Loan portfolios generally have the biggest impact on the risk profile and earnings performance (interest financial gain, fees, provisions, and alternative factors) of community banks. the common loan portfolio represents around sixty two.5 p.c of total consolidated assets for banking organizations with but $1 billion in total assets and sixty four.9 p.c of total consolidated assets for banking organizations with but $10 billion in total assets.1
In order to manage credit risk, it’s imperative that acceptable and effective policies, procedures, and practices area unit developed and enforced. Loan policies ought to align with the mission and objectives of the bank, further as support safe and sound disposal activity. Policies and procedures ought to function a framework for all major credit choices and actions, cowl all material aspects of credit risk, and replicate the quality of the activities within which a bank engages.