The Fisherman and the Cook

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Why frontline loan officers should fully follow their role in backroom loan administration matters

By Ancin Cooley

Sitting in a sushi restaurant, all eyes are on the chef as they prepare sashimi with masterful precision. As hungry customers, it’s easy to forget the fishermen, who caught the fish, changed the bait, and knew where to move the boat just so we could enjoy some maki for lunch. But make no mistake—the sushi chefs know. They know their restaurant’s reputation and business depend on both the fishermen catching superior fish and their flavorful, artistic presentation of it.

This symbiotic dynamic is quite analogous and relevant to those involved with maintaining proper loan document processes at financial institutions. Consider loan officers as your community bank’s fishermen, tasked with “catching” the good loans, while loan administrators are their counterpart “cooks,” who uphold the operational backbone. In theory, these lending roles and their activities go hand-in-hand; in practice, most institutions overemphasize the fishermen, leaving loan administration underfunded and undervalued.

A fisherman might say to a cook, “I caught the fish, prepare it however you feel is best,” without much thought about their connection to the end product. But this kind of disconnected thinking is damaging to any lending institution. Poorly documented and underwritten loans will hurt the loan officer’s ability to get loans approved, and these deficiencies also will increase the risk of losses.

So, how can fishermen and cooks at your community bank better serve each other and their common purpose in the lending process? For any bank to reduce risk and build a balanced mindset, it must coordinate four things well among their lending fishermen and chefs:

Reflect the importance of both roles in training and core procedures. If banks overly rely on a pre-scripted loan documentation system, they end up with loan administration personnel who know where Document A should go without understanding why. Instead, personnel should have the knowledge and bird’s-eye view they need to create greater context for their role in the lending process.

Create a sense of urgency and co-ownership. Frontline loan officers often dismiss the document-review function and documentation-exception list as nuisances instead of essential risk-management functions. Essential functions within this process include determining if loan documents comply with state and federal regulations and with their bank’s own requirements.

Consider the substantial risks that would be minimized if originating loan officers responded to documentation exceptions and post-closing items for noncompliant loan documents with the same diligence they apply to their sales efforts. The efficiencies could easily reach down to improve your bank’s bottom line.

Remain familiar with documentation “recipes.” Loan officers should proactively review their bank’s loan documentation standards (usually maintained by their document review department) to help ensure appropriate documentation is received at or before every loan closing.

Share information to support the bank’s broader “catch.” Take, for example, the importance of loan system data. Having the right coding about portfolio-level data empowers bank executives to synthesize informed conclusions, set appropriate projections and refocus strategy. Without it, senior management, investors and regulators are vulnerable to misinformed decision-making, incorrect capital reserves calculation and increased regulatory scrutiny.

If loan officers share their firsthand knowledge of the borrower, the loan, the collateral and all the other particulars, they will help build a strong base of information that supports the future of their institution and a safe and sound operation.

When these cooperative practices are put in place, your community bank’s lending staff will be less likely to shrug off its administration activities as inconsequential to the lending process. They will instead value those important activities more as the way to successfully “feed” and satisfy their customers.


Ancin Cooley (acooley@synbc.com) is the founder and principal of Synergy Bank Consulting Inc., a risk management advisory firm in Chicago. Synergy offers a full suite of services for financial institutions. Our multi-disciplined approach combines the expertise of attorneys, workout specialists, appraisers, IT and compliance auditors. We handpick teams to meet your needs. A former bank examiner leads and manages all services to ensure solutions are communicated with a regulatory perspective in mind.