eDelta offers a series of lending services for commercial banks, savings banks, credit unions, mortgage companies, asset-based lenders, factoring companies and equipment leasing companies. In each case, the services are required by government regulators, accountants, executive management and auditors. eDelta functions as an outsourced, independent reviewer of the service. In all cases, eDelta looks to add its expertise in technology for improving the efficiency of the work and providing customized management reports for the client. If accounting issues arise, eDelta’s capabilities in that area distinguish the firm from the competition.
Loan Reviews (also known as Credit Audit)
A statistically valid sampling of the commercial (C&I), commercial real estate (CRE), asset-based (ABL), mortgage loans, and equipment finance credit files are reviewed. Included in the review are underwriting criteria and procedures, adherence to loan policy and credit approval authorities, risk .ratings, evaluation of collateral, covenant compliance, and loan officer performance. The examination of the loan loss reserve is often a component of these reviews. The reviews should confirm the lender’s ratings for individual loans and for the portfolio as a whole. It can provide the lender with early warnings on individual loans based on updated information, and provide insight into market conditions and industry trends. An eDelta Principal will be in attendance at all Loan Reviews.
Collateral Reviews (also called Field Exams)
Accounts Receivables and Inventory that are collateral for ABL and commercial loans are audited. The audits consist of confirming the aging and quality of the receivables and inventory, adherence to lender credit policy and approval authorities, accounting issues, and insurance verification. The asset-based lending structure assumes collateral as the main source of loan repayment and financial strength the second. Traditional commercial loan structures place emphasis first on the financial strength and second on collateral. As a summary of the benefits, a well-executed field exam will identify risks and patterns of declining credit situations. An established field tester will provide valuable insights into the borrower’s financial condition along with recommendations to lenders.
Residential Mortgage Reviews
Compliance audits that are required by Fannie Mae post loan closing. The audits review a sample of the documentation file for completeness, maturity of the homeowners’ insurance, order a new appraisal, update the credit bureau scores of the borrower(s) and comment on the rationale for the credit decision. Although not required by Fannie Mae, attention is paid to marketing issues such as the ratio of closed loans to declines and the ratio of canceled loans to approvals/declines. While this process is a regulatory requirement, it can provide insight into credit quality trends, appraiser credibility, and market conditions.
Loan Portfolio Management
Many lending institutions now undertake sophisticated data analysis using risk-adjusted credit scoring to risk rate the C&I and CRE loan portfolios. The process involves enhancing the bank’s risk rating systems, creating a profitability model for loan portfolios based on risk-adjusted returns, and integrating the risk-rating system and profitability model with capital requirements so capital can be more efficiently allocated based on the risk of each loan category. Because there is a great deal of analytical work required, many lenders outsource this function to firms like eDelta. The ultimate goal is to create a system that maximizes portfolio returns and drives marketing efforts toward better credits and/or obtaining better pricing.
Credit Policy and Procedures Updates
This service is applicable to lenders that want to update existing policies and procedures as well as to troubled institutions who want to ensure policies are compliant with regulatory and audit requirements. Policies and procedures are reviewed in detail and recommendations are made to ensure adherence to industry best practices. Often policies which by their nature do not change frequently are written in a policy document that is separate from a procedures manual that may be updated frequently. eDelta looks for redundancies and outdated items, especially in the procedures.
Due Diligence Assignments
When lenders are considering the acquisition of another company or a portfolio of loans, eDelta has substantial experience with assisting in the due diligence on individual loans. These assignments are done in strict confidence, often on weekends, and are customized to the needs of the client.
Loan Reviews (Credit Audit)
Reviews completed for a New Jersey Regional Bank’s C&I and CRE Middle Market and Lower Middle Market Loan Portfolios. Reviews completed for a large Long Island credit union’s Commercial Mortgage and CRE portfolio. Reviews completed for the CRE loans of a Los Angeles based Taiwanese owned bank. Reviews completed for a San Francisco and New York-headquartered Community Development Financial Institution (CDFI). The reviews used eDelta forms and reports as well as those designed by the clients.
Collateral Reviews (Field Exams)
Reviews completed for a New York City Regional bank on a Middle Market Loan collateralized by Accounts Receivable. Review completed for the New York City operation of a foreign bank on an Asset Based Loan to a children’s wear company. The reviews used eDelta forms and reports as well as those designed by the clients.
Residential Mortgage Reviews
Reviews are undertaken for a Long Island-based mid-sized credit union. These reviews are done each month on loan applications processed during the previous month.
Loan Portfolio Management
An extensive process was put in place at a suburban New York Area community bank. Risk rating standards were updated, a two-part rating system put in place and a well-structured credit/marketing strategy was implemented.
Credit Policy and Procedures
Assignments completed for a New York City Savings Bank, a Long Island headquartered Regional Bank and the New York operation of a Dominican Bank. The projects included C&I, CRE, ABL, Residential Mortgage, and consumer loans.
eDelta Consultants have worked with a New York-based commercial bank to review commercial mortgages that were purchased from a New York City savings bank. For the same bank, equipment leasing transactions were reviewed from a Pennsylvania headquartered equipment leasing company.