OCC issues lending risk management handbook update for bank examinations

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OCC lending handbook update

Highlights

OCC publishes new 'Lending and Loan Portfolio Risk Management' booklet, rescinding multiple previous supervisory materials including the 'Loan Portfolio Management' booklet and several OTS handbooks.
The new handbook consolidates examination procedures and guidance, emphasizing risk-based supervision and material financial risks throughout the lending life cycle.
OCC aims to strengthen supervisory consistency and transparency across OCC-supervised banks by aligning the new booklet with other Safety and Soundness and Consumer Compliance resources.

Handbook revision and rescissions

As reported by the Office of the Comptroller of the Currency, the new “Lending and Loan Portfolio Risk Management” booklet revises and combines multiple existing supervisory materials that are rescinded with its publication.

The rescissions include the “Loan Portfolio Management” booklet of the Comptroller’s Handbook and its April 1998 transmittal letter, several Office of Thrift Supervision Examination Handbook sections on lending operations and portfolio diversification, the “Loan Portfolio Management” section of the “Internal Control Questionnaire” booklet, and the “Interest on Loans” section of the “Other Consumer Protection Laws and Regulations” booklet.

The OCC also rescinds OTS Thrift Bulletin 78a on investment limitations under the Home Owners’ Loan Act, which is now incorporated as appendix K of the new booklet.

Supervisory use and banking sector impact

The booklet is intended to inform and educate examiners about risks associated with lending, risk-based supervision of lending and loan portfolio risk management, and common practices that apply across a loan’s life cycle. It also includes examination procedures meant to support lending and loan portfolio risk management reviews, with emphasis on material financial risks.

The OCC says the handbook is designed to be used alongside other Safety and Soundness and Consumer Compliance booklets and to support consistent, high-quality supervision across OCC-supervised banks. While the booklet is designed for examiners, it is also made public to provide transparency into the agency’s supervisory process.

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