Bonus Plans for Loan Staff

[RichShortt at aol.com]

Hello,

I am interested in information on compensation plans in use to reward
loan staff and any support staff for meeting or exceeding lending goals.
If you have such a plan, can you respond with information on how it
works? Are there any industry standards on this? If you know of an
organization that uses such a plan, I would appreciate information on
how to contact them. Thanks for your help. Richard Shortt

--
Richard Shortt
Director of Lending Western Massachusetts Enterprise Fund, Inc.
P.O. Box 1077
Greenfield, MA 01302
Phone: 413 774-4033 FAX: 413 774-3673
rshortt@wmef.org
website: www.wmef.org



This post transferred from the cdb-l mailing list

[wlmmyers]

Rich:
Interesting. Would that compensation plan also address success in
keeping loans current? Considering the default rate for many microloan
programs in the country, I would think that this would be a key
indicator of performance.
Jason J. Friedman
Senior Manager for Business & Industry Development
Association for Enterprise Opportunity (AEO)
1 Knollwood Lane
Iowa City, IA 52245
Phone/Fax: 319-341-3556
mailto:jfriedman@assoceo.org
http://www.microenterpriseworks.org

===---===---===---===---===<<<>>>===---===---===---===---===

AmericanBanker.com had a recent article about incentive plans for loan
officers, giving points to consider for structuring the plan. As it is
geared towards a traditional lending environment, you might want to tweak
this (e.g., should you value the # of loans more than $?).

Still, I thought it was interesting and a good starting point. I'll fax you
a copy. It can also be found in their archive by searching under "incentive
plan."


Greg Morishige
Shorebank Advisory Services
7054 S. Jeffery
Chicago, IL 60649
773-420-4909
773-753-5880 fax
http://www.shorebankadvisory.com

Shorebank Advisory Services is a consulting firm that works with CDFIs,
banks, nonprofits, and other organizations, helping them revitalize
communities throughout the U.S. and abroad.

===---===---===---===---===<<<>>>===---===---===---===---===

I am also interested in such information.

Deborah F. Scanlan
HomeOwnership Center Manager
St. Petersburg NHS, Inc.
St. Petersburg, Florida
727-821-6897
deborah.scanlan2@verizon.net


-----Original Message-----
>Hello,
>
> I am interested in information on compensation plans in use to reward
>loan staff and any support staff for meeting or exceeding lending goals.
>
>If you have such a plan, can you respond with information on how it
>works? Are there any industry standards on this? If you know of an
>organization that uses such a plan, I would appreciate information on
>how to contact them. Thanks for your help. Richard Shortt
>
>--
>Richard Shortt
>Director of Lending Western Massachusetts Enterprise Fund, Inc.
>P.O. Box 1077
>Greenfield, MA 01302
>Phone: 413 774-4033 FAX: 413 774-3673
>rshortt@wmef.org
>website: www.wmef.org



This post transferred from the cdb-l mailing list

[zgast at assoceo.org]

I'm interested in this discussion. I would suggest an excellent article by
Martin Holtmann of IPC, who wrote about the issue of incentive plans for
loan officers in microfinance institutions.

The article appears in the April 2001 issue of the Microbanking Bulletin
http://www.microbanking-mbb.org/

As the article indicates, loan volume (both number and dollar value) must be
tempered by clear incentives for portfolio quality (usually measured through
current portolio at risk). Many lenders are also seeking to integrate
outreach (proxied by loans to first-time borrowers or poverty status) into
these incentive schemes.

Zach Gast
Policy & Research Manager
Association for Enterprise Opportunity


-----Original Message-----
From: owner-COMMUNITYDEVELOPMENTBANKING-L@cornell.edu
[mailto:owner-COMMUNITYDEVELOPMENTBANKING-L@cornell.edu]On Behalf Of
William Myers
Sent: Saturday, July 27, 2002 10:32 PM
To: communitydevelopmentbanking-l@cornell.edu
Subject: RE: Bonus Plans for Loan Staff



Rich:
Interesting. Would that compensation plan also address success in
keeping loans current? Considering the default rate for many microloan
programs in the country, I would think that this would be a key
indicator of performance.
Jason J. Friedman
Senior Manager for Business & Industry Development
Association for Enterprise Opportunity (AEO)
1 Knollwood Lane
Iowa City, IA 52245
Phone/Fax: 319-341-3556
mailto:jfriedman@assoceo.org
http://www.microenterpriseworks.org

===---===---===---===---===<<<>>>===---===---===---===---===

AmericanBanker.com had a recent article about incentive plans for loan
officers, giving points to consider for structuring the plan. As it is
geared towards a traditional lending environment, you might want to tweak
this (e.g., should you value the # of loans more than $?).

Still, I thought it was interesting and a good starting point. I'll fax you
a copy. It can also be found in their archive by searching under "incentive
plan."


Greg Morishige
Shorebank Advisory Services
7054 S. Jeffery
Chicago, IL 60649
773-420-4909
773-753-5880 fax
http://www.shorebankadvisory.com

Shorebank Advisory Services is a consulting firm that works with CDFIs,
banks, nonprofits, and other organizations, helping them revitalize
communities throughout the U.S. and abroad.

===---===---===---===---===<<<>>>===---===---===---===---===

I am also interested in such information.

Deborah F. Scanlan
HomeOwnership Center Manager
St. Petersburg NHS, Inc.
St. Petersburg, Florida
727-821-6897
deborah.scanlan2@verizon.net


-----Original Message-----
>Hello,
>
> I am interested in information on compensation plans in use to reward
>loan staff and any support staff for meeting or exceeding lending goals.
>
>If you have such a plan, can you respond with information on how it
>works? Are there any industry standards on this? If you know of an
>organization that uses such a plan, I would appreciate information on
>how to contact them. Thanks for your help. Richard Shortt
>
>--
>Richard Shortt
>Director of Lending Western Massachusetts Enterprise Fund, Inc.
>P.O. Box 1077
>Greenfield, MA 01302
>Phone: 413 774-4033 FAX: 413 774-3673
>rshortt@wmef.org
>website: www.wmef.org



This post transferred from the cdb-l mailing list

[Greg_Morishige at SBK.COM]

About that American Banker article again if other people are searching for
it, the title was "an incentive plan will work only if you target the right
behavior." The title is exactly right. Per the article, "another bank's
program rewarded lenders only for loan volume growth. The loan portfolio
grew rapidly, but the lenders were not held accountable for documentation
errors, rapid loan deterioration, special mention loans, etc. As a result,
during the recent recession, the new loans did not hold up as well as
previous loans." The anecdote is far from an isolated incident, as
incentives purely for volume and not for quality has led to damaging losses
at many financial institutions.

Greg

=====================
Greg Morishige
Shorebank Advisory Services
7054 S. Jeffery
Chicago, IL 60649
773-420-4909
773-753-5880 fax
http://www.shorebankadvisory.com

Shorebank Advisory Services is a consulting firm that works with CDFIs,
banks, nonprofits, and other organizations, helping them revitalize
communities throughout the U.S. and abroad.


-----Original Message-----
From: William Myers [mailto:WMyers@alternatives.org]
Sent: Saturday, July 27, 2002 9:32 PM
To: communitydevelopmentbanking-l@cornell.edu
Subject: RE: Bonus Plans for Loan Staff



Rich:
Interesting. Would that compensation plan also address success in
keeping loans current? Considering the default rate for many microloan
programs in the country, I would think that this would be a key
indicator of performance.
Jason J. Friedman
Senior Manager for Business & Industry Development
Association for Enterprise Opportunity (AEO)
1 Knollwood Lane
Iowa City, IA 52245
Phone/Fax: 319-341-3556
mailto:jfriedman@assoceo.org
http://www.microenterpriseworks.org

===---===---===---===---===<<<>>>===---===---===---===---===

AmericanBanker.com had a recent article about incentive plans for loan
officers, giving points to consider for structuring the plan. As it is
geared towards a traditional lending environment, you might want to tweak
this (e.g., should you value the # of loans more than $?).

Still, I thought it was interesting and a good starting point. I'll fax you
a copy. It can also be found in their archive by searching under "incentive
plan."


Greg Morishige
Shorebank Advisory Services
7054 S. Jeffery
Chicago, IL 60649
773-420-4909
773-753-5880 fax
http://www.shorebankadvisory.com

Shorebank Advisory Services is a consulting firm that works with CDFIs,
banks, nonprofits, and other organizations, helping them revitalize
communities throughout the U.S. and abroad.

===---===---===---===---===<<<>>>===---===---===---===---===

I am also interested in such information.

Deborah F. Scanlan
HomeOwnership Center Manager
St. Petersburg NHS, Inc.
St. Petersburg, Florida
727-821-6897
deborah.scanlan2@verizon.net


-----Original Message-----
>Hello,
>
> I am interested in information on compensation plans in use to reward
>loan staff and any support staff for meeting or exceeding lending goals.
>
>If you have such a plan, can you respond with information on how it
>works? Are there any industry standards on this? If you know of an
>organization that uses such a plan, I would appreciate information on
>how to contact them. Thanks for your help. Richard Shortt
>
>--
>Richard Shortt
>Director of Lending Western Massachusetts Enterprise Fund, Inc.
>P.O. Box 1077
>Greenfield, MA 01302
>Phone: 413 774-4033 FAX: 413 774-3673
>rshortt@wmef.org
>website: www.wmef.org



This post transferred from the cdb-l mailing list