For the fourth consecutive year, underwriting practices among national and federal savings associations eased, according to a report by the Office of the Comptroller of the Currency.
In the OCC's "Survey of Credit Underwriting Practices," examiners reported an incremental easing of underwriting practices within commercial and retail loans across 93 national banks and federal savings associations. The easing standards "reflect the bank's response to competitive pressures, expanding risk appetites, and a desire for loan growth," the OCC reported.
The survey listed aggressive growth rates, concentration risk management weakness, energy-related portfolio deterioration and general easing of underwriting practices as primary concerns. Easing of underwriting practices was reported to be most prevalent in direct consumer loans, conventional home equity, commercial real estate loans and residential real estate loans.
Easing of commercial underwriting in pricing, guarantor requirements and loan covenants was noted by examiners. On the retail side, they noted easing occurred most frequently in collateral, loan size and debt-to-income requirements.
The survey compiled examiner observations and assessments of credit underwriting practices at 93 of the largest national banks and FSAs managed by the OCC, during the 12-month period ending June 30, 2016.