The OCC, which has been at the forefront of regulatory scrutiny of community banks, outlined its operating plan and list of priorities for its examiners in 2017. Specific to its review of commercial lending activities within community banks, the OCC operating plan highlighted credit underwriting as a major area of focus.
Per the release, the guidelines instructed examiners to review commercial credit underwriting practices as follows:
“Evaluating underwriting practices on new or renewed loans for easing in structure and terms, increased risk layering, and potential fair lending implications. Reviews will focus on new products, areas of highest growth, or portfolios that represent concentrations, such as commercial and industrial, commercial real estate, and auto loans.”
In what has been referred to as a Horizontal Underwriting Review, the examiners have specifically striven to measure the effectiveness of bank underwriting on required best practices including 1) the analysis of CRE investment property rollover risk and tenant quality, and 2) subject property sensitivity analysis with shock factors including interest rate, vacancy and rental income. Policy exception reporting has also been an area of high scrutiny.
If you find your bank short-staffed on a temporary or periodic basis, we provide deeply seasoned commercial underwriters and analysts to provide your lending function with the support it needs to keep your portfolio growth on track with high-quality underwriting that will pass regulatory scrutiny.