Hi, The examiners are requesting we update our policy for limits related to concentration risk. Has anyone addressed concentration risk in their loan participations policy? In particular, limits related to types of loans AND participants? Are you using NAICS codes? If able, can you please share your policy? We do almost all of our participation loans (purchases) with 1 credit union. We essentially perform the underwriting for the loan (we outsource to a qualified 3rd party) and also review the other institution’s underwriting as well (separate underwriter). We have a long standing relationship with this institution. Also, all of the loans are real-estate secured. Many of our NAICS codes are for “real estate holding” which isn’t the core activity of the project (i.e., could be a real-estate holding company setup to hold property to a strip mall, medical office suites, etc.). The examiners did not suggest that we form relationships with other credit unions for the sake of diversifying our partners. They actually supported our approach, however included wording related to participants in the comment. Thanks, Dan ElstonBayPort Credit UnionEmail: [email protected]
May 9, 2012 - 3:20pm
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