Loan Management: Minimizing Problem Loans

Download this course description (pdf)

Business Issue - Institutional concerns about commercial credit risk are on the rise due to economic uncertainties, incidents of corporate misconduct and overemphasis on loan portfolio growth during boom years.

Effective risk management begins with sound underwriting practices, including loan structuring and documentation. After the loan is booked, accountability for its ultimate repayment rests with individuals who need to monitor, evaluate and take action on credit issues. While these individuals are likely to have had training and experience in analysis and underwriting, most need additional skills and knowledge to actively prevent and solve potential problems while managing the existing credit relationship.

Omega Performance’s Solution - Loan Management: Minimizing Problem Loans is Omega Performance’s system that teaches best-practice approaches for recognizing potential loan problems, identifying appropriate solutions and minimizing exposure to lender liability.

What Is Included

Loan Management: Minimizing Problem Loans is delivered as a two-day workshop.

During Day 1, participants:

Review principles of credit analysis and context of loan management as part of Omega Performance’s exclusive Decision Strategy™, a step-by-step process for investigating, analyzing and interpreting borrower information
Participate in a “loan review” activity using a case study
Explore legal issues concerning documentation and forms of business
Participate in an overview of loan management
Discuss performance monitoring and participate in a monitoring activity using a case study
Explore legal issues concerning account development and commitment
Learn about early warning signals and participate in a warning signals activity using a case study
Learn how to prioritize potential problems using several cases
Learn about the impact problem loans have on institutional performance

During Day 2, participants:

Review problem recognition and analysis and determine an appropriate strategy (workout/ restructure, outplacement, liquidation)
Participate in a problem recognition and strategy activity using a case study
Explore legal issues concerning acceleration, cancellation/halting advances and waiving loan covenants
Participate in a comprehensive case application including monitoring, problem recognition and warning signals
Explore legal issues regarding guarantees, bankruptcy and fraudulent conveyance
Study risk grading
Explore legal issues concerning excessive control, due diligence and environmental laws
Participate in a comprehensive case application on taking appropriate action to remedy a problem loan

Results You Can Expect

Loan Management: Minimizing Problem Loans helps you and your lenders:

Identify potential credit risks related to loan structuring, underwriting and documentation
Gather information required to monitor borrower relationships for changes in risk, including determining the appropriate level of monitoring and identifying information required
Evaluate changes in credit risk that require action, including assessing internal and external factors and recognizing and evaluating early warning signals
Select appropriate solutions to solve emerging credit problems by using strategies that optimize the outcome for the institution
Recognize lending situations that entail legal risk or exposure to lender liability
Identify the potential impact of problem loans on the institution

Who Should Be Trained

Loan Management: Minimizing Problem Loans is recommended for:

Lenders with one or more years of experience who manage credit relationships with commercial borrowers
Credit analysts and loan underwriters
Loan administrators
Loan review staff

Prerequisites

The recommended prerequisite for this program is Omega Performance’s Commercial Loans to Business or an equivalent training program, plus on-the-job lending experience.