Key Learning Objectives of this Topic:How to identify potential problem loansHow to evaluate causes of problem loansHow to mitigate the problem loans causes to mitigate further increases in lossesHow to select the most appropriate approach to resolving a problem loanAreas CoveredPreventive maintenance—red flags of problem loans, portfolio signals, e.g., declining communication from borrower, slowdown in financial information, deterioration in risk ratings, covenant breaches, overdrafts, delinquencyProblem asset policy—when to transfer problem loans to problem asset management, e.g., criticized and classified assets, non-accrual, charge-off, OREO asset managementProblem Asset Management—process of default, judgment, foreclosure, possession, OREO; reporting, disposal; negotiation issues and tipsWho Should Attend Loan Workout officersLoan Review Staff, Credit AnalystsCommercial Lenders and BankersCommercial Real Estate LendersCredit Department ManagersCredit Risk Managers and Credit Approval OfficersBank Auditors and Bank Regulatory ExaminersLoan Documentation Staff, Loan Operations StaffWhy Should You Attend Delinquencies and losses rise as the business cycle rolls through periods of higher interest rates and higher operating expenses. The pairing of inflation and possible recession will cut into borrower cash flows as tightening loan requirements reduce credit availability. Finding and resolving a problem loan in its early stages is much easier now than later. This session will help you diagnose and cure now.Topic Background If you make loans, you will encounter problem loans. No lender intends to make a problem loan, but lending institutions must anticipate having some level of problem loans and loan losses. Problem Loans are simply a by-product of the business of lending, while there are different strategies for managing and resolving problem loans, the underlying problem is the same – a lack of cash flow to pay their creditors and operating costs.Resolving problems can be expensive and difficult, and managing problem loans properly is a complex, time-consuming task, frequently requiring specialized knowledge and expertise in credit analysis, loan underwriting, bankruptcy law, and negotiating skills. The overriding objective in managing problem loans is to improve the lender’s position enough to get repaid in full.This session provides an overview for those wanting to know the basics of sound problem asset management.