SBA SOP 51 00 - Small Business Administration
SBA
SOP 51 00
_______________________ On-Site Lender Reviews/Examinations
Office of Lender Oversight U.S. Small Business Administration
Effective Date:
September 28, 2006
2
Table of Contents
Chapter 1. Introduction
1. Purpose of this Standard Operating Procedure
2. Notice of Implementation
3. Authority
4. Applicability
Chapter 2. Risk-Based Lender Reviews and Examinations
1. Overview
2. Definitions for Risk-Based Lenders Reviews and Examinations
a.
Definitions
b. Performance Rates
c.
Credit Quality Rates
d. Active Purchase Rates
e.
Peer Groups
3. Objectives for Risk-Based Lender Reviews and Examinations
4. Approach to Risk-Based Lender Reviews and Examinations
5. Relationship to Lender Oversight Program
6. On-site Lender Review/Examination Program
7. Risk-Based Review Components
a.
Portfolio Performance
b. SBA Management and Operations
c. Credit Administration
d. Compliance
8. Risk-Based Examination Components
a. Capital
b. Asset Quality
c. Management
d. Earnings
e. Liquidity
f.
Compliance
9. Lender Review/Examination Assessment Categories a. Acceptable Category b. Acceptable with Corrective Actions Required Category c. Less than Acceptable with Corrective Actions Required Category
Effective Date:
September 28, 2006
9
9
10
10
10
12
12
12 12 15 16 17 18
18
19
20
20
21 21 22 22 22
23 23 23 24 24 24 25
25 26 27 29
3
10. Disclosure of Assessment Category
11. Use of Review/Examination Results
12. On-Site Lender Review/Examination Process
a. Review/Examination Team
b. Review/Examination Scheduling and SBA Lender Notification
c. Scope of the Review/Examination
d. Review/Examination Planning
e. Review/Examination Plan Responsibility and Preparation
f.
Sources of Information for Plan Development
g. Loan Sample Composition and Selection
h. Plan Format
i.
Review/Examination Team Composition
j.
Conducting the On-Site Review/Examination
k. Work Schedules
l.
Conduct
13. Development of Findings
14. Development of Component Assessment
15. Report
16. Report Preparation and Format
17. Workpapers
a.
Workpaper Forms
b. Organizing Workpapers
18. SBA Lender Files Related to Reviews/Examinations
a.
Review/Examination File
b. Active Review/Examination File
c.
Permanent File
d. Retention Schedule
e. Loan Files with Material Deficiencies and/or Suspected Fraud
19. Distribution of Report
20. SBA Lender Response and Corrective Actions
21. Appeal of Assessment 22. Quality Control 23. Cost of Reviews
Chapter 3. 7(a) Risk-Based Lender Reviews and Examinations
1. Introduction
2. Portfolio Performance Review Component a. Introduction
Effective Date:
September 28, 2006
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31 31 31 32 33 35 36 36 37 37 39 43 43
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44
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45
47 49 50
51 51 51 52 52 52
53
53
54 54 54
55
55
55 55
4
b. Review Criteria
55
c.
Review Objectives
56
d. Review Procedures
56
3. SBA Management and Operations Review Component
59
a. Introduction
59
b. Review Criteria
59
c. Review Objectives
60
d. Review Procedure
61
4. Credit Administration Review Component
63
a. Introduction
63
b. Review Criteria
63
c. Review Objectives
63
d. Review Procedures
66
5. Compliance Review Component
71
a.
Introduction
71
b. Review Criteria
71
c.
Review Objectives
71
d. Review Procedures
72
Chapter 4. Small Business Lending Company and Non-Federally
Regulated Lender Examinations
77
1. Introduction
77
2. Lenders Who will Receive Examinations
77
3. Examination Components
78
4. Capital Examination Component
81
a.
Introduction
81
b. Examination Criteria
82
c.
Examination Objectives
87
d. Examination Procedures
87
5. Asset Quality Examination Component
88
a. Introduction ? Loan Portfolio Management Subcomponent
88
b. Examination Criteria ? Loan Portfolio Management Subcomponent
89
c.
Examination Objective ? Loan Portfolio Management Subcomponent
93
d. Examination Procedures ? Loan Portfolio Management Subcomponent 93
e. Introduction ? Portfolio Performance Subcomponent
96
f.
Examination Criteria ? Portfolio Performance Subcomponent
97
g. Examination Objective ? Portfolio Performance Subcomponent
97
h. Examination Procedures ? Portfolio Performance Subcomponent
97
i.
Introduction ? Credit Administration Subcomponent
100
j.
Examination Criteria ? Credit Administration Subcomponent
101
k. Examination Objective ? Credit Administration Subcomponent
102
l.
Examination Procedures ? Credit Administration Subcomponent
103
m. Introduction ? Asset Classification Subcomponent
105
Effective Date:
September 28, 2006
5
n. Examination Criteria ? Asset Classification Subcomponent
106
o. Examination Objective ? Asset Classification Subcomponent
112
p. Examination Procedures ? Asset Classification Subcomponent
113
q. Introduction ? Allowance for Loan Losses Subcomponent
115
r.
Examination Criteria ? Allowance for Loan Losses Subcomponent
115
s.
Examination Objectives ? Allowance for Loan Losses Subcomponent
118
t.
Examination Procedures ? Allowance for Loan Losses Subcomponent 118
u. Introduction ? Asset/Liability Management Subcomponent
120
v. Examination Criteria ? Asset/Liability Management Subcomponent
120
w. Examination Objectives ? Asset/Liability Management Subcomponent 125
x. Examination Procedures ? Asset/Liability Management Subcomponent 125
y. Introduction ? Valuation/Accounting for Servicing Rights, Assets & Residual Interests
Subcomponent
127
z. Examination Criteria ? Valuation/Accounting for Servicing Rights, Assets & Residual
Interests Subcomponent
128
aa. Examination Objectives ? Valuation/Accounting for Servicing Rights, Assets & Residual
Interests Subcomponent
128
ab. Examination Procedures ? Valuation/Accounting for Servicing Rights, Assets & Residual
Interests Subcomponent
128
6. Management Examination Component
130
a.
Introduction ? Management and Operations Subcomponent
130
b. Examination Criteria ? Management and Operations Subcomponent
131
c.
Examination Objectives? Management and Operations Subcomponent 133
d. Examination Procedures? Management and Operations Subcomponent 134
e.
Introduction ? Internal Controls Subcomponent
135
f.
Examination Criteria ? Internal Controls Subcomponent
136
g. Examination Objectives? Internal Controls Subcomponent
139
h. Examination Procedures? Internal Controls Subcomponent
140
7. Earnings Examination Component
142
a.
Introduction
142
b. Examination Criteria
143
c.
Examination Objectives
145
d. Examination Procedures
146
8. Liquidity Examination Component
147
a. Introduction
147
b. Examination Criteria
148
c. Examination Objectives
150
d. Examination Procedures
150
9. Compliance Examination Component
151
a. Introduction
151
b. Examination Criteria
152
c. Examination Objectives
152
d. Examination Procedures
152
Chapter 5. Certified Development Company (CDC) Risk-Based Reviews
157
1. Introduction
157
Effective Date:
September 28, 2006
6
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