Advice General

Happy New Year

Posted on January 29, 2018 Published by

With 2018 upon us, it’s a great opportunity to set goals and objectives and get things in order for the year ahead. January brings a unique opportunity to get a head start on the long list of responsibilities we all have, even if you’re not into new year’s resolutions.

If you’re responsible for your organization’s risk management efforts, there are a few important things to keep in mind as you consider goals for the next 12 months.

First, make sure you have the right people on your credit administration and lending team. This may mean giving current team members an opportunity to shine in another area of your financial institution or hiring a new employee. This is also the perfect time to check in with current team members to see where they see themselves in the future. People make the difference in banking. It’s important to have the right people in the right areas.

Second, make sure your loan policy is reviewed and updated. This is an expectation in well run organizations, and for good reason. Loan policies should include enough information to set expectations and guide the management of the loan portfolio, but not too much to cause logistical challenges when trying to police the portfolio. It’s also important to get everyone in the organization to sign on and be a part of the loan policy review process.

Third, get things in order for a proactive approach to collecting financial information from your borrowers. With year-end just behind us, borrowers are starting to prepare year-end financial statements and tax returns. Take the opportunity to touch base with them and remind them of what they need to provide and when.

Fourth, set priorities for your annual reviews. Limited resources shouldn’t be an excuse to not complete the required annual reviews; start the process early and prioritize. You’ll need updated financial information much of the time, but there are instances where updated financial information may not be necessary to complete a sufficient annual review. Regardless of your method, January is the perfect time to get the process ready.

Finally, make sure your loan review is scheduled. Senior management and board members are expected to monitor the organization’s adherence to policy and implementation of risk management best practices that are applicable to your unique organization. There’s no better opportunity than at an independent loan review, which not only provides feedback on the organization’s risk management practices, but also provides feedback as to what examiners are looking for and best practices in the industry.

Of course, you’re not alone! We’re happy to be of assistance with any questions you might have. Best wishes for a successful 2018!

Peter Nugent is Director and founder of Enlighten Financial, a specialized consulting firm that focuses on providing loan review and risk management services to community banks and credit unions. Peter guides the company’s service offerings, which include in-depth loan reviews, commercial and personal underwriting/analysis, internal process improvement and workout services. To talk to Peter directly, please call: (920) 354-6797.

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“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