Establishing a loan production office (LPO) can be a strategic move to expand a bank’s footprint, increase loan portfolios, and enhance customer service. However, setting up a successful LPO requires careful planning, deep market understanding, and most crucially, the right team.

When a $17bn bank was ready to enter into the Fort Worth, Texas Market, it was The Anderson Search Group providing them with their solution. With a loan production office already in Dallas, the client bank saw an opportunity to move into the highly desirable, yet extremely unique market of Fort Worth. The Anderson Search Group was able to complete a commercial banking team lift out made up of a market president and two senior commercial banking officers. Because this was an established team with center’s of influence throughout the market and the ability to generate their own business, this team was able to put almost $200 million in new loans on the books in the first 18 months and was profitable in their first year.

This article provides a starting guide for bankers on establishing an effective LPO.

Step 1: Market Analysis and Strategic Planning

Understanding the Market

Before establishing an LPO, conduct thorough market research to identify potential locations with high loan demand. Analyze demographic data, economic indicators, and competitive landscapes to ensure a viable market presence.

Strategic Planning

Develop a clear business plan outlining your LPO’s objectives, target market, product offerings, and growth strategies. This plan should align with your bank’s overall business strategy and risk appetite.

Step 2: Regulatory Compliance and Legal Framework

Navigating Regulations

Understand and comply with the regulatory requirements specific to the region where the LPO will operate. This includes state and federal banking regulations, as well as compliance with fair lending laws.

Legal Setup

Consult with legal experts to establish the legal structure of your LPO, ensuring adherence to all legal requirements and minimizing liability risks.

Step 3: Infrastructure and Technology

Office Setup

Choose a location that is accessible and visible to your target clientele. The office should be equipped with the necessary infrastructure to support efficient loan processing.

Technology Integration

Invest in technology that streamlines loan origination, underwriting, and servicing processes. A robust IT infrastructure enhances efficiency and customer experience.

Step 4: Assembling the Right Team

Role of Recruiters

Recruiters play a crucial role in staffing your LPO with competent professionals. They have the expertise and networks to identify candidates who not only have the requisite skills but also fit your corporate culture.

Hiring Strategy

Develop a hiring strategy that outlines the roles and skills needed in your LPO, such as loan officers, underwriters, and support staff. Prioritize candidates with local market knowledge and a proven track record in loan origination.

Step 5: Training and Development

Onboarding and Training

Invest in comprehensive training programs to ensure your team is well-versed in your products, systems, and regulatory compliance.

Continuous Development

Encourage ongoing professional development to keep your team updated on industry trends, regulatory changes, and best practices.

Step 6: Marketing and Community Engagement

Building Relationships

Engage with the local community to build relationships and establish trust. Participate in local events and collaborate with local businesses.

Marketing Strategies

Develop targeted marketing strategies to promote your loan products, emphasizing the unique benefits your LPO offers to the community.

Conclusion

Establishing a loan production office is a significant undertaking that requires strategic planning, regulatory compliance, effective team building, and community engagement. Utilizing the expertise of professional recruiters can significantly enhance the process of assembling a skilled and cohesive team, which is crucial for the success of any LPO. By following these steps and leveraging the right resources, bankers can effectively expand their operations, grow their loan portfolios, and better serve their communities.