CARM-Pro - The most widely used collection and recovery software in US banking.
IBS: Dedicated to Collection and Recovery Software and Automation in the Banking Industry Since 1989
CARM-Pro - Licensed to almost 900 Financial Institutions Since 1989.
ARM-Pro - The most widely used Recovery and Special Asset Tracking software in US Banks and Credit Unions.
CARM-Pro - Credit Union and Bank Collection Compliance Software for todays turbulent times.
CARM-Pro - The most widely used independent bank collection software in US banking.

Portfolio Management Controls Risk With Collection Software Help

 

All lending involves risks. Lenders control risk and compliance on the front end by developing strong, compliant underwriting policies and procedures. Lenders manage risk using loan portfolio management aided by collections software.

According to the OCC, effective management of the loan portfolio and the credit function is fundamental to a bank’s safety and soundness. Loan portfolio management controls the risks inherent in the credit process.

Effective loan portfolio management is essential to controlling credit risk. To manage risk, however, financial institutions must understand the types and levels of credit risk in its portfolio. One critical element of a sturdy portfolio management system is the loan review, which provides an evaluation of the general value of a loan portfolio.

Portfolio reporting in context of a collection and recovery vendor, typically involves the entire client portfolio, every person, every loan, every deposit; so portfolio performance, trending, analytics can happen.

Portfolio reporting in context of a collection and recovery vendor, typically involves the entire client portfolio, every person, every loan, every deposit; so portfolio performance, trending, analytics can happen.

Loan Review vs. Portfolio Review

A loan review is not a portfolio review. A loan review does not evaluate economic geography, borrower, or other factors that can increase portfolio risk. The loan review assesses loan quality at a definite point in time.

Specifically, a loan review: evaluates individual loans, including repayment risk, verifies compliance with lending procedures and policies, recognizes missing documentation, supplies credit risk management priority results, and recommends practices and procedures to deal with findings.

In most cases, it is impractical for the loan review team to review an entire portfolio; therefore, the loan review team will review a subset of files to assess the portfolio quality. Effective technology, such as collections software, including access to warehouses and work paper retention/storage; electronic storage loan line sheets with embedded policies in a Web-based format are also emerging.

A robust collections system help review any debt owed the bank or credit union. If the client owes the financial institution, for any reason, CARM-Pro can accommodate that past due debt collection and analysis.

Loan Review Reveals Risks

A thorough and correctly completed loan review provides management and the board of directors with objective and timely data on loan portfolio quality and recommendations for addressing weaknesses. A portfolio manager can now obtain early indications of increasing risk by taking a more comprehensive view of the loan portfolio.

Effective loan portfolio management begins with oversight of the risk in individual loans, according to the OCC. Careful risk variety is vital to maintaining favorable loan quality. Therefore, the historical emphasis on controlling the quality of individual loan approvals and managing the performance of loans continues to be essential. But better technology, such as with a complete collections software system and information systems opens the door to better management methods.

To manage their portfolios, bankers must understand not only the risk posed by each credit but also how the risks of individual loans and portfolios are interrelated, which can multiply the risk.

Many banks view the loan portfolio in its segments, and as a whole, and consider the relationships among portfolio segments as well as among loans. These practices provide management with a more complete picture of the bank’s credit risk profile and with more tools to analyze and control the risk.