What will your Strategic Plan for Lending Look Like Heading Into 2024?
Written By: Bill Dolan, CMB, AMP
If I were to ask just how diligent are you when it comes to fair lending responsibility to HMDA, ensuring your bank or credit union is maintaining and delivering a pristine LAR, many of you would respond with an undeniable “check”. However, if I were to ask how many are using your HMDA data for strategic planning purposes, my guess is I’d hear crickets from a good majority out there.
If performed with attention and understanding, the output from your HMDA data can identify new opportunities and provide you with a greater understanding of your strengths and weaknesses as well as necessary feedback for future planning. A systematic approach starts with defining your loan production objectives, associated with your anticipated origination volume, sources of those originations, mortgage product types, and your market penetration.
DO NOT set your loan production objectives without first conducting an in-depth analysis of the competitive market factors, using your HMDA data. You must pay special attention to your data sets such as: product line breakdown, historical market size, forecasted growth, benchmarks, and demographic and organizational analysis.
The real question comes down to where you are today and where you want to be.
Ask yourself the following:
Who are my competitors within my market area?
Identify lending institutions (participants, market share, their size type, and their interaction with the secondary market.
Evaluate change within your market competitors (new vs. shrinking)
Classify your competitors as direct or indirect.
What changes in competitive services within your market have affected or could affect market share (new players, new branch locations, loan pricing, etc.)?
When it comes to products and diversification within your market area, ask yourself the following:
What is the concentration of loans by volume, type, purpose, etc.?
What products are they offering that you aren’t offering? It is important that you distinguish between investment quality loans and higher risk loans.
It is critical that you complete your competitive assessment to determine your competitive advantage to exploit and produce more loans.
SCA’s professional team of compliance and HMDA consultants and analysts can advise and support you by helping you monitor and evaluate your fair lending risks and help provide necessary solutions to move into 2024 far more confidently.
SCA’s Chief Strategists (David Brennan and George DeMello) in conjunction with our Sr. Consultants will help you to develop, communicate, and execute your community bank or credit union’s strategies to enhance your strategic initiatives, meet future goals, and promote financial growth. You may also need to strengthen areas within your institution to support your strategic plan (Asset Management, Secondary Markets, Correspondent Lending, Sales & Marketing Plans, Technology, Due Diligence, Quality Control, Loan Servicing, Training & Staffing).
Arrange for a free private consultation by contacting Bill Dolan, Director, at (617) 694-2617 or contact Bill at WDolan@scapartnering.com.
