In most cases, it is neither effective nor efficient for a loan officer or other senior officer of most community banks to engage in problem loan resolution, workout management or special assets. The assigned loan officer is often inexperienced and to some extent compromised by personal relationships with the borrower. This often results in the loan officer being distracted from a more productive role as a producer of profitable banking relationships.
Even in banks of sufficient size with the ability to hire a staff of Special Assets Officers, it is more effective and efficient to utilize an outsourcing of the Problem Loan Resolution, Workout Management and Special Assets function for the bank’s problem loans. We believe that the knowledge, talents and experience of our staff in these areas will typically far exceed that of the employees the bank is able to attract to these positions. Additionally, the expenses related to internal staffing are fixed and non-controllable; whereas, the expense of outsourcing the Special Assets function is a variable and controllable expense.
There are other benefits to outsourcing the resolution of problem loans. Since Crossroads Credit and Portfolio Management LLC is a contractor with no loan authority, there is no role confusion in workout situations avoiding the possibility of lender liability. Also, your loan officers can remain independent of and untainted by the workout process which can lead to a bad reputation in the market.
Crossroads Credit and Portfolio Management LLC recognizes there are sensitive concerns for any bank utilizing an outside contractor. We understand your concerns after all, we are community bankers. Crossroads realizes its actions could impact the image of the Bank in the community. We will take the utmost care in representing your bank in a professional and courteous manner.
An overview of the terms and conditions for outsourcing the Problem Loan Resolution, Workout Management and Special Assets function should include the following:
•
All loan assets to be handled on an outsourced basis should be
assigned to Crossroads on a monthly, quarterly or other
determined basis.
•
We suggest a pre-assignment meeting between a representative
of senior management, the current loan officer, and a
representative from Crossroads Credit and Portfolio Management
LLC to fully discuss the loan history, current situation, actions to
date and alternative resolution strategies.
•
A formal, written resolution plan, including the resolution and/or
litigation strategy, estimated resolution timeline and resolution
budget will be presented by Crossroads Credit and Portfolio
Management LLC and approved by senior management of the
bank or their designee.
•
The approved resolution plan will provide for all delegated
responsibility, as well as the process for any required approval of
actions and settlements.
•
If there is a significant recommended change in strategy, a
revised new resolution plan will be submitted for approval.
•
Crossroads Credit and Portfolio Management LLC will provide the
Bank with a written summary progress report on all loans for
which they have received assignment on a monthly basis. All
important developments will be communicated on the same day
as realized.
* References available upon request.
