PROBLEM LOAN REPORTING Overview Clause Samples

PROBLEM LOAN REPORTING Overview. Over the lifecycle of any borrower, there may be periods where operational and financial problems may negatively affect the repayment of a loan. It is important that we proactively manage these situations to try and preserve our relationship with our borrower while managing the increasing level of risk in a particular loan. Once a loan is rated 4 or higher, it is considered a problem loan. Loans rated 3 or higher may be experiencing negative trends in financial or operational performance, cash flow and debt service capability or collateral value. In these cases the loan officer should consider consulting with the Problem Loan Manager as to strategy and tactics in managing the loan before the situation deteriorates further. When a loan is downgraded to a 4 it is the responsibility of the loan officer to arrange a meeting with the respective MD and Problem Loan Manager to determine: • what level of supervision will be required by the Problem Loan Manager or other representatives from Capital Analytics (CA) • what strategy and tactics will be adopted to prevent further deterioration and ultimately lead to an upgrade of the risk rating to 3 or better?