Concentrations / Portfolio Management

A concentration of credit consists of direct, indirect, or contingent obligations exceeding 25 percent of a bank’s capital structure. In general concentrations may involve one borrower, an affiliated group of borrowers, or borrowers engaged in or dependent on one industry.

A bank’s loan portfolio is typically its largest asset and predominate source of revenue. Consequently, it is also one of the greatest sources of risk, making effective portfolio management a key factor in bank safety and soundness.

Learn More

Loan Portfolio Management (Comptroller’s Handbook, April 1998)
Outlines nine elements that underpin a bank’s loan portfolio management process and provides examiner guidance.

References

Concentrations in Commercial Real Estate Lending (OCC 2006-46, December 2006), Guidance (Federal Register, December 12, 2006)
Addresses sound risk management practices and includes guidance published in the Federal Register

Concentrations of Credit: Revised Booklet (OCC 2011-48, December 13, 2011)
Announces the revision of the Concentrations of Credit booklet and highlights changes in how concentrations are included in reports of examination