A bank should be monitoring performance both on an individual loan basis as well as on a collective basis for loans collateralized by similar property types or in the same markets.
In addition, while lending to different geographic areas can provide diversification, bankers should be mindful of potential problems when they begin to lend outside their market or "footprint," where they normally have better market intelligence. In recent years, supervisors have observed banks lending outside their established footprint - to maintain a customer relationship - into real estate markets with which they have less experience.