Introduction to Problem Banks eBook

Internal Use Only

List of Red Flags

• Internal reporting delays, errors, omissions • Concentrations, of any kind • Delinquencies • Over 90 and accruing • Weak audit/examination finding remediation tracking • Rapid growth and/or new material product lines • Unfunded commitments • Inaccessible/unresponsive management and/or board • Uninsured deposit levels • Adjusting policy limits simply to avoid exceptions

 Increase in non-core funding

 Decrease in core deposits or no core deposits  Loan renewals without any paydowns

High Net Interest Margin

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 Loan review scope influenced by management

No audit

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 Inadequate CECL (ALLL back in the day) methodology  Not reporting policy exceptions to the board

Turnover

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Internal Use Only

In conclusion:  Definitions  Sources for red flags  Questions to ask