In addition to summary reports, there are detailed reports used to track credit quality. In many instances these reports are similar to summary reports except they provide information on individual loans and the name of the specific loan officer responsible for each loan.
Lending Limit Report
Past-Due Loan Report
Charge-Off and Recoveries Report
Large Loan Report
Loans to Insiders and Loans to Affiliate Reports
Lending Limit Report – This report provides information on a bank’s legal and “in-house” lending limits and lists lending relationships approaching these limits. As such, it helps the bank avoid legal lending limit violations that can have severe consequences for directors and bank management. Directors can be held liable for losses on a loan above the legal limit. Breaching legal lending limits reflects poorly on bank management and can be the basis for supervisory action against the bank.
It is important to remember that lending limits are not phrased in terms of individual loans to a borrower, but in terms of the total lending relationship to an individual and his/her related interests. Determining this total lending relationship can be complicated and rules on how loans are aggregated to determine the total relationship vary from state to state. As a result, you need to ask management what rules apply to aggregating loan information for lending limit purposes.
Past-Due Loan Report – The past due and nonaccrual listings give performance information on individual loans. Often, the loan officer responsible for these loans is named in the report. This can provide insights into loan problems and management’s efforts to collect on them. It is also helpful for identifying loan officer performance issues.
Charge-Off and Recoveries Report – This report provides a listing of charge-offs and recoveries on individual loans and the officers responsible for the loans. A listing of charge-offs and recoveries allows tracking resolution of loan problems and management’s success in salvaging some value for the bank. Like the summary report, which provides more aggregate information, this report can provide insights into management’s aggressiveness in dealing with loan problems. It is also helpful for identifying loan officer performance issues.
Large Loan Report – This report provides a listing of new large loans and customers with large loan balances. As such, it gives you information on valuable customer relationships and provides you with data on the bank’s largest opportunities and risks. As a director, you should be aware of the bank’s large loan customers whose names appear on these reports. There may be instances when you know or discover something that can help the bank in dealing with these customers in times of trouble such as when a borrower’s loan is past due or is being watched because it presents more than normal credit risk.
Loans to Insiders and Loans to Affiliate Reports – These reports provide listings of loans to insiders (officers, directors and principle shareholders), helping ensure the bank’s compliance with Regulation O. It also lists loans to affiliates, those companies under common control with the bank, ensuring bank compliance with Regulation W. (See the “Sam Wilson Loan” area of this course for more information on Regulation O and Regulation W.)