When it comes to business lending, a properly structured loan iscritical to credit risk management fundamentals.

Vin Vieten, NCUA member business loan program officer, sharedthat insight with more than 150 attendees at CU Business Group's National Business Services Conference inPortland, Ore. on Wednesday.

Vieten stressed the need for credit unions to follow establishedbest practices from both the banking and credit union industries.These are the standards the NCUA is expecting as they go intocredit union exams, he said.

The need for proper levels of loan authority and a well-defined,consistent risk rating system were also discussed. Vieten alsoemphasized the importance of a thorough credit presentation memothat clearly lays out the case for approving the loan. The NCUAexpects the loan to be properly analyzed, and for the analysis tobe clearly documented in the credit presentation, he added.

Independent appraisal reviews and third-party MBL portfolio reviews are other best practices that the NCUA isexpecting credit unions to have in place, according to Vieten. Thisindependent verification of key processes and procedures is a keycomponent of proper risk management.

Vieten also discussed MBL participations, which he said havemany positive attributes but also increase the complexity of thetransaction. A key area of focus for complete risk management inparticipations is performing proper due diligence on the leadlender, according to Vieten.

CUBG said it now serves 397 credit unions in 43 states.