Pub. 7 2012-2013 Issue 1

May/June 2012 13 Extraordinary Service for Extraordinary Members. should provide a common-sense reality check given cur- rent market conditions. • Do our processes include sufficient and timely early- warning indicators? • Are processes in sync with policy and vice versa? • Are short-term viewpoints aligned with our long-term strategies? Withmore banks chasing too few commercial loans, there is a strong risk of compromising underwriting standards in pursuit of volume. We should be aware of how our loan policies and processes are affected and ask ourselves, “When does a policy exception become the new norm?” All benefits from a well-written mission statement, loan policy, and procedures manual can be impaired quickly if not followed by corresponding behavior of lenders, opera- tions staff, loan review, and audit. • Do we have individual accountability and responsibility for actions and decisions? • Are bank objectives weighed more than individual or profit center goals? Although it is best to train new lenders from within the bank, this is not always an option. Withmergers and acquisi- tions between banks and consolidation of duties within de- partments, there is a need to quickly and effectively train the bank’s risk tolerances to those new to the bank or the lending function. Credit culture training can be limited to just hand- ing the new hire the loan policy to read their first day on the job. Do we truly take the time to instill our values from the bank’s historical background and reasoning behind the mis- sion and purpose, as well as our loan policy and processes? Training credit culture cannot come from a one-hour webinar or a one-day seminar. This is an investment in our people, to establish a firm bond between the bank’s intrinsic values to those hired for their own intrinsic values. It requires a three-prong approach of on-the-job coaching, technical training, and leadership development. A consis- tent, disciplined credit culture is a durable line of defense against impulsive credit and pricing decisions. Through training, we not only cultivate and strengthen our credit culture by developing our people, but also enhance overall credit quality and therefore our profitability.  Michael Wear is a senior credit analyst at First National Bank of Omaha and a faculty member and loan portfolio management section leader at the Graduate School of Banking at the University of Wisconsin-Madison. You can reach him at (800) 755-6440 or mikewear@hotmail.com. For 67 years, the Graduate School of Banking in Wisconsin has been an industry leader in providing advanced management education for financial professionals. Curriculum and program offerings are continually updated and uniquely tailored to meet the needs of today’s banking leaders. For more information, visit www.GSB.org. 1125 South 103rd Street Omaha, NE 68124 402.390.9500 koleyjessen .com COMMERCIAL LOANS - TIF/BOND FINANCING DIP FINANCING - BANKRUPTCY/CREDITORS’ RIGHTS REGULATORY COMPLIANCE - GENERAL CORPORATE Max Burbach & Tom Ackley