CEIS reviews existing loan loss reserve methodology for conformance to regulatory guidelines, reasonableness in establishing the reserve allocations, and appropriate statement in the bank’s loan policy.
We will analyze, test and validate the methodology underlying the specific and general allocations that are applied in the client’s periodic assessment of loan loss reserves. We develop a framework / format / model that can be periodically updated. CEIS analyzes the portfolio experience of the last three to ten years including the migration of loan grades, loss experience, reliability of loan grading system, changes in portfolio mix, trends in portfolio risk in view of concentrations such as large loan exposures, loan types, collateral types, industry and loan grades; delinquency and non-accrual trends, off balance sheet commitments, the loss experience of its “peers”, and other factors relevant to the client portfolio profile. After the “base report”, CEIS periodically updates the data, observations and conclusions.
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