Advice Market Information

From Insights to Action: Leveraging 2025 Borrower Performance for Year-End Preparation

Posted on September 16, 2025 Published by

As September arrives, many financial institutions turn their attention toward the close of another fiscal year. For banks and credit unions, this season marks the critical transition from Q3 reporting into year-end planning. One of the most valuable tools in this process is the loan portfolio review.  Done well, it arms leadership with actionable insights to manage risk and reduce unwelcome surprises during year-end audits and regulatory exams. 

Why September Matters

Quarter three represents a turning point. By September, most institutions have a clear sense of borrower performance, portfolio trends, and evolving market risks. Waiting until late Q4 to address emerging issues often leaves little time for remediation before year-end. Leveraging Q3 loan review findings gives credit teams a head start in identifying weak spots and strengthening the portfolio ahead of audits and examiner scrutiny. 

Identifying Problem Loans Early 

One of the most pressing goals in year-end preparation is proactively flagging and managing problem loans. In September, review teams should: 

  • Re-examine risk ratings for borrowers showing signs of stress, particularly in industries sensitive to interest rate fluctuations, seasonal revenue cycles, or inflationary pressures. 
  • Assess repayment capacity by comparing updated borrower financials against original underwriting assumptions. 
  • Scrutinize collateral values as economic conditions may have shifted, impacting the reliability of collateral as a repayment source. 
  • Document findings thoroughly to ensure examiners see not just the risks, but the institution’s recognition and response. 

Catching these issues now provides valuable time for loan officers and management to engage with borrowers, pursue restructuring where appropriate, or shore up collateral positions. 

Using Reviews to Reduce Year-End Surprises 

Year-end audits and exams tend to magnify portfolio weaknesses. By acting in September, institutions can reduce those stress points. Consider these practical steps: 

  • Close documentation gaps now to avoid examiner questions later. 
  • Conduct targeted portfolio reviews on higher-risk segments (e.g., CRE, hospitality, agriculture) that may be under pressure as the year closes. 
  • Refresh stress testing scenarios using updated Q3 data to see how rising rates or slowing growth may impact repayment trends. 
  • Communicate with the board early, translating review findings into clear, actionable insights for governance and planning. 
  • Communicate with the board early, translating review findings into clear, actionable insights for governance and planning. 

Building Momentum into Year-End

A proactive loan review in September positions institutions to enter Q4 with confidence. Instead of scrambling in December to explain deteriorating credits or justify unexpected losses, banks and credit unions can demonstrate foresight, sound governance, and a strong risk culture. 

At Enlighten Financial, we believe loan review is a strategic opportunity. Institutions that use September reviews wisely not only minimize year-end surprises but also set the stage for stronger performance in the year ahead. 

Tags:

Comments are closed here.

“The staff at Enlighten have been available for questions, in addition to the engaged work that they do. They've been very helpful as a resource beyond the major audit.”
— Meghann Kasper, Chief Credit Officer, Bank First
“Enlighten gives us a very good second set of eyes on our transactions. They're not afraid to challenge us on some of the work that we've done, which is what is needed. I don't need to pay somebody to tell me I'm good, I need to pay somebody to tell me where I've made mistakes.”
— Robert McPherson, VP of Risk Management, Peoples State Bank
“Enlighten provided industry best practices that weren’t going to show up in an audit report. They would say, ‘Hey, I noticed you do this. This is really unique, you do a really great job of it.’ And then they might add, ‘Some other clients that I have are doing something like this.’”
— Bill Beardsley, President, Michigan Business Connection
“By questioning some of our methodologies, Enlighten has helped us say, ‘Okay, this is where we need to train staff better and focus on so that they understand what they're doing better.”
— Robert McPherson, VP of Risk Management, Peoples State Bank
“The organization of the communication — before, during, and after the reporting process — was certainly better with Enlighten than what I've experienced with a lot of auditors.”
— Bill Beardsley, President, Michigan Business Connection
“The staff at Enlighten have been available for questions, in addition to the engaged work that they do. They've been very helpful as a resource beyond the major audit.”
— Meghann Kasper, Chief Credit Officer, Bank First
“Enlighten gives us a very good second set of eyes on our transactions. They're not afraid to challenge us on some of the work that we've done, which is what is needed. I don't need to pay somebody to tell me I'm good, I need to pay somebody to tell me where I've made mistakes.”
— Robert McPherson, VP of Risk Management, Peoples State Bank
“Enlighten provided industry best practices that weren’t going to show up in an audit report. They would say, ‘Hey, I noticed you do this. This is really unique, you do a really great job of it.’ And then they might add, ‘Some other clients that I have are doing something like this.’”
— Bill Beardsley, President, Michigan Business Connection
“By questioning some of our methodologies, Enlighten has helped us say, ‘Okay, this is where we need to train staff better and focus on so that they understand what they're doing better.”
— Robert McPherson, VP of Risk Management, Peoples State Bank
“The organization of the communication — before, during, and after the reporting process — was certainly better with Enlighten than what I've experienced with a lot of auditors."
— Bill Beardsley, President, Michigan Business Connection