|
|
Libro Financial
Libro Financial Group Reduces Loan Losses while Increasing Efficiency with Tighter Risk Management Controls
This story discusses how Libro Financial, a $1.5 billion full-service financial institutions has been able to reduce loan losses, while increasing efficency and improving borrower relationships despite these tough times.
The Challenge:
Like many commercial lenders, Libro's bottom line was affected by loan losses and process inefficiencies. Their reliance on manual analysis methods impacted their ability to effectively and prudently manage their commercial portfolio.
In 2005, Libro decided to take action: tight commercial loan control was going to be a key factor in their continued growth and success. They needed a solution that could be implemented across the organization, providing centralized visibility and control, while allowing branches to manage their own client portfolios. Little did they know that their early actions would help protect them from the looming world-wide financial crisis...
The Solution:
Libro Financial Group chose Covarity, a commercial loan monitoring and portfolio management solution. As a consistent risk management framework, Covarity improves efficiencies, reduces credit and operational risk and strengthens borrower relationships. The ability to quickly analyze each loan with new depth and insight - on a consistent and frequent basis - provides banks with an accurate picture of their risk exposure.
The Result:
Loan Loss Reduction - Risk Transparency
Although Libro conducted covenant and financial analyses on a frequent basis, they still felt that their delinquent loan rate could be improved. Manual processes hindered the analysis process, and as a result covenant breaches and other early warning signs of deteriorating asset quality weren't available for months. This meant Libro missed opportunities to work with borrowers to slow their deterioration towards loan loss.
With Covarity in place, Libro has a consistent framework for managing their commercial loans frequently and in unprecedented depth. And with the transparency created by Covarity, issues within Libro's credit portfolio are elevated and addressed in a timely manner. Libro Account Managers have a real-time picture of their portfolio performance, including information on late reporting, covenant breaches, and borrowers at risk.
"Just prior to implementing Covarity, we took a significant loan loss that we would have avoided with the intelligence we get from the Covarity system," says Frank Kennes, Vice President Credit. In fact, in the 5 years since Libro implemented Covarity, they haven't experienced a similar loan loss. "Now we can see it coming and take action early. The prevention of just one loss has paid for the system".
Process Efficiency Improvements
Libro relied on manual spreadsheet statements to conduct credit analysis and monitor their covenants: borrowers often failed to meet reporting requirements and the Libro team wasted valuable time obtaining the needed information. As a result, adjustments to credit availability were delayed, and the adjustment rationale was often not made clear to the borrower. Ultimately the entire process was subject to inconsistency, error, delinquency and higher risk.
With Covarity in place, the loan monitoring process is streamlined: borrowers electronically upload their financial statements, a deep analysis is automatically conducted, and sophisticated reports allow Libro to manage by exception.
Account managers spend less time monitoring existing loans and more time growing the business. According to Greg McQueen, Branch Manager, "Credit Analysts using Covarity say it helps them to see a true picture every month: they can measure the state of business loans in a single screen. We're not focused on saving existing business, we're working on building new business."
Borrower Relationships
Whether their borrower is a farming operation, plastics plant or family-owned construction company, Libro works diligently with its commercial clients to help make them successful. A big part of this was to ease the cumbersome process of submitting financials for regular review -- now done effortlessly with Covarity. Borrowers using Covarity appreciate the standard email reminder and statement upload features that help them meet their reporting requirements.
Beyond electronic uploads Covarity also helps Libro deliver a personalized experience for commercial borrowers. Now, on a single screen, a borrower can access the individual reports, rules and lending limits for their business. Covarity also offers practical and convenient tools and reporting capabilities that help borrowers in the decision making process.
Checks and Balances
Maintaining their tradition of innovation for business improvement, Libro looked to Covarity to help them keep their fingers on the pulse of commercial loans. With Covarity in place, Libro now has a system that provides a coordinated effort between account managers, branch managers, executives...and borrowers. Borrowers electronically upload financial data within specified reporting periods, and Libro has current and accurate information for timely loan analysis at the branch and corporate level. Both Libro and its borrowers are able to identify issues before they occur, and put the necessary steps in to place to ensure continued mutual success.
With improved commercial loan monitoring, Libro is able to more effectively manage the risk associated with loans - especially in financial downturns - identifying issues long before they have any effect, and ensuring that loan losses don't impact the bottom line. |
|
|
|
