Federal Deposit
Insurance Corporation

After reviewing the proposed changes to loan classifications, I am writing to let you know I am opposed to these changes.  Our bank's internal system is patterened after the current regulatory classifications.  This method is well understood by our entire management team including all of our lenders.  Our lenders are responsible for self-assessing their portfolio with executive management oversight.  Everyone understands the process and performs this task on a quarterly basis within a minimal amount of time.  With few exceptions, our internal classifications have been in line with examiner classifications.  In addition, our ability to identify problem credits has allowed us to effectively manage our loan portfolio with a minimum amount of losses.  I'm concerned that a change to a more complex and burdensome task will slow the process down in regards to internal ratings and may not allow us to be as effective in identifying problem loans as the new method will not be as well understood.  I also believe that it would create communication problems between examiners and bankers.  At the present time, both sides understand the present system and are able to effectively discuss issues surrounding a problem loan. 

 

Our bank has just over $90 million in loans.  We have two offices and six lenders including the President.  In addition to our duties as lenders we have other responsibilities including branch management, A/L planning, marketing, investments, compliance, and other  jobs necessary to be done in an independent bank.  I'm concerned that changing the present loan classification system will hinder our ability to sufficiently perform other tasks due to the time it will take to understand and implement the new process.  Our present system has worked well for us.  Please allow this system to remain in place for the future.

 

Thanks,  Jeff McCoy