Key Indicators of Problem Loans

Recognize the early warning signs of deteriorating loans and learn what you can do to react quickly to get a positive outcome.

Most loans on the books move from closing to full payout in accordance with the terms of the loan without the requirement of a serious collection effort. Unfortunately, some loans will not perform as expected due to several reasons. Most of the reasons for nonperformance of commercial loans are due to financial factors such as lack of cash flow or a low liquidity position. Other reasons are nonfinancial factors such as a down economy, poor management, technological advances or competition. One of the primary reasons why bankers are criticized by regulators for poor loan portfolio management is due to bankers being slow in to recognize deteriorating loans and when recognized, being slow to react. The purpose of this presentation is to assist bankers in recognizing the early warning signs of a deteriorating loan. Early intervention in a potentially problem loan could result in a positive outcome by minimizing or even eliminating losses during the problem loan management phase. Warning signs can present itself as financial red flags or nonfinancial red flags. Both are equally effective in determining if your commercial borrower is experiencing financial difficulties.

Faculty

Jeffery W. Johnson

Bankers Insight Group