Loan Policy and Procedures

Loan policy for the Bank should be a collaborative effort by the Board of Directors and Executive Management, possibly assisted by Ewing Loan Advisors as a third-party consultant. The Loan Policy Manual should be comprehensive, completely covering both policy and procedures.

The Board of Directors has the responsibility for postulating policy appropriate for overview guidance of specific loan policy and should include such topics as:

• Acknowledge its responsibility for the Safety & Soundness of the Bank.
• Acknowledge its responsibility for the determination of Loan Policy.
• Require compliance with Laws and Regulations.
• Recognize its commitment to serve the needs of the community within the Bank’s trade service area.
• Recognize its need to meet the legitimate credit needs of the business and individual constituents of the primary service area.
• Promote sound loan underwriting resulting in collectible and profitable loans.
• Recognize the Bank’s responsibility for maintaining a balanced mix of loans within the loan portfolio.
• Recognize the Bank’s responsibility for maintaining a sound ratio of loans to assets and to capital.
• Recognize the Bank’s responsibility for prudent asset-liability management, maintaining appropriate interest-rate sensitivity.
• Establish and approve the organizational structure for the implementation of Loan Policy.
• Assign lending authorities to loan committees and/or officers, as appropriate.

The appropriate principles for loan policy should be formally resolved by the Board of Directors and incorporated into the Loan Policy as the initial section.

Specific Loan Policy should be promulgated by Executive Management, with the approval and guidance of the Board of Directors. Each of these sections should include definitions, overview, policy, exceptions, procedures and cross-references. The sections should address such topics as:

• Laws & Regulations
• Lending Organization and Authorities (Board Resolution)
• Credit Extension Guidelines
  • Consumer (Specific types)
  • Commercial & Industrial (Specific types)
  • Real Estate (Specific types)
    • Appraisal Policy
    • Environmental Policy
  • Loan Application & Documentation Required for Loan Approval
  • Credit Structure
    • Demand Loans
    • Short-term Notes & Extensions
    • Lines of Credit
      • Draw Notes
      • Revolving Lines
      • Guidance Lines
      • Advised Lines
      • Term Loans
      • Renewals
      • Commitment Letters
      • Loan Agreements
      • Guaranties
      • Issuance of:
        • Letters of Credit
        • Stand-By Letters of Credit
        • Trade Letters of Credit
        • Acceptances
        • Loan Pricing
        • Collateral & Collateral Control
        • Documentation (Separate Section or Manual)
        • Loan Administration (Separate Section or Manual)
          • Disbursements & Payoffs
          • Portfolio Management
            • Servicing Requirements & Credit Review
            • Credit File Maintenance & Ticklers
            • Loan Review
            • Credit Grades & Grading
            • Past dues
            • Problem Loans
            • Non-Accrual
            • Charge-off/Write-down & ALLL Adequacy
            • TDR/ISF
            • ORE & Repossessed Collateral