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Internal Loan Audits: Why They Matter to Bank Customers


As guardians of the public’s financial assets, banking is one of the most closely regulated industries. Conducting internal audits is a necessary part of our business. While these audits are time-consuming and rigorous, they provide real benefits to the bank, our customers, and our shareholders providing a fresh look at our internal controls, procedures, and practices to ensure the bank is running efficiently and soundly.

Some financial organizations have the bandwidth to conduct these audits internally, however Republic Bank of Arizona, like many other community banks, hires a third-party consultant to conduct our internal audits.

“Internal loan audits give us a first-run review before the Federal Regulators come in for their reviews,” says EVP and Chief Credit Officer Amy Lou Blunt. “This gives us an opportunity to learn and improve our own internal procedures. The audit ensures we comply with the thousands of regulations out there, that we’re running the bank cost-effectively, and are providing shareholder value.”

RBAZ is “Spot On”

The bank’s track record has been very good, according to Amy. “We have traditionally been spot-on with our risk rating, with no issues, and no recommendations for improvement,” she says. “We are squeaky clean.”

What that means to customers is important. The excellent internal audit reviews the Bank receives indicates we function with:

  • Strong internal controls to ensure our loan processes and procedures are well designed and implemented and are working as they should be in terms of operations, reporting and compliance.
  • Efficiency, streamlining our practices and procedures to ensure we keep our operating costs down.
  • Integrity, by acting in good faith and for our clients’ and shareholders’ best interests.
  • Acceptable risk, ensuring our risk mitigations are working as they should.

In other words, our internal loan audit results include all the factors that support our Bauer Financial 5-Star Superior rating, the highest rating a bank can receive.

A Rigorous Process

It’s like that tough personal trainer that puts you through a strenuous, difficult workout at your request. You wonder why you’re doing this to yourself, but you feel so strong and healthy when you’re done.

That’s sort of what an internal loan audit is like. It’s a rigorous, intense, all-encompassing week-long review where the Bank provides a high level of data and documentation around various loan accounts, supplying additional information and answering questions throughout the process. But when it’s over, and you are given a glowing report, it’s all worth it.

It gives our customers, shareholders, and team members the assurance and confidence that the Bank is properly adhering to all the various federal regulations and requirements, that its loan processes and procedures are fair, balanced, and accurate, and most importantly, that the bank maintains its position as one of the top-performing financial institutions in the country.