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Summarized by Peter Cherpack, Ardmore Banking Advisors

*Please note, this article is simple a summary a summary of the items discussed at the Loan Review Manager’s Forum, presented by ProSight, in March of 2026, and is distributed for information purposes only. The forum is made up of institutions ranging in size from $75 million to $34 billion, with titles of attendees including Director of Loan Review, Chief Credit Officer and Loan Portfolio Managers.

Loan Review Department Models

Loan review departments vary in scope from those performing full document validation to selective document checks, with most departments retaining final authority over risk ratings, following a documented resolution process when disagreements occur . Some departments review loans both pre- and post-approval, and practices reflect differing approaches to balancing independence and operational involvement in the bank.

Pass Watch & Upgrading

Attendees noted regulatory scrutiny on how long loans remain on pass-watch and differing attitudes about upgrading—some managers handle upgrades while others leave them to credit to preserve independence. The group agreed that pass watch status should not be indefinite and that independence concerns can justify limiting LR involvement in upgrades, though practices vary.

Managing Projection-Based Loans

Banks generally risk-rate projection-based loans (e.g., construction) at a stabilized future value while monitoring progress—often via quarterly or annual reviews—with appraisals and projections stress-tested for changing market conditions. Regulators expect updated market assumptions (CoStar, Moody’s) and documentation showing alignment among borrower, bank, and appraisal projections.

Do Loan Reviewers Respread Financials?

Practices vary: some loan review teams respread financials when they are received if Credit has not respread them (often within a bank’s grace period), while others rely on credit’s spreads or automate spreading via AI tools. The consensus was that risk ratings should reflect the most current financials available, and missing or late financials can potentially justify exceptions or downgrades.

Using AI in Loan Review

Attendees see AI as a time saving tool for pulling financials and drafting analyses, but consensus is that human verification remains essential. Opinions differed on whether AI should suggest risk ratings. Use is constrained by data privacy concerns (firewalls, restricted access) and by management policy, but many believe that management expects expanding, careful use of AI copilots and other AI tools for efficiency gains.

CRE Concerns

Overall, CRE repricing risk was not an immediate worry, though many banks plan targeted reviews of maturing or repricing CRE loans and stress testing exposures. The idea of stress testing all CRE that was maturing and not yet at market rates was cited as a best practice. An assessment of CRE repricing was part of one department manager’s continuous monitoring approach.

Continuous Monitoring Programs

Most banks use a seasoning period (often six months) and key risk indicators to target new loan monitoring, applying lighter initial reviews and deeper follow-ups as needed; some re review entire relationships to avoid split ratings. There is no uniform target coverage percentage; practices are risk driven and often incorporated into overall coverage metrics.

Business Unit Risk Assessments

Banks use formal or informal business unit risk assessments to prioritize reviews, leveraging automated systems to produce summary data by department and sometimes presenting those summaries to boards. Early warning systems (color coded status) were highlighted as valuable for smaller loans and proactive portfolio oversight, though source data origin may affect perceived independence.

Using Third-Party Loan Review Service Providers

Participants view third party co sourcing as a valuable way to obtain independent perspective, benchmarking context, and add expertise for new products or markets. Many banks with internal loan review departments engage vendors periodically (e.g., every two years). Regulators generally see co sourcing positively as a contributor to independence.

Internal Risk Rating Matrices and GCF

Risk rating matrices combining quantitative and qualitative criteria are useful to support ratings and resolving disagreements; inclusion of guarantor coverage and global cash flow (GCF) requires documented policies and careful evaluation of guarantor ability/willingness to pay. Regulators expect these practices to be codified in policy where relied upon.

Responsibilities of a Loan Review Department

Scope varies by bank size and policy—some LR departments perform compliance, document checks, or appraisal review while others focus strictly on credit risk; clear policy determines responsibilities. Banks should consider aligning their resources and structure to the mission of the department and avoid assuming tasks better handled by other departments.

New Emerging Risks

Attendees flagged industry specific concerns (software firms, agriculture commodities, gas/oil impacts), possible consumer credit issues, and risks from banks’ increased exposure to private credit and crypto. These constitute evolving watch areas rather than immediate crises, but warrant monitoring and inclusion in review planning.

Regulatory Shifts in Sentiment

The group observed a regulatory emphasis on material financial risk, data driven exams, and greater reliance on banks’ own loan review processes, with smaller banks likely to see less experienced examiners and more question driven, data centric exams. Strong loan review programs and documented practices can reduce examination burden and increase examiner reliance on a bank’s controls.

Review of Recent OCC Credit Concerns

OCC commentary suggests CRE risk is stabilizing unevenly across property types and metros, with certain markets still fragile with high vacancy in class B and C , Office and Hospitality. Specialty niche lending like data center construction presenting operational challenges. There is concern about Multifamily in some overbuilt markets, new growth in C&I and private credit lending were noted as areas of heightened attention. Managers should continue to monitor market and sector nuances (vacancy, rent trends, tenant demand) as they assess CRE exposures.

Presentation on Hiring Loan Review Staff

Ardmore led discussion on hiring/training in a remote and competitive market, emphasizing vendors’ focus on fast, concise credit analysts and the strategic use of remote/part time talent. Firms like Ardmore leverage automated platforms, a mix of part time and full time remote staff, and streamlined onboarding to meet seasonal and contract demands. Due to differences in need for internal loan review, larger banks may hire specific expertise, while smaller banks may hire new talent directly from school or a bank management rotation program.

Group Breakout Highlights

Breakouts discussed and reinforced varied practices: some banks downgrade for missing financials, most ensure independence via reporting lines, coverage targets range (30–60%), documentation is critical amid turnover, and annual planning methods differ (full year vs. rolling). Remote work models vary widely and productivity is best evaluated over months/quarters given external variability in review timing.

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