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Top Story:  Training Program Develops Examiner Skills While Supporting OCC’s Supervisory Effectiveness

03/06/2014

By Randy Berner, Continuing Education,
Nancy Mott, LBS, and
Bob Parson, Commercial Credit Risk

At last September’s Mortgage Bankers Association conference, Darrin Benhart, the OCC's Deputy Comptroller for Credit and Market Risk, told 650 risk managers that OCC reviews of banks of all sizes had found weaknesses in many aspects of bank and thrift appraisal processes.

The 2013 Retail Credit NTI Team. Front row: NBE Mike Burson, ANBE Nadira Persaud, Appraisal Policy Specialist Bob Parson, NBE Jillian Smith, and Retail Credit Lead Expert Randy Bollenbacher. Middle row: NBE Madeline Hilferty, NBE Chis Shaw, NBE Gena Francis, NBE Lana Moran, Bank Examiner Carolyn Engelhardt, and Retail Credit Specialist Nancy Mott. Back row: NBE Peter Newell, NBE Ed Norris, NBE James Cashell, Retail Credit Policy Director Bob Piepergerdes, NBE Darin Mickey, NBE Michelle Sedlon, Appraiser Kevin Lawton, Retail Credit Lead Expert Dave Henry.

The 2013 Retail Credit NTI Team. Front row: NBE Mike Burson, ANBE Nadira Persaud, Appraisal Policy Specialist Bob Parson, NBE Jillian Smith, and Retail Credit Lead Expert Randy Bollenbacher. Middle row: NBE Madeline Hilferty, NBE Chis Shaw, NBE Gena Francis, NBE Lana Moran, Bank Examiner Carolyn Engelhardt, and Retail Credit Specialist Nancy Mott. Back row: NBE Peter Newell, NBE Ed Norris, NBE James Cashell, Retail Credit Policy Director Bob Piepergerdes, NBE Darin Mickey, NBE Michelle Sedlon, Appraiser Kevin Lawton, Retail Credit Lead Expert Dave Henry.

Where did those findings come from? It all began a year before the conference, when 13 examiners and four trainers came together to attend a three-day orientation to the Retail Credit National Training Initiative (RC NTI).

The NTI program is a Committee for Bank Supervision program administered by Continuing Education that offers examiners developmental opportunities in bank supervision within the OCC’s eight specialty examination functions: Commercial Credit, Capital Markets, Compliance, Bank Information Technology, Asset Management, Retail Credit, Mortgage Banking, and Operational Risk. Each year senior management selects a topic or topics for an NTI, and examiners who want to enhance their knowledge and skills in that area, and who meet the criteria for participating, may apply to the program. Once selected, the examiners develop skills by taking part in exams under the guidance of a trainer who is highly skilled in that area.

“Each NTI focuses on bridging a very specific, identified skills gap. The NTI provides an excellent opportunity for examiners to develop their skills as participants as well as an opportunity for highly skilled examiners to share their skills and knowledge by serving as team leaders. After the program, participants are expected to continue to develop their skills and to serve as a resource and a trainer for other examiners,” says NTI Program Manager Randy Berner.

An NTI runs for a single fiscal year, from October 1 through September 30. Although time commitments vary depending on the NTI, participants and trainers generally spend between 10 and 15 weeks on NTI-related activities. In addition to the Retail Credit NTI, two other NTIs—in Capital Markets and Compliance—were conducted in fiscal year 2013.

2013 Retail Credit NTI
The 2013 RC NTI aimed at enhancing participants’ skills in evaluating collateral valuation tools used in residential real estate lending, as well as evaluating bank processes in that area. Under the guidance of Nancy Mott, RC NTI Coordinator, and Bob Parson, Appraisal Policy Specialist in Credit and Market Risk and technical trainer, the participants focused on residential real estate appraisal and evaluation programs at 12 banks selected for the NTI from across all lines of business.

During the orientation at Headquarters, participants received informal training and job aids and became acquainted with team members and team leaders. Soon after, the four teams, supported by Parson and Credit Risk Appraiser Kevin Lawton, began their on-the-job training during exams in four community, five midsize, and three large banks. The team leaders for this NTI were Central District Retail Credit Lead Expert Randy Bollenbacher, Western District Retail Credit Lead Expert David Henry, Examiner Donna Quertermous, and Examiner Chris Shaw.

Throughout the year, Mott coordinated conference calls to keep participants informed of exam findings and other issues identified during the examinations. Feedback from the trainers, along with information sharing among participants, is an important part of the NTI and is integral to helping participants develop the skills and knowledge in the targeted areas.

By the end of the RC NTI, the teams had identified numerous violations and presented multiple matters requiring attention at 11 of the 12 institutions. Participants identified such systemic issues as non-existent or weak governance, inadequate appraisal and evaluation policies, staffing and organizational issues, deficiencies in the appraisal and/or evaluation review process, and, in cases where banks used appraisal management companies (AMCs), little or no oversight of the AMCs. In some cases, bankers did not understand how appraisers were selected and engaged by the AMC on behalf of the bank. These are recurring issues that examiners will be addressing in upcoming exams.

A valuable training opportunity
While the team’s findings have implications on how the agency will examine the residential collateral valuation programs of OCC-supervised institutions, participants agreed that not only did the 2013 RC NTI provide a valuable opportunity to learn and develop new skills, but it far exceeded their expectations. “I went into this assignment thinking I would gain just a few additional appraisal review skills,” says Lana Moran, Central District Retail Credit Lead Expert Support , “but after my three assignments ended, I realized that I gained a range of invaluable skills, including the ability to quickly review and assess a bank’s appraisal ordering and review function. I also gained a much better understanding of automated valuation models and how banks use appraisal management companies in the ordering and review function.”

For Bollenbacher, the collaborative format was highly effective. “I was amazed at how much I learned during this project. I feel that this was a very rewarding project to build examiner knowledge and skills in the collateral valuation area. It was particularly helpful having agency appraisers participate since their insights were invaluable,” he says.

Henry echoes the praise. “As a former OTS examiner, this was my first experience with an NTI. I was impressed with the collaboration and high-level engagement between the NTI Coordinator (Mott), appraisal policy experts Bob Parson and Kevin Lawton, the team leads, and the participants. It was rewarding to learn from the other exam teams and to provide them with some meaningful insights.”

Long-term impact of the NTI
One objective of the NTI program is to prepare participants to serve as future subject matter resources, possibly participating on assignments, serving as trainers on that topic, or being available to answer questions. Several participants have plans to share their newly acquired knowledge and skills with other examiners, while others, like Northeast District Retail Credit Lead Expert Support Jillian Smith, have already begun to share what they learned.

Says Smith, “I was able to provide examiners, outside of the NTI, guidance in the form of procedures and job aids created and used by the training participants.” Smith also helped increase examiners’ awareness of common issues and concerns within their institutions that the NTI teams had identified during their exams. She adds, “I will continue to utilize the skills I have gained throughout this process when examining other institutions as well as continue to share my experiences and resources with other examiners.”

To learn more about NTIs and how to become an NTI participant, visit the National Training Initiatives page on the OCCnet.

Last Updated: 03/21/2014