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Bank Credit Advisors

Bank credit advisory services for banks and bank investors

Diligent has extensive experience working with the key management of banks and bank investors contemplating whole bank transactions or loan portfolio acquisitions. These clients need a supportable estimate of current expected credit loss (CECL), based on a life of loan view of the losses in a portfolio.  Diligent’s scalable approach is designed to be a completely outsourced solution or to incorporate your internal resources.  We understand our behavior is a direct reflection of our client and perform our services in a respectful, professional manner.

Preliminary Evaluation to Establish Realistic Expectations

Diligent’s preliminary data tape testing and analysis is designed to reveal adverse credit characteristics validating or invalidating Risk Ratings and important management estimates, such as the ALLL. Based on our experience and data from the Bank we are able to develop preliminary estimates of the probability of default, loss given default, and current expected credit loss for the target portfolios.

Augmenting the preliminary evaluation, Diligent performs loan level reviews and analysis to validate assumptions for probability of default and loss given default driving the estimate of current expected credit loss.  This review results in a refined estimate of current expected credit loss and serves as the basis for fair value accounting.

The added value of actionable intelligence

Diligent offers a unique point of view on bank and loan portfolio acquisitions, having participated in over 175 whole bank transactions and loan portfolio sales/acquisitions. Our diligence delivers actionable intelligence, with fully documented assessments of both opportunity and risk, to determine appropriate risk mitigation and potential negotiating points to price.

We can assess how acquisition targets measure impairment, determine the likelihood of pass-rated loans becoming impaired, and identify the characteristics that a bank’s credit department uses to predict future non-performance (these factors help shape opening balance sheets).

Diligence for banks and bank investors

  • Sell side M&A
  • Buy side M&A
  • Reverse diligence
  • CECL/ALLL estimation, validation and management
  • Indemnification asset validation/reasonableness testing
  • Annual credit reviews
  • Risk rating validation
  • Special limited loan pool reviews
  • Shared loss agreement termination
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