Loan Portfolio Credit Review

Our objective in conducting the loan review is to provide Senior Management and the Board of Directors with an independent assessment regarding the quality of the loan portfolio and effectiveness of the internal loan classification and risk rating system. Our evaluation methodology included an analysis of financial data, including ratio and trend analysis; cash flow analysis to ascertain the capacity of the borrower to service the debt; review of payment history; review of current collateral values; review of correspondence, memoranda and other pertinent file data; inquiry of lending personnel; and examination of other relevant information in the Bank’s credit file.

Our credit review is based on various criteria that contained certain elements which by their nature are judgmental and/or subjective and applied consistently over the portfolio. We rely on statements, representations, and written memoranda made by Bank’s management and lending officers. Our report is based in part on such statements, representations, and memoranda.

The review includes an assessment of the accuracy of assigned risk ratings, evaluation of loan underwriting, determination of credit monitoring, documentation deficiencies, and assessment with compliance with bank policies and regulatory guidelines.