Due-Diligence Review Services
Our experienced loan professionals can 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 client and 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.
- 3-year bank Risk Grade Migration Analysis and a comparison of Due Diligence Risk Grades versus current bank Risk Grades
- A review and trend analysis of the quarter-end Past-Due Loan and NSF/Overdraft reports for 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 processes and internal controls.
- A stringent review of loan grading, identification of TDR & Impaired loans and a deficiency analysis, levels of specific reserves and charge-offs, and the adequacy of the ALLL account to confirm the realistic book value for the loan portfolio 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 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 for the evaluation of the realistic market value for a bank loan portfolio.