Banks and credit unions often use a standardized risk rating system for internal monitoring of credit risk. Regulators stress the importance of accurate and timely risk ratings, especially during economic uncertainty. Financial institutions should anticipate that credit rating systems and loan grading will receive enhanced emphasis during upcoming exams. This blog outlines the significance of credit risk ratings and regulatory priorities related to credit grading. It also offers guidance for assessing and monitoring credit risks while meeting risk management and compliance goals.
Small banks can leapfrog competitors and better serve their communities by combining their unique advantages with smart management and partnerships. In this blog, former banker and Abrigo Director of Client Experience Kent Kirby says community financial institutions need to ensure they aren’t giving customers a reason to leave other than for pricing. Read the blog for ways to foster a relationship that meets the customer’s needs with quick decisions and personal attention.
On the surface, rising rates may appear to be the solution to the desired outcome of increasing net interest income after such a long earnings drought. There are many ways institutions can earn more income and mitigate interest rate risk through these periods of rising rates. However, it isn’t as simple as being able to charge higher rates on loans, earn higher rates on the investment portfolio, and call it a day. This blog emphasizes the importance of intentionality when it comes to funding strategies and loan pricing models.
In 2023, Abrigo Director of Advisory Services Kent Kirby and Abrigo Senior Advisor Rob Newberry provided guidance on covenants during the webinar “Demystifying covenants: Who needs them and why." Based on their expertise, this refresher on loan covenants may be helpful as commercial lenders, credit managers, credit risk managers, and others navigate the institution’s push-me-pull-you goals of growing balance sheet liabilities while mitigating rising pressures on credit quality.
There may be a long runway to prepare, but it's not too early to get a handle on the CFPB requirements and how they will affect your bank or credit union. With the changes, many financial institutions face the most significant data collection and reporting effort in nearly 50 years. Given this scope, lenders need to begin assessing how and when they will comply. This blog contains important tips for capturing small business loan data, storing it, and reporting it to the CFPB to comply with the required timelines.
