9 Class Hours
Instructor: David Linaburg
Why this course is important:
For community bankers, the loan portfolio is the foundation of profitability and risk, making it essential to understand how lending decisions impact their institution. This course provides a deep dive into loan portfolio management, covering economic, regulatory and credit risk factors that influence lending.
This class will review the current and past economic environments that may have had an impact on a bank’s loan portfolio and its performance, as well as the impact it has on current loan policy and decision criteria. The loan portfolio is subject to changes in the Regulatory, Economic and Political environments, and each of these potential impacts will be discussed.
The class will evaluate potential risk in a series of loan transactions, giving them a better understanding of risk. There will be active participation and discussions across all major topics as this class is not a lecture, but a discussion of all the potential impacts to a bank’s loan portfolio, focusing on individual banks represented in the class.
We will also spend time grading a group of loans, and the intricacies of the different grade levels and learning the regulatory definitions of each grade and how two very similar loans may be graded differently. Since most of a bank’s income is derived from its loan portfolio, it is essential for a banker to understand the risk in lending, meeting the standards of regulatory compliance and taking the appropriate actions to mitigate the risk that are identified. While a loan portfolio may have the greatest impact on the bank’s income, it also contains the most risk and volatility. Profitability is important, but meeting the credit needs of their community is just as important and we will discuss how to identify and address these needs.
Key learning objectives of the course include:
- Understanding Loan Portfolio Risk – Learn how lending decisions impact a bank’s profitability, risk exposure, and overall financial health.
- Economic & Regulatory Influences – Analyze how changes in the economy, regulations and political environment affect loan portfolios and lending policies.
- Loan Grading & Risk Assessment – Develop skills to evaluate and properly grade loans, understanding how similar loans may receive different risk ratings.
- Balancing Profitability & Compliance – Gain insights into maintaining a profitable loan portfolio while meeting regulatory requirements and serving community credit needs.
- Real-World Application – Engage in interactive discussions and case studies to apply risk management strategies directly to your institution’s loan portfolio.
Annual School Session
Second Year Core Course
Competency: Lending