Established in 1893, International Bank of Amherst is an independent, locally owned bank serving the greater community of Amherst, Wisconsin. With well over a century of service, the bank offers a full line of consumer, business, and agriculture loans, taking pride in loan decisions that are made locally.

Situation

Led by its desire to be proactive, International Bank of Amherst wanted to conduct an in-house loan review prior to its upcoming regulatory examination in order to identify and resolve any potential issues. Its management quickly recognized, however, that an in-house review would be too great a challenge given the bank’s limited internal resources and time constraints. The bank turned to Wipfli to perform an independent loan review.

Strategy

The bank’s management defined the scope of the review by selecting 12 of its largest lines of credit and, therefore, its greatest concentration of risk. In addition to obtaining an independent evaluation of credit quality, International Bank of Amherst also requested suggestions for improving its lending procedures.

Wipfli conducted a thorough loan review, which included:

• Examining credit quality and reviewing customers’ financial statements.
• Evaluating collateral for appropriateness.
• Reviewing bank procedures to ensure all loans adhered to the bank’s policies as well as industry regulations.
• Reviewing file documentation to ensure accuracy and completeness.

Wipfli provided a complete written report detailing its findings. The firm also provided the bank’s management with insights into best practices on improving its policy on troubled debt restructuring and documenting other real estate owned—two key areas of regulatory scrutiny. In addition, Wipfli recommended standardizing the format used for loan file comments.

Benefits

As a result of the independent loan review, International Bank of Amherst was able to confirm the accuracy of its risk rating system and confidently demonstrate to regulators its proactive management of lending activities. In addition, the bank enhanced the effectiveness of its lending policies and procedures by making improvements to loan policy and other real estate owned documentation. By further standardizing the format for loan file comments, the bank also improved documentation, reducing reliance on the originating lender’s personal knowledge of a credit and giving all loan officers an accurate and complete picture of accounts. Recognizing the value of an outside perspective, the bank continues to obtain independent loan reviews periodically.