Portfolio Risk & CECL Loan Review and Due Diligence

The value of loan review worksheets: Bringing structure to analysis

Kent Kirby

May 6, 2025

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This article covers these key topics:

What is a loan review worksheet?
5 Benefits of using worksheets
Worksheet examples for loan reviewers

Utilizing loan review worksheet for consistent analysis

Analytical inconsistency is a persistent challenge in the loan review profession, often leading to wildly different approaches across reviewers. Striking the right balance is essential—and a structured tool like the loan review worksheet can help reviewers achieve clarity, consistency, and more meaningful assessments.

Standardization matters when assessing asset quality

One of the things Abrigo Senior Consultant Kent Kirby observed over his loan review career is that analytical consistency is not a hallmark of the loan review profession.

“We’re all over the board,” he said. “On one end are maniacs like me. As my wife and daughter will readily attest, I’ll carry an analysis far beyond what’s necessary to make sure every detail is crystal clear. At the other extreme are those who provide so little analysis that readers are left guessing at even the basics: When was the company founded? What are the terms and conditions of the facility? These analysts often spend more time cutting and pasting from prior work than developing new, relevant insights.”

Neither extreme is desirable. Both drive the reviewer in charge crazy as they battle inconsistent individual approaches on their way to the true objective: assessing asset quality, administrative competency, and the future trajectory of the segment under review.

Fortunately, there’s a tool that helps eliminate these extremes and foster a consistent, thoughtful approach: the loan review worksheet.

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What is a loan review worksheet?

A worksheet is simply a series of standardized questions on a subject loan review cares about — underwriting, governance, monitoring, etc. Its purpose is to systematically collect structured, comparable, and analyzable information to support sound, data-driven conclusions.

Specifically, worksheets help to:

Assess borrower risk: Gather updated financial, operational, and compliance information to evaluate repayment ability.
Test underwriting discipline: Verify that loans were originated and monitored according to policy and sound credit principles.
Identify emerging credit issues: Surface early signs of borrower stress, collateral deterioration, or covenant breaches.
Enable portfolio monitoring: Aggregate responses to detect risk patterns across industries, geographies, or loan types.
Support documentation and defensibility: Create a clear record of what information was considered during analysis for regulators, auditors, and management.

In short, loan review worksheets turn scattered, subjective input into organized, actionable insight for targeted and effective loan reviews

Five benefits of using worksheets

Here are five key benefits of using worksheets in analytical work:

Standardization of data collection
- Ensures every analyst answers the same questions, presented in the same way.
- Improves consistency, making results easier to compare and quantify.
Efficiency and scalability
- Quickly gathers data across many credits with relatively low effort.
- Helps analysts stay focused, avoiding the extremes of over- or under-analysis.
Objectivity and reduced bias
- Minimizes bias toward particular credits or lenders.
- Captures responses openly (often on the line sheet), promoting comparability.
Quantitative and qualitative insights
- Provides numeric scoring and rankings, as well as open-ended narrative insights.
- Supports both statistical and thematic analysis.
Data archiving and reusability
- Stores responses electronically for easy retrieval, comparison, and analysis.

Worksheet examples for loan reviewers

A common question when creating loan review worksheets is: Should I build one comprehensive worksheet or several smaller ones?

Experience has shown that a series of smaller worksheets (no more than 10–15 questions each) works best.

Some worksheets should be mandatory (e.g., credit analysis).
Others can be optional depending on the nature of the review (e.g., collateral evaluation).

Here are two simple examples — not best practices, but illustrations:

Example: Credit analysis worksheet (250 words or less per response)

Briefly describe the background of the borrower(s).
Do you arrive at the same conclusion as the original approval? (Yes / Yes with qualifications / No—explain.)
Quality of primary repayment analysis: (Conservative / Reasonable / Liberal—explain.)
Quality of secondary repayment analysis: (Conservative / Reasonable / Liberal—explain.)
Quality of projections: (Acceptable / Unacceptable / N/A—explain.)
Quality of sensitivity analysis: (Acceptable / Unacceptable / N/A—explain.)
Are the guarantors a source of strength? (Yes/No—explain; if Yes, assess global cash flow.)
Do you agree with the assigned risk rating? (Explain.)
Credit strengths: (Explain.)
Credit weaknesses: (Explain. Were they identified by the line? Were mitigations put in place?)
Financial trend of the borrower: (Improving / Stable / Erratic / Declining — explain.)
Any follow-up questions for the Relationship Manager?

Example: Controls worksheet (250 words or less per response)

What exceptions were cited by the bank? (Choose from list.)
What exceptions were missed? (Choose from same list.)
Do mitigating factors justify exceptions? (Yes/No—explain.)
How do you rate ongoing borrower monitoring controls? (Adequate/Inadequate—explain.)
Are covenants effectively monitored? (Yes / No / Missing—explain.)
If substandard, should customer be moved to non-accrual/charged off? (Select option and explain.)

Each worksheet mixes quantitative (trackable/scorable) and qualitative (explanatory) responses.

By keeping each worksheet focused, analysts zero in on risks that matter — and avoid wasting time on superfluous activities. Worksheets bring structure, consistency, and objectivity to loan review. They help the reviewer in charge bridge different analytical styles and generate forward-looking, actionable insights that truly add value.

If you’re not using worksheets yet and want to start, reach out to [email protected] to set up a time to discuss how worksheets can add structure, insight, and real value to your loan review program.

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