What are the processes/tools for monitoring the portfolio and individual loans?

If the deal rating results in the need for manual review and approval, authorized approvers can review the loan and submit their decision (along with any approval conditions/requirements).

What are the processes/tools for monitoring the portfolio and individual loans?

Let’s start with individual loans. We provide the following features for monitoring individual loans:

• Covenants

• Periodic/Annual Review

Covenants

Covenants can be added to a loan application or entity/relationship from the digital credit file user interface (Q2 Origination can be customized to add covenants automatically as well). Launch APP-00000000041 and navigate to the Covenants screen to demonstrate the “Add Covenants” user experience.

Covenants in Q2 Origination come in two forms – document (reporting) covenants and financial covenants. For document covenants, you can define the type (i.e. Document), description, evaluation frequency, notification period (i.e. the number of days prior to the covenant becoming an exception should the relationship manager and borrower be notified of the covenant requirement) and associations (i.e. loan product association, legal entity type association, etc. – how we associate specific covenants with specific deals).

In addition to document/reporting covenants, we also support financial covenants to enable FIs to periodically evaluate key financial indicators to continuously manage credit risk. Financial covenants are enforced by defining the specific financial indicator/ratio and the evaluation criteria (i.e. operator and matching value), along with the frequency.

When a covenant evaluation is triggered (based on the Notification Date configuration at the Covenant Definition level), the covenant becomes visible on the Relationship UI.

Authorized users can manage covenant exceptions and view covenant history.

That’s how we manage covenant tracking and monitoring; however, we also enable periodic credit risk reviews in Q2 Origination.

Periodic Reviews

Periodic reviews are managed in Q2 Origination with a special type of loan product configuration. By using our existing product infrastructure, we have the ability to manage credit analysis, decisioning and exception tracking workflows during periodic/annual reviews the same way we do during loan origination. For example, if you want to manage ongoing/annual reviews for specific small business or commercial loans, you simply need to 1) configure the periodic review product workflow; and 2) link the periodic review product to the specific small business or commercial loan product you want to review.