Independent Banker - July 2023 - 54

Because of the complexities
involved, Hild generally recommends
community banks consider robust
and comprehensive third-party risk
management evaluation software.
These platforms can help community
banks manage their myriad vendor
relationships and could be especially
important if a bank is dinged by a
regulator for deficiency in this area of
third-party risk management, he says.
RISK
MANAGING CREDIT RISK
IS COMPLICATED.
Especially as rates rise, credit risk is
becoming a more pressing issue for
community banks. According to the
most recent Wolters Kluwer study,
51% of banks cited it as a top concern.
SOLUTION
For new loans, community banks
should be vigilant about both credit
risk and pricing.
Hui recommends that banks
look at whether they are pricing the
risk in the right way. If they aren't
getting compensated for the risk
they are taking on, a higher price is
probably the right answer for the
institution, even though the loan
officers might not like it.
Community banks should also
look beyond their historical loss
experience and consider that the
world will be different and the risks
may not be the same in the future,
says Matt Pieniazek, president
and CEO of Darling Consulting in
Newburyport, Mass.
" There can be a tendency for an
" You're not going to prevent
every breach, but you want
to make sure that you can get
your systems up and running
pretty quickly. "
-DENNIS HILD, CROWE LLP
overreliance on ratios, " he says.
" When times are tougher and the
uncertainty is greater, we need to ask
questions with qualitative responses
that won't show up in the ratios. "
For instance, as uncertainties
are elevated, the questions need to
change, Pieniazek says. Banks look
at a variety of metrics: loan-to-value
ratios, debt-service-coverage ratios,
cash flow returns and return on
investment. Continuing to dig deeper
will yield even better results.
Even though the ratios may look
good now, they should be asking
the loan officers presenting a loan:
How could this loan go bad? Could
anything within the loan recipient's
industry change? What factors could
cause this assessment to change?
This process affords community
banks greater clarity and allows
them the opportunity to price the
loans accordingly or take a pass,
Pieniazek says.
Of course, existing loan portfolios
should also be reviewed for possible
trouble signs. Hui recommends that
community banks enact protections
for cases where the borrowers may
not be on as solid ground as when
the loan was extended. " The biggest
exposure is not going to be new
loans, " he says.
On annual commercial loan
reviews, risk ratings should be a
focus. If necessary, they can put the
loan on a watch list to manage the
risk going forward.
" It's not re-underwriting, "
54 // ICBA Independent Banker // July 2023

Independent Banker - July 2023

Table of Contents for the Digital Edition of Independent Banker - July 2023

Contents
Independent Banker - July 2023 - Intro
Independent Banker - July 2023 - Cover1
Independent Banker - July 2023 - Cover2
Independent Banker - July 2023 - Contents
Independent Banker - July 2023 - 2
Independent Banker - July 2023 - 3
Independent Banker - July 2023 - 4
Independent Banker - July 2023 - 5
Independent Banker - July 2023 - 6
Independent Banker - July 2023 - 7
Independent Banker - July 2023 - 8
Independent Banker - July 2023 - 9
Independent Banker - July 2023 - 10
Independent Banker - July 2023 - 11
Independent Banker - July 2023 - 12
Independent Banker - July 2023 - 13
Independent Banker - July 2023 - 14
Independent Banker - July 2023 - 15
Independent Banker - July 2023 - 16
Independent Banker - July 2023 - 17
Independent Banker - July 2023 - 18
Independent Banker - July 2023 - 19
Independent Banker - July 2023 - 20
Independent Banker - July 2023 - 21
Independent Banker - July 2023 - 22
Independent Banker - July 2023 - 23
Independent Banker - July 2023 - 24
Independent Banker - July 2023 - 25
Independent Banker - July 2023 - 26
Independent Banker - July 2023 - 27
Independent Banker - July 2023 - 28
Independent Banker - July 2023 - 29
Independent Banker - July 2023 - 30
Independent Banker - July 2023 - 31
Independent Banker - July 2023 - 32
Independent Banker - July 2023 - 33
Independent Banker - July 2023 - 34
Independent Banker - July 2023 - 35
Independent Banker - July 2023 - 36
Independent Banker - July 2023 - 37
Independent Banker - July 2023 - 38
Independent Banker - July 2023 - 39
Independent Banker - July 2023 - 40
Independent Banker - July 2023 - 41
Independent Banker - July 2023 - 42
Independent Banker - July 2023 - 43
Independent Banker - July 2023 - 44
Independent Banker - July 2023 - 45
Independent Banker - July 2023 - 46
Independent Banker - July 2023 - 47
Independent Banker - July 2023 - 48
Independent Banker - July 2023 - 49
Independent Banker - July 2023 - 50
Independent Banker - July 2023 - 51
Independent Banker - July 2023 - 52
Independent Banker - July 2023 - 53
Independent Banker - July 2023 - 54
Independent Banker - July 2023 - 55
Independent Banker - July 2023 - 56
Independent Banker - July 2023 - 57
Independent Banker - July 2023 - 58
Independent Banker - July 2023 - 59
Independent Banker - July 2023 - 60
Independent Banker - July 2023 - 61
Independent Banker - July 2023 - 62
Independent Banker - July 2023 - 63
Independent Banker - July 2023 - 64
Independent Banker - July 2023 - 65
Independent Banker - July 2023 - 66
Independent Banker - July 2023 - 67
Independent Banker - July 2023 - 68
Independent Banker - July 2023 - 69
Independent Banker - July 2023 - 70
Independent Banker - July 2023 - 71
Independent Banker - July 2023 - 72
Independent Banker - July 2023 - 73
Independent Banker - July 2023 - 74
Independent Banker - July 2023 - 75
Independent Banker - July 2023 - 76
Independent Banker - July 2023 - 77
Independent Banker - July 2023 - 78
Independent Banker - July 2023 - 79
Independent Banker - July 2023 - 80
Independent Banker - July 2023 - Cover3
Independent Banker - July 2023 - Cover4
https://www.nxtbook.com/mspc/independentbanker/september2024
https://www.nxtbook.com/mspc/independentbanker/august2024
https://www.nxtbook.com/mspc/independentbanker/july2024
https://www.nxtbook.com/mspc/independentbanker/june2024
https://www.nxtbook.com/mspc/independentbanker/may2024
https://www.nxtbook.com/mspc/independentbanker/april2024
https://www.nxtbook.com/mspc/independentbanker/march2024
https://www.nxtbook.com/mspc/independentbanker/february2024
https://www.nxtbook.com/mspc/independentbanker/january2024
https://www.nxtbook.com/mspc/independentbanker/december2023
https://www.nxtbook.com/mspc/independentbanker/november2023
https://www.nxtbook.com/mspc/independentbanker/october2023
https://www.nxtbook.com/mspc/independentbanker/september2023
https://www.nxtbook.com/mspc/independentbanker/august2023
https://www.nxtbook.com/mspc/independentbanker/july2023
https://www.nxtbook.com/mspc/independentbanker/june2023
https://www.nxtbook.com/mspc/independentbanker/may2023
https://www.nxtbook.com/mspc/independentbanker/april2023
https://www.nxtbook.com/mspc/independentbanker/march2023
https://www.nxtbook.com/mspc/independentbanker/february2023
https://www.nxtbook.com/mspc/independentbanker/january2023
https://www.nxtbook.com/mspc/independentbanker/december2022
https://www.nxtbook.com/mspc/independentbanker/november2022
https://www.nxtbook.com/mspc/independentbanker/october2022
https://www.nxtbook.com/mspc/independentbanker/september2022
https://www.nxtbook.com/mspc/independentbanker/august2022
https://www.nxtbook.com/mspc/independentbanker/july2022
https://www.nxtbook.com/mspc/independentbanker/june2022
https://www.nxtbook.com/mspc/independentbanker/may2022
https://www.nxtbook.com/mspc/independentbanker/april2022
https://www.nxtbook.com/mspc/independentbanker/march2022
https://www.nxtbook.com/mspc/independentbanker/february2022
https://www.nxtbook.com/mspc/independentbanker/january2022
https://www.nxtbook.com/mspc/independentbanker/december2021
https://www.nxtbook.com/mspc/independentbanker/november2021
https://www.nxtbook.com/mspc/independentbanker/october2021
https://www.nxtbook.com/mspc/independentbanker/september2021
https://www.nxtbook.com/mspc/independentbanker/august2021
https://www.nxtbook.com/mspc/independentbanker/july2021
https://www.nxtbook.com/mspc/independentbanker/june2021
https://www.nxtbook.com/mspc/independentbanker/may2021
https://www.nxtbook.com/mspc/independentbanker/april2021
https://www.nxtbook.com/mspc/independentbanker/march2021
https://www.nxtbook.com/mspc/independentbanker/february2021
https://www.nxtbook.com/mspc/independentbanker/january2021
https://www.nxtbook.com/mspc/independentbanker/december2020
https://www.nxtbook.com/mspc/independentbanker/november2020
https://www.nxtbook.com/mspc/independentbanker/october2020
https://www.nxtbook.com/mspc/independentbanker/september2020
https://www.nxtbook.com/mspc/independentbanker/august2020
https://www.nxtbook.com/mspc/independentbanker/july2020
https://www.nxtbook.com/mspc/independentbanker/june2020
https://www.nxtbook.com/mspc/independentbanker/may2020
https://www.nxtbook.com/mspc/independentbanker/april2020
https://www.nxtbook.com/mspc/independentbanker/march2020
https://www.nxtbook.com/mspc/independentbanker/february2020
https://www.nxtbook.com/mspc/independentbanker/january2020
https://www.nxtbook.com/mspc/independentbanker/december2019
https://www.nxtbook.com/mspc/independentbanker/november2019
https://www.nxtbook.com/mspc/independentbanker/october2019
https://www.nxtbook.com/mspc/independentbanker/september2019
https://www.nxtbook.com/mspc/independentbanker/august2019
https://www.nxtbook.com/mspc/independentbanker/july2019
https://www.nxtbook.com/mspc/independentbanker/june2019
https://www.nxtbook.com/mspc/independentbanker/may2019
https://www.nxtbook.com/mspc/independentbanker/april2019
https://www.nxtbook.com/mspc/independentbanker/march2019
https://www.nxtbook.com/mspc/independentbanker/february2019
https://www.nxtbook.com/mspc/independentbanker/january2019
https://www.nxtbook.com/mspc/independentbanker/december2018
https://www.nxtbook.com/mspc/independentbanker/november2018
https://www.nxtbook.com/mspc/independentbanker/october2018
https://www.nxtbook.com/mspc/independentbanker/september2018
https://www.nxtbook.com/mspc/independentbanker/august2018
https://www.nxtbook.com/mspc/independentbanker/july2018
https://www.nxtbook.com/mspc/independentbanker/june2018
https://www.nxtbook.com/mspc/independentbanker/may2018
https://www.nxtbook.com/mspc/independentbanker/april2018
https://www.nxtbook.com/mspc/independentbanker/march2018
https://www.nxtbook.com/mspc/independentbanker/february2018
https://www.nxtbook.com/mspc/independentbanker/january2018
https://www.nxtbook.com/mspc/independentbanker/december2017
https://www.nxtbook.com/mspc/independentbanker/november2017
https://www.nxtbook.com/mspc/independentbanker/october2017
https://www.nxtbook.com/mspc/independentbanker/september2017
https://www.nxtbook.com/mspc/independentbanker/august2017
https://www.nxtbook.com/mspc/independentbanker/july2017
https://www.nxtbook.com/mspc/independentbanker/june2017
https://www.nxtbook.com/mspc/independentbanker/may2017
https://www.nxtbook.com/mspc/independentbanker/april2017
https://www.nxtbookmedia.com