Crowe Credit Risk Consulting Services
Objectivity, experience, implementation
Audit / Tax / Advisory / Risk / Performance
Smart decisions. Lasting value.™
Facing continuing and evolving regulatory and economic pressures, many financial institutions find that it is imperative for them to reassess the structural and operational aspects of their credit programs, including loan origination, administration, portfolio management, and governance. As the only provider of American Bankers Associationendorsed credit review services, Crowe Horwath works collaboratively with clients to help them address regulatory expectations while also positioning themselves for the future.
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Achieving credit risk maturity in a challenging environment A combination of regulatory, economic, and competitive challenges is placing new demands on lending institutions every day. In particular, stakeholders are raising their expectations of credit risk operations and looking for more effective monitoring, better documentation of procedures and conclusions, and demonstrated compliance with a growing and increasingly complex array of regulatory requirements. In this environment, Crowe financial industry professionals provide banks and lenders of all sizes and specialties with independent, objective analysis; workable road maps for improvement; and proactive implementation approaches designed to advance the maturity of banks’ and lenders’ credit programs. Credit-trained and risk-oriented, the experienced Crowe team of former bankers, lenders, and regulators is helping a rapidly growing number of clients identify and implement solutions that solve immediate problems while also positioning clients for the future.
The Crowe approach Drawing on extensive direct experience in credit risk management, members of the Crowe team help banks conduct a broad and objective review of the governance, administration, and operation of their lending functions. Crowe brings a valued, objective perspective that enables banks to compare their credit programs to those of other organizations of similar size and focus. The goal is to develop credible and practical recommendations for improving work processes, correcting deficiencies in policies and procedures, improving regulatory compliance, enhancing credit risk management, and addressing ongoing risk-related issues. To achieve this goal, Crowe works collaboratively with you to: • Understand the unique credit risk profile of your organization • Understand your current and ongoing initiatives for managing credit risk and adhering to the supervisory guidance on credit-related matters • Assess your current credit risk program against the Crowe lending framework and maturity model • Identify and prioritize gaps in your credit risk program • Define prioritized initiatives for both immediate and long-term corrective action and for advancing the maturity of your program in the future Beyond providing assessments and road maps, Crowe frequently works side by side with client teams to assist in the execution and implementation of the needed plans and projects.
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Where Crowe can help Crowe works closely with banks’ management teams, boards, and internal auditors to identify specific areas of concern and attention. Crowe helps you address specialized areas of your lending programs, offering particular expertise in a number of critical areas, including: • Overall credit risk program and culture assessment • Allowance for loan and lease losses (ALLL) methodology review • Model validation for credit risk-related models • Regulatory remediation assessment • Loan- and portfolio-level stress testing • Stress-testing governance and process documentation, including DoddFrank Wall Street Reform and Consumer Protection Act stress testing • Assisting internal audit in the assessment of loan review • Lending policy assessment and remediation • Desktop procedure development • Risk assessment methodology development • Construction lending process review • Problem loan administration program assessment • Appraisal process assessment • Portfolio analytic assistance
Exhibit 1: Crowe Lending Framework (CLeF) Enterprise Foundation Principal Capabilities
Credit Origination
Credit Administration
Portfolio Management
Business Development
Compliance
Portfolio Performance
Underwriting
Ongoing Processing
Portfolio Rebalancing
Due Diligence
Exception Tracking
Profitability Analysis
Initial Grade Assessment
Borrower Performance
Origination and Pricing
Closing
Officer Performance
Portfolio Modeling
Collections and Workouts
Stress Testing
Loan Review
Scoping and Planning
Loan Grade Confirmation
Quality Control
File Review
Accounting Standards
Analysis and Reporting
Data and Document Management for Retention and Audit Trails Effective Internal Controls Monitoring/Self-Testing Independent Audit Source: Crowe analysis
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Board Oversight
Staffing and Training
Targeted Risk Assessments
Management Oversight
Written Procedures
Enterprise Risk Assessment
Program and Project Management
Policies
Demonstrated Execution
Corporate Governance/ERM
Tried-and-tested tools to achieve results Crowe credit risk consulting services are guided by the Crowe lending framework (CLeF) model, which provides an independent framework for organizing governance and operational components, assessing risk, and making recommendations related to a financial institution’s credit risk program. Used in conjunction with the CLeF, the Crowe program assessment and road map (PAR) methodology helps facilitate the development of a tactical, strategic road map for improvement. This tried-and-tested methodology can provide many advantages. The methodology includes the application of a consistent framework for assessing and evaluating your credit risk program based on regulatory requirements and expectations, followed by the development of a road map for enhancing the program. By applying a sound, structured methodology for prioritizing initiatives, Crowe helps you more effectively handle planning, budgeting, and staffing questions involving both internal and external resources. This approach also produces credible documentation of your intent to proactively address credit risk program issues – before regulators cite inconsistencies or concerns and dictate a timeline or activities.
Exhibit 2: PAR Wheel Monitor and Report Pr ogr VI – e s ess a Ph
Phase V Develop a Tactical and Strategic Road Map
Phase IV Document Gaps and Enhancement Opportunities
Phase I Understand the Compliance Environment
PAR Method
Phase II Gather Data
Phase III Assess Compliance Program Maturity
Source: Crowe analysis
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Crowe experience and credibility For more than 60 years, Crowe banking professionals have helped financial institutions of all sizes improve processes, underwriting, problem loan identification, and effective loan monitoring. Crowe currently provides credit risk review services to more than 120 financial institutions, including some of the largest banks in the United States, as well as credit unions, farm credit associations, and insurance companies. Crowe lending teams include dedicated banking professionals with years of experience as banking executives and credit officers as well as executives with direct regulatory experience. As a full-service public accounting and consulting firm, Crowe maintains extensive professional contacts throughout both the financial services industry and the regulatory community. Crowe risk services are endorsed by the American Bankers Association (ABA) through its affiliate, the Corporation for American Banking. Crowe ABA-endorsed credit review service offerings include: • Outsourcing of the credit review function • Managing commercial real estate concentrations • Credit administration process reviews • ALLL support and methodology • Acquisition due diligence
Experience & credibility 6
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About us
Scott Miller, Principal +1 616 752 4264 scott.miller@crowehorwath.com
Crowe Horwath is one of the largest public accounting, consulting, and technology firms in the United States. Connecting deep industry and specialized knowledge with innovative technology, our dedicated professionals create value for our clients with integrity and objectivity. We accomplish this by listening to our clients – about their businesses, trends in their industries, and the challenges they face. We forge each relationship with the intention of delivering exceptional client service while upholding our core values and our industry’s strong professional standards. Crowe invests in tomorrow because we know smart decisions build lasting value for our clients, people, and profession.
David Adams +1 818 325 8415 david.adams@crowehorwath.com Mike Budinger, Partner +1 216 623 7517 michael.budinger@crowehorwath.com
The governance, risk, and compliance management solutions from Crowe are endorsed by the American Bankers Association (ABA) through its subsidiary, the Corporation for American Banking. The ABA endorsement of these solutions indicates they deliver high quality and meet performance standards, and offer the potential to improve your bank’s profitability and performance.
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In accordance with applicable professional standards, some firm services may not be available to attest clients. © 2016 Crowe Horwath LLP, an independent member of Crowe Horwath International crowehorwath.com/disclosure
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