3 Traits of a Strong Loan Reviewer – Video
The DNA of an Effective Loan Reviewer
Independent loan reviewers need certain competencies or traits. Consultant Ancin Cooley explains in this video.
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A strong loan reviewer can be very valuable to a bank or credit union. As discussed here previously, the loan review officer or loan review function can actually create a competitive advantage for a growing lender, even though the role historically or stereotypically might be viewed as a “strict parent.” or governor on growth.
What does it take to be an effective loan reviewer? Ancin Cooley, CIA CISA, Founder and Principal of Synergy Credit Union Consulting Inc. and Synergy Bank Consulting Inc., says strong loan reviewers have three traits in their DNA. Cooley has led webinars for Abrigo on loan review for banks and loan review for credit unions, and he describes those traits in the webinars, along with the strategic advantages of loan review.
Watch the video above, a preview of the webinars, or continue reading to learn more.
A strong loan reviewer cannot get around having solid technical skills, according to Cooley.
“As a loan reviewer, you need to be technically sound in order to do your job, which means you need to have a fundamental understanding of financial analysis, tax analysis, and all of the regulatory laws that surround the credits that you’re going to be reviewing,” Cooley says.
That means a loan reviewer tasked with reviewing consumer loans will need to understand the rules and laws around various consumer loans. A commercial loan reviewer will need to understand business models and financial statements.
A loan reviewer must be technically sound in order to handle these various types of loans. In addition, Cooley says, “You have to be technically sound so that when you’re walking into these rooms and talking with loan officers, other credit analysts, as well as perhaps presenting to the board of directors, you want to be able to explain to your end consumer your thought processes and how you arrived at your conclusions.”
Another trait that is important for a loan reviewer to have in order to operate an effective loan review function is curiosity, Cooley says. “One of the greatest things about being a loan reviewer is you get to see different industries,” he says. “One day you might be looking at a loan for an ice cream shop. The next day you might be looking at a loan for a commercial real estate developer. Another day you might be looking at a pet store. The variety is amazing, and it never makes for a long day. But what you should always bring with you is your curiosity.”
At the same time, a loan reviewer should leave behind biases, if they have any, related to certain industries or product types, when they take on a file. “Your job is to ensure that the loan was originated in a safe and sound manner and to ensure that the risk rating on that particular relationship currently is accurate,” Cooley says. Bias should be avoided, but curiosity is essential.
One of the most essential competencies – if not the most important – that a loan reviewer can bring to the table is emotional intelligence, according to Cooley. Emotional intelligence, or the ability to monitor and manage your own emotions as well as recognize and respond to the emotions of others, is used very frequently on the job as a loan reviewer, particularly when presenting the results of a review.
“You can be curious, and you can be technically sound, but if you present the information in a very terse, coarse, and undigestible manner to your end user, you’re making it more about you and what you know and not about how you’re helping your institution,” Cooley says.
For example, if a loan reviewer is considering downgrading a large loan that is likely to cause some upheaval within the financial institution, the loan reviewer would not wait until the exit meeting and spring the news on the senior lender or chief executive officer. Instead, Cooley says, the reviewer begins earlier on in the process to let stakeholders know the likely path so there are no surprises. “Also, I lean into the fact that it is hurtful to see a loan go from pass to substandard, especially if it’s a large credit,” Cooley says. “But I don’t let that stop me. I’m still independent.”
Bringing your emotional intelligence to the job will serve your career well while fostering a strong loan review system.