Credit Management Information
By: Stephen Rountree
Several recent regulatory publications indicate increasing risks in the banking sector. Within the SHP & Co. peer banks, discussion of recent exams indicates a somewhat increased regulatory focus on loan concentrations and interest rate risk.
In its Winter 2017 issue of Supervisory Insights, the FDIC published Credit Management Information, Systems: A Forward-Looking Approach. The article drew information from 24 large state nonmember banks and indicated “forward-looking metrics are showing signs of increasing risk at some institutions”. The article stressed the need for proactive MIS. The following matrix reflects various report types and suggested credit metrics.
In its Winter 2017 issue of Supervisory Insights, the FDIC published Credit Management Information, Systems: A Forward-Looking Approach. The article drew information from 24 large state nonmember banks and indicated “forward-looking metrics are showing signs of increasing risk at some institutions”. The article stressed the need for proactive MIS. The following matrix reflects various report types and suggested credit metrics.
Per the SI issue, the following were the most common issues contributing to increased risk:
Historical SHP & Co. newsletters have discussed competition as a contributing factor to changes in client bank & industry underwriting. We have noted a slight up-tick in loan policy exceptions within internal underwriting at some clients. Of note, our findings would appear to mirror those found in the SI. See the graph below.
- Out-of-area lending (including whole loan purchases, loan participations, and shared national credits);
- Growth in loans, ADC or CRE concentrations, assets, or deposits; and
- Higher risk practices in lending or underwriting, often in response to increased competition
Historical SHP & Co. newsletters have discussed competition as a contributing factor to changes in client bank & industry underwriting. We have noted a slight up-tick in loan policy exceptions within internal underwriting at some clients. Of note, our findings would appear to mirror those found in the SI. See the graph below.