Due-Diligence Review Services

Our experienced loan professionals can aptly provide due-diligence review for open-market and assisted-transaction bank acquisitions, capital investment, and valuation of loan portfolios for purchase or sale. The scope of the independent review or loan portfolio appraisal will be tailored to the objectives dictated by the nature of the transaction, as affected by current economic and market conditions.

Typically, an “open-market” bank acquisition due-diligence review will address:

• A loan-specific review of roughly 65-80% of the dollar amount of the loan portfolio.
• A loan-specific review of all significant cited assets and OREO.
• A review of the quarter-end past-due loan and NFS reports for at least several prior periods.
• All Reg. O loans
• Review of policies and procedures for loan underwriting, approval and closing, credit administration, loan administration and loan servicing.
• A review of the adequacy of loan process controls.
• And particularly in the current market environment, a stringent review of loan grading, identification of impaired loans and deficiency analysis, levels of specific reserves and charge-offs, and the adequacy of the ALLL account to confirm the realistic book value of the target bank.

For an “assisted-transaction” bank acquisition, the scope of the due-diligence review should be similar to the “open-market” review with an additional assessment of “fair market valuations” for the loans in the loan portfolio.

In a valuation of a commercial loan portfolio for purchase or sale, all of the loans would be reviewed with a fair market value determined for each loan, as well as the pool of loans.

The review parameters listed above are provided as an example of the scope of a due-diligence review; the actual scope of the due-diligence review will be determined based on the actual transaction and the client’s specifications.

Our collective years of experience in problem asset management and loan asset sales, as well as in credit underwriting, lending, and loan review make us a valuable due-diligence resource in an evaluation of a realistic market value for a bank loan portfolio.