Question

You have been hired as the new Loan Department Manager in a bank that has been having troubles in the loan department as identified by the federal auditors. You task is to clean the procedures, the lending policies and reduce the problematic loans so that profitability is restored and the CAMELS score improves. Please take me through the process and set up clear policies and procedures

Answer 1

Loan Department Manager in a bank
Responsible for managing the Loan Operations Department of the Bank. Effectively support the lending team for both banks. Develop and implement best practices in loan operations related processes and procedures. Pro active leader and team player with the ability to be influential and establish positive working relationships across the organization. Expertise in HMDA, FREDDIE MAC, mortgage operations and servicing, credit card programs, and FIS/Metavante system are essential.

Essential Duties and Responsibilities:

• Manage the daily operations of the department in an efficient and effective manner
• Establish and maintain an efficient and productive working environment within the department based on continuous and effective staff communication.
• Achieve established departmental goals within defined timelines, as well as define and implement a measurement of acceptable staff performance in order to safeguard the Bank’s loan portfolio
• Successfully interact with the lending staff at both banks to improve accuracies and efficiencies. Perform on going training, review and communicate current or developing lending industry topics/concerns or standards
• Implement operation policies and procedures to ensure compliance with State and Federal regulations and internal compliance requirements
• Conduct various assessments and audits to ensure department procedures are achieving accurate and desired results. Implement clean-up procedures and corresponding changes when necessary and as appropriate
• Communicate with management team to coordinate system and control activities related to loan documentation and monitoring.
• Interact with auditors, loan review, compliance, and examiners to assist in Bank reviews and examinations. Follow up and correct any items addressed and ensure necessary changes or recommendations have been implemented as directed.
• Research computer concerns in order to maximize the capabilities of the Bank’s lending system
• Perform other job related duties as assigned

Key factors to consider when assessing the credit union's earnings are:

• Level, growth trends, and stability of earnings, particularly return on average assets;
• Adequacy of valuation allowances and their effect on earnings;
• Adequacy of budgeting systems, forecasting processes, and management information systems, in general;
• Future earnings prospects under a variety of economic conditions;
• Net interest margin;
• Net non-operating income and losses and their effect on earnings;
• Quality and composition of assets;
• Net worth level;
• Sufficiency of earnings for necessary capital formation; and
• Material factors affecting the credit union's income producing ability such as fixed assets and other real estate owned ("OREOs").

CAMELS is a recognized international rating system that bank supervisory authorities use in order to rate financial institutions according to six factors represented by its acronym. Supervisory authorities assign each bank a score on a scale. A rating of one is considered the best, and a rating of five is considered the worst for each factor.

Sensitivity covers how particular risk exposures can affect institutions. Examiners assess an institution's sensitivity to market risk by monitoring the management of credit concentrations. In this way, examiners are able to see how lending to specific industries affects an institution. These loans include agricultural lending, medical lending, credit card lending, and energy sector lending. Exposure to foreign exchange, commodities, equities, and derivatives are also included in rating the sensitivity of a company to market risk.

• CAMELS is an international rating system used by regulatory banking authorities to rate financial institutions, according to the six factors represented by its acronym.
• The CAMELS acronym stands for "Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity."

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