Forgive me for my ignorance but I'm in a tight situation and I need to find out some the higher prioritized risks of revolving lines of credit. I need to have this summarized for our Loan Committee meeting next week. What are risks carry the most impact? Any help would be greatly appreciated.

Some banks require an annual review due to deteriorating credit over time.

commercial?consumer?secured?unsecured?

I'm not really sure. All I believe.

The risk I cited most in looking at loan files was underwriting. Loan officer tended to look at whether the payments could be made (interest or 2% of balance or whatever.) As a risk person, I wanted to know how they would repay the balance when the loan matured.

Consumer loans tended to be high LTV HELOCs. Not that they are bad in themselves, but....if you are 100% LTV and you foreclose.....what do you really get? If you aren't in first, are you going to buy out the first mtg holder to recover half of your loss?

Commercial loans.....I look at evergreen loans. Lenders tend to label them as needed for cash flow. Again....how will they be repaid.

Hope that helps.

Another risk would be collateral based loans (i.e. borrowing base or livestock). Who tracks the borrowing base? If you have a $500,000 loan with a borrowing base of $350,000 this month who is watching to see that the loan is not fully advanced. If you have a loan that is secured by stocker cattle who is watching the cattle values. With the fluxuating (sp?) prices of cattle someone should be watch the purchases, which includes making sure that monies aren't being used for operating expenses vs. purchasing cattle.

How would overall need be determined? Monitoring of advances/pay-downs, etc. A full monthly income and expense budget, is really the only way to calculate, and track position, and a borrowing base, (unless over secured by RE or some other tangible long term collateral) is the only to maintain sufficient collateral coverage.

So collateral and tracking would be the biggest factors in mitigating my risk right?