"Hey TGA, what is my risk rating?"

Helping Financial Institutions Manage Credit Risk Since 1984

Key Takeaways from 2025

Credit risk was Moderate and Stable for most of TGA's clients in 2025. During the 2025 loan review cycle, TGA analyzed 3,888 borrowers with total exposure of $7.2 billion. Of these, 94.32% were risk-rated Pass, similar to 94.62% in 2024. The average Classified Loans to Capital ratio improved from 9.05% in 2024 to 7.61% in 2025. However, Net Losses increased from 0.08% of total loans to 0.12%. Regardless of the increase, the ratio was well below the 0.59% for all banks in the United States. Total Past Due (including Non-Accrual Loans) was 1.49% of total loans, similar to 1.47% for all banks in the United States.

Adherence to policy standards was also stable. During 2025, TGA clients approved 26.99% loans as exceptions to policy, compared to 25.42% in 2024. Our clients also did a good job collecting current financial statements for the primary source of repayment. Only 8.33% of financial statements were considered outdated for risk rating purposes, compared to 7.12% in 2024.

Congratulations to all our clients for a great 2025 loan review cycle.

TGA uses many metrics to assess credit risk during loan reviews. To learn more, please contact us.

Looking ahead to 2026

Community banks are moving from defense to offense in 2026, leveraging strong capital and improving margins to drive lending, particularly to small businesses, while adapting to a more stable yet complex economic outlook.

Business sentiment presents a mixed, "K-shaped" outlook, with strong optimism among large corporations, contrasted with caution and pessimism among small businesses. Consumer sentiment is broadly low due to affordability issues and job insecurity.

A potential "bubble" in AI stocks, election uncertainty, and global tensions continue to pose risks.

Vigilance is needed, especially in CRE, as higher rates continue to impact some borrowers.

Suggestions for 2026:

Stay proactive! Manage risk by using the Weighted Average Risk Rating (WARR), and not lagging indicators like delinquency and losses.

Stick to proven strategies, such as making loans you have the expertise to do and to borrowers in your market area.

Don’t be afraid to maintain a healthy allowance (above peer group). You control the Q-Factors!

TGA Risk Rating Program

Coming Soon! TGA is currently developing a user interface that will provide small business owners and financial institutions with on-demand access to our proprietary risk rating methodology in 2026.

Users will be able to access TGA’s Risk Rating Program directly from our website and obtain an independent risk rating along with a detailed report for your immediate use.

Tested for over 40 years and incorporating the all-important 5 Cs of lending, TGA’s methodology provides a very transparent and consistent assignment of risk ratings for commercial loans.

TGA has been providing loan review services to financial institutions since 1984. Our risk-based approach in conducting loan reviews is well regarded by clients and regulators. If you would like to learn more, please contact us.