Dark WEb PlatformThe Genesis of BriansClub.cm Famous Dark WEb Platform
The Genesis of BriansClub.cm Famous Dark WEb Platform
SabaaSudozai
 
Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...
Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...
Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...
IPLTech Electric
 
4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf
4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf
4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf
onlyfansmanagedau
 
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian MatkaDpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian Matka
➒➌➎➏➑➐➋➑➐➐Dpboss Matka Guessing Satta Matka Kalyan Chart Indian Matka
 
一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理
一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理
一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理
taqyea
 
Digital Marketing with a Focus on Sustainability
Digital Marketing with a Focus on SustainabilityDigital Marketing with a Focus on Sustainability
Digital Marketing with a Focus on Sustainability
sssourabhsharma
 
Part 2 Deep Dive: Navigating the 2024 Slowdown
Part 2 Deep Dive: Navigating the 2024 SlowdownPart 2 Deep Dive: Navigating the 2024 Slowdown
Part 2 Deep Dive: Navigating the 2024 Slowdown
jeffkluth1
 
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...
Herman Kienhuis
 
GKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt PresentationGKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt Presentation
GraceKohler1
 
Profiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdfProfiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdf
TTop Threads
 
Call8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessingCall8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessing
➑➌➋➑➒➎➑➑➊➍
 
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
AnnySerafinaLove
 
How to Buy an Engagement Ring.pcffbhfbfghfhptx
How to Buy an Engagement Ring.pcffbhfbfghfhptxHow to Buy an Engagement Ring.pcffbhfbfghfhptx
How to Buy an Engagement Ring.pcffbhfbfghfhptx
Charleston Alexander
 
DearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUniDearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUni
katiejasper96
 
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta MatkaDpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta Matka
➒➌➎➏➑➐➋➑➐➐Dpboss Matka Guessing Satta Matka Kalyan Chart Indian Matka
 
Registered-Establishment-List-in-Uttarakhand-pdf.pdf
Registered-Establishment-List-in-Uttarakhand-pdf.pdfRegistered-Establishment-List-in-Uttarakhand-pdf.pdf
Registered-Establishment-List-in-Uttarakhand-pdf.pdf
dazzjoker
 
Lundin Gold Corporate Presentation - June 2024
Lundin Gold Corporate Presentation - June 2024Lundin Gold Corporate Presentation - June 2024
Lundin Gold Corporate Presentation - June 2024
Adnet Communications
 
Negotiation & Presentation Skills regarding steps in business communication, ...
Negotiation & Presentation Skills regarding steps in business communication, ...Negotiation & Presentation Skills regarding steps in business communication, ...
Negotiation & Presentation Skills regarding steps in business communication, ...
UdayaShankarS1
 
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
❼❷⓿❺❻❷❽❷❼❽ Dpboss Kalyan Satta Matka Guessing Matka Result Main Bazar chart
 
Best practices for project execution and delivery
Best practices for project execution and deliveryBest practices for project execution and delivery
Best practices for project execution and delivery
CLIVE MINCHIN
 

Recently uploaded (20)

The Genesis of BriansClub.cm Famous Dark WEb Platform
The Genesis of BriansClub.cm Famous Dark WEb PlatformThe Genesis of BriansClub.cm Famous Dark WEb Platform
The Genesis of BriansClub.cm Famous Dark WEb Platform
 
Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...
Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...
Sustainable Logistics for Cost Reduction_ IPLTech Electric's Eco-Friendly Tra...
 
4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf
4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf
4 Benefits of Partnering with an OnlyFans Agency for Content Creators.pdf
 
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian MatkaDpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Indian Matka
 
一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理
一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理
一比一原版(QMUE毕业证书)英国爱丁堡玛格丽特女王大学毕业证文凭如何办理
 
Digital Marketing with a Focus on Sustainability
Digital Marketing with a Focus on SustainabilityDigital Marketing with a Focus on Sustainability
Digital Marketing with a Focus on Sustainability
 
Part 2 Deep Dive: Navigating the 2024 Slowdown
Part 2 Deep Dive: Navigating the 2024 SlowdownPart 2 Deep Dive: Navigating the 2024 Slowdown
Part 2 Deep Dive: Navigating the 2024 Slowdown
 
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...
 
GKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt PresentationGKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt Presentation
 
Profiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdfProfiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdf
 
Call8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessingCall8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessing
 
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
 
How to Buy an Engagement Ring.pcffbhfbfghfhptx
How to Buy an Engagement Ring.pcffbhfbfghfhptxHow to Buy an Engagement Ring.pcffbhfbfghfhptx
How to Buy an Engagement Ring.pcffbhfbfghfhptx
 
DearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUniDearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUni
 
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta MatkaDpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta Matka
Dpboss Matka Guessing Satta Matta Matka Kalyan Chart Satta Matka
 
Registered-Establishment-List-in-Uttarakhand-pdf.pdf
Registered-Establishment-List-in-Uttarakhand-pdf.pdfRegistered-Establishment-List-in-Uttarakhand-pdf.pdf
Registered-Establishment-List-in-Uttarakhand-pdf.pdf
 
Lundin Gold Corporate Presentation - June 2024
Lundin Gold Corporate Presentation - June 2024Lundin Gold Corporate Presentation - June 2024
Lundin Gold Corporate Presentation - June 2024
 
Negotiation & Presentation Skills regarding steps in business communication, ...
Negotiation & Presentation Skills regarding steps in business communication, ...Negotiation & Presentation Skills regarding steps in business communication, ...
Negotiation & Presentation Skills regarding steps in business communication, ...
 
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
 
Best practices for project execution and delivery
Best practices for project execution and deliveryBest practices for project execution and delivery
Best practices for project execution and delivery
 

CEIS Review Q2 2015

  • 2. ON MY MIND – CEIS PRESIDENT, JOE HILL  Community banks in our client base are nearly all showing growth  While the growth of loans have increased, the qualities of our clients’ portfolios have not deteriorated  This is important to highlight because this across-the-board loan growth has been caused by an easing in the underwriting process which brings with it a potential rise in credit risk within portfolios. This is not the case for CEIS’s clients.
  • 3. IN THE SPOTLIGHT – JOHN P. MACUKAS  Managing Director  Overseas Leveraged Lending and Structured Finance engagements  Manages a team that overseas the due diligence process for these engagements  Full bio available: http://www.ceisreview.com/biographies/CEIS- Management
  • 4. REGULATORY RELEASES  Recent releases which pertain to our clients  OCC - Thomas Curry addressed efforts to ease the burden of regulation on community banks.  OCC - Financing Small Multifamily Rental Properties  Interagency - Final Rule on Minimum Requirements for Appraisal Management Companies
  • 5. CREATING A EFFECTIVE CREDIT POLICY  A credit policy is the main way in which a Board of Directors can establishes the culture of the bank  What the bank identifies as its appetite for risk  What levels decision-making discretion is delegated  How the bank will measure, monitor, control and report inherent risks in its loan portfolio  Credit Policies must be comprehensive, strictly enforced and kept up to date with modern times.  Without these objectives the Policy will almost always fail
  • 6. LEGISLATE A POLICY WITH CLARITY 1. Policy, Not Procedure  Each credit policy is generally unique per institution  It should not focus so closely on “how to” guidelines and more so on what the rules should be when defining the needs of the bank 2. Clarity  Policies must contain clear language so that its law is not just lines drawn in the sand  This facilitates the enforceability of the policy  Resist the temptation to adopt softer regulations so to attract better business  Trade flexibility for an exception clause instead
  • 7. KEEPING YOUR CREDIT POLICY CURRENT AND ORGANIZED 3. Keeping it Current  Make sure that the policies are kept up to date with the latest regulatory guidelines  Remove dated material from you policies  If clauses in the policy are obsolete or inaccurate, it makes the entire policy harder to enforce or simply to be used as a guide 4. Organization  Keep a living copy on your network that is constantly updated with the contemporary changes  Have every page of the policy carry the date of the last update, to show when changes have been implemented  Pay attention to the pagination of your document, as pages are removed and added there can be inconsistencies in the document
  • 8. MAKE YOUR POLICY ACCESSIBLE AND BE WARY OF AMENDMENTS 5. Access  Minimal access will discourage staff from regularly using the Credit Policy  Allow privileges to people with jobs that require consulting the policy while still keeping its contents private to the majority  Make your document searchable on the computer so time won’t be wasted navigating the multi-hundred page document  An index is also incredibly helpful for the above objective 6. Amendments  Limit their frequencies, there are only rare cases in which Amendments are necessary  Frequent changes can bring integrity and direction into question  It is a time consuming procedure for the Board of Directors
  • 9. EXCEPTIONS AND WRITING YOUR POLICY 7. Exceptions  A much better option than amendments  Exceptions can test the quality of the Credit Policy, if the same exceptions continually need to be made, maybe a change should be considered  Minimal exceptions may indicate a bank’s policies are tight enough  Allow insight into the current state of the market, and the bank’s position 8. Writing your policy  Consider the pros and cons of looking for an independent writer to draft your policy  The more complex your operations, the more necessary a consultant will become  A consultant’s policy may not be unique and be a “one size fits all policy”
  • 10. CONCLUSION  As Banking becomes more competitive, effective management increases in difficulty  It is important that the BoD and Management are upfront and provide clear guidelines for their staff  The Credit Policy is a key factor in communicating these guidelines  A well written Credit Policy means a well-run, and successful bank  A unsatisfactory Credit Policy can have a direct impact on a banks ability to thrive.