Attachment 1_credit-competency-model.pdf

Credit Curriculum Competency Model for Precommissioned Examiners March 25, 2021

Examiner Development Committee Office of the Comptroller of the Currency Page 1

BACKGROUND

In the first quarter of fiscal year 2017, a working group was established to execute the short-term activities for Initiative 3.1.1 of the FY 2017–2019 Workforce Plan. The efforts of that working group resulted in a set of competencies—general, leadership, and technical competencies examiners are expected to acquire throughout the commissioning process. These competencies became the basis for developing individual specialty areas to create specific technical competencies for each specialty.

In support of those efforts, the Committee on Bank Supervision (CBS) charged the Examiner Development Committee (EDC) with ensuring that the OCC's training curriculum supports agency hiring efforts by considering the needs of examiners at all levels, including entry-level hired examiners and industry experienced hires. The EDC decided there is a need to take a holistic review of the Midsize and Community Bank Supervision (MCBS) credit curriculum to see what credit-related competencies are required at various points throughout the precommissioned examiner's career and to compare those competencies against existing courses, developmental activities (e.g., on-the-job training), and business needs/requirements and expectations to identify gaps and make recommendations.

CREDIT COMPETENCIES

The following table presents the technical competencies specifically for credit required for precommissioned examiners. The credit competencies were mapped to commissioning track competencies identified for credit. In the table, commissioning track competencies are across the top; credit competencies are along the left.

This cell is intentionally blank. ASSET QUALITY OCC EXAMINATION PROCESS &

POLICIES

FEDERAL BANKING LAWS &

REGULATIONS EXAMINATION PLANNING

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X

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PA

YM

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CA

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TY

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U N

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X X

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CU

X X X

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X X X X

Although not listed in the credit competency table, general and leadership competencies on the next page and the commissioning track technical competencies on page 3 are applicable. These commissioning track general, leadership, and technical competencies along with the technical competencies for credit comprise the totality of competencies for the credit curriculum.

Examiner Development Committee Office of the Comptroller of the Currency Page 2

570 SERIES COMMISSIONING TRACK EXAMINER CREDIT COMPETENCY MODEL

General Competencies

Accountability: Holds self and others responsible for accomplishing objectives and outcomes. Can be relied upon to ensure that work within areas of specific responsibility is completed in a timely and effective manner. Monitors and evaluates plans; focuses on results and measuring attainment of outcomes.

Change Management: Advocates and supports new policies/procedures. Encourages buy-in from employees regarding change. Guides employees through transition process. Translates policy changes and expectations into understandable objectives and action items.

Communication: Ability to communicate information to individuals and groups in a clear manner. Facilitates an open exchange of ideas and fosters an atmosphere of open communication. Demonstrates ability to listen to others.

Conflict Management: Manages and resolves conflicts and disagreements in a positive and constructive manner to minimize negative impact. Identifies and takes steps to prevent unnecessary or recurring conflict. Supports employee efforts to independently resolve conflicts.

Continual Learning: Actively seeks opportunities to learn new things. Demonstrates initiative and energy in learning new approaches to managing and conducting business. Willingness to apply innovative solutions to improve organizational functioning. Demonstrates inquisitiveness in professional situations.

External Relations: Anticipates and influences stakeholders’ reactions to key internal or external events and issues. Understands external stakeholders’ interests.

Flexibility: Is open to change and new information. Adapts behavior in response to new information, changing conditions, or unexpected obstacles. Adjusts to new situations/environments warranting attention and resolution.

Initiative: Sets well-defined and realistic personal goals. Displays a high level of effort and commitment towards completing assignments in a timely manner. Works with appropriate level of supervision. Motivated to achieve.

Integrity/Honesty: Demonstrates the highest level of ethical, personal, and professional standards; is trustworthy. Refuses to tolerate favoritism or discrimination in any form. Displays a high level of professionalism and corporate responsibility while working toward organizational goals.

Interpersonal Skills: Shows understanding, courtesy, tact, empathy, concern, and politeness to others. Develops and maintains relationships with others; may include dealing with individuals who are difficult, hostile, or distressed. Relates well to people from varied backgrounds and different situations. Respects cultural diversity, race, gender, disabilities, and other individual differences.

Partnering: Builds relationships/networks and collaborates across organizational boundaries. Builds a shared vision with others and understands the “big picture.” Works with others to translate vision into actions or results and achieve common goals.

Planning/Organizing: Organizes work, sets priorities, and determines resource requirements. Determines short- or long-term goals and strategies to achieve them. Coordinates with other organizations or parts of the organization to accomplish goals. Monitors progress and evaluates outcomes.

Problem Solving: Identifies and analyzes issues or concerns. Evaluates alternatives to make recommendations. Implements recommended solutions.

Project Management: Plans and organizes activities and sets priorities to achieve objectives. Manages resources and assigns responsibilities to accomplish milestones and meet deadlines. Provides critical project information and/or deliverables to key stakeholders.

Resilience: Responds well under pressure and high levels of scrutiny. Recovers quickly from setbacks. Maintains focus and remains committed even under adversity.

Self-Awareness: Understands and recognizes own strengths and weaknesses (e.g., biases, hot buttons, personal work style). Demonstrates belief in own abilities and ideas. Seeks feedback from others and opportunities for personal development.

Teamwork: Exhibits willingness to share knowledge and experiences. Exhibits willingness to share credit and give credit where it is due (i.e., acknowledge others). Actively participates in group work activities.

Leadership Competencies

Decisiveness: Gathers necessary information to assist in decision making. Exercises judgment and is willing to take risks as necessary (e.g., limited data, solutions produce unpleasant consequences). Makes sound, well-informed, and timely decisions. Evaluates decisions and makes adjustments as necessary and as new information is presented.

Developing Others: Demonstrates willingness to help others identify strengths and address/minimize weaknesses. Coaches others to identify developmental opportunities.

Leveraging Diversity: Recruits, develops, and retains a diverse, high quality workforce in an equitable manner. Leads and manages an inclusive workplace that maximizes the talents of each person to achieve sound business results. Respects, understands, values, and seeks out individual differences to achieve the vision and mission of the agency. Holds self and others accountable for achieving results that embody the principles of diversity.

Examiner Development Committee Office of the Comptroller of the Currency Page 3

Influencing/Negotiating: Builds consensus through give and take. Gains cooperation from others to obtain information and accomplish goals. Communicates the agency’s vision and influences others to work toward organizational goals. Aims to achieve “win-win” situations.

Team Building: Creates an environment of mutual respect. Builds cohesive and cooperative work unit. Leads by example. Motivates and guides others toward goal accomplishment. Recognizes and rewards the contributions of team members.

Commissioning Track Technical Competencies (that directly mapped to the credit competencies)

Asset Quality: Scopes, performs, expands when warranted, and draws conclusions for the asset quality review. Leads an examination team to conduct the loan portfolio review and to develop overall conclusions. Selects the most appropriate risk-based loan sample and assigns appropriate risk classifications. Identifies trends in asset quality. Identifies structurally weak commercial loans. Reviews line sheets for loans to ensure analysis supports findings. Evaluates the adequacy of credit administration practices. Identifies loan documentation deficiencies.

Assesses systems for identifying and managing asset concentrations. Assesses administration of assets, including the management of problem assets. Determines compliance with credit-related laws and regulations and applicable OCC and interagency guidance. Evaluates the underwriting for all sampled lending activities. Determines the direction of credit underwriting practices since the previous supervisory activity and concludes on the appropriate assessment rating. Determines the credit risk inherent in the loan portfolio. Determines the quantity of credit risk associated with other assets, including investments. Evaluates the appropriateness of the allowance for loan and lease losses (ALLL) methodology. Assesses the adequacy of asset quality monitoring systems. Determines the adequacy of portfolio risk management systems. Assesses the adequacy of the internal controls over the credit function. Determines the significance of risk exposure from asset quality. Determines the asset quality component rating, adequacy of the ALLL, quantity of credit risk, the quality of credit risk management, and the potential impact on all other applicable risk assessments.

Examination Planning: Reviews and assesses the appropriateness of the supervisory strategy for upcoming examinations. Considers emerging economic and financial trends and issues when developing the supervisory strategy. Plans the scope, objectives, and resources of examinations. Requests advance information from banks tailored to the examination scope and risk profile. Conducts planning meetings with bank management and examination teams.

Federal Banking Laws & Regulations: Applies knowledge of federal banking laws and regulations in executing the OCC examination process.

Reviews and analyzes new regulations, rules, and policies to determine their impact on OCC-supervised financial institutions.

OCC Examination Process, Policies & Procedures: Demonstrates knowledge of OCC examination procedures, policies, and materials for planning the scope and objectives of OCC supervisory activities. Utilizes appropriate OCC and industry reference materials in conducting examinations. Applies appropriate OCC policies and procedures when conducting management meetings (e.g., entrance, interim, and exit meetings) and presentations to boards of directors. Demonstrates knowledge of overall institution ratings criteria and risk assessments.

Demonstrates knowledge of OCC requirements for written communications with bank management and boards (including requirements for Reports of Examination, CRA Performance Evaluation, etc.).

Credit Competencies Structure: Demonstrates knowledge of amortization, tenor, pricing, loan types, and controls. Assesses the appropriateness and/or adequacy of amortization, pricing risk and reward, loan types, and controls.

Underwriting: Demonstrates knowledge of preapproval processes and analysis, post-funding monitoring, and compliance to OCC and federal banking laws, regulations, and policies. Assesses banks’ preapproval analyses. Assesses banks’ compliance to policies. Assesses banks’ post-funding monitoring.

Collateral and Security: Demonstrates knowledge of types of collateral, loan-to-value, how liens are perfected, and different methods for evaluating collateral. Assesses collateral and appropriateness of loan-to-value. Determines if liens are perfected. Applies supervisory loan-to-value guidance.

Repayment Capacity: Demonstrates knowledge of primary and secondary sources. Demonstrates knowledge of net operating income and guarantor support. Recognizes FICO and credit reports. Demonstrates knowledge of debt service coverage, including financial statements and tax returns as sources of financial information. Assesses adequacy of primary and secondary sources. Calculates and assesses debt-to-income (DTI). Utilizes tax returns for financial information. Assesses guarantor as a secondary source and develops global cash flow analysis.

Assesses conversion of assets.

Risk Rating and Accounting: Demonstrates knowledge of OCC Bulletin 2000-20. Applies guidance from bulletin. Demonstrates knowledge of line sheets, loan discussion and write-ups, accrual assessments, Troubled Debt Restructure (TDR) assessments, credit underwriting assessments (CUA), and risk rating. Accurately documents line sheet data. Conducts loan discussions and develops a loan write-up. Performs CUAs. Applies risk ratings.

Loan Portfolio Management: Demonstrates knowledge of the planning, execution, and rating assignments involved in loan portfolio management (LPM). Assesses, evaluates, and conducts the planning, execution and rating assignments involved with LPM.

Examiner Development Committee Office of the Comptroller of the Currency Page 4

570 SERIES COMMISSIONING TRACK EXAMINER CREDIT COMPETENCY MODEL PROFICIENCY LEVEL GUIDANCE

The following table presents the technical competency proficiency levels for the credit competencies. The table shows the advancement of competency development over four years leading to commissioning. This four-year progression is aligned with the OCC’s goal to accelerate the commissioning process. Although the credit competencies show a four-year progression, the first year is divided into separate competency levels to show the level of competency achievement after the training team assignment and at the end of the first year.

Definitions for proficiency levels can be found on page 5. Upgrades in competency proficiency levels across years are indicated with bold font.

This cell is intentionally blank Credit Competency

First Year:

0 to 8 Months

(Training Team)

First Year:

9 to 12 Months

Second Year:

13 to 24 Months

Third Year:

25 to 36 Months

Fourth Year:

37 to 48 Months

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RU

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Amortization/Tenor Awareness Basic Intermediate Intermediate Intermediate

Pricing NA1 Awareness Awareness Basic Basic

Controls Awareness Awareness/Basic Awareness/Basic/ Intermediate

Basic/ Intermediate

Intermediate

Loan Types NA Awareness/Basic Awareness/Basic Basic/ Intermediate

Basic/ Intermediate

U N

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Preapproval/Underwriting Analysis

Awareness Basic Basic Basic Intermediate

Post-Funding Monitoring NA Awareness Basic Basic Intermediate

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CU

Collateral/Security Perfection Awareness Basic Basic Intermediate Intermediate

Collateral/Security Type Awareness Basic Basic Intermediate Intermediate

Appraisal/Valuation/Inspection Awareness Basic Basic Intermediate Intermediate

Loan to Value (LTV)/Cost Awareness Basic Basic Intermediate Intermediate

Supervisory Loan to Value Limit NA Awareness Basic Intermediate Intermediate

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Primary/Secondary Sources Awareness Basic Basic Basic/ Intermediate

Intermediate

Credit Score/Credit Report Awareness Basic Basic Intermediate Intermediate

Debt-to-income (DTI) NA Awareness Basic Intermediate Intermediate

Cash Flow/Debt Service Coverage Awareness Basic Awareness/Basic Basic Intermediate

Net Operating Income Awareness Awareness Awareness Basic Intermediate

Conversion of Assets NA NA Awareness Basic Intermediate

Guarantor Support NA Awareness Basic Basic Intermediate

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Retail Classification Guidelines NA Awareness Basic Intermediate Intermediate

Line Sheet Documentation NA Awareness Basic Intermediate Intermediate

Credit Underwriting Assessment

(CUA)

NA NA Awareness Basic Intermediate

Loan Discussion NA NA Awareness Basic Intermediate

Loan Write-Up NA NA Awareness Basic Intermediate

Accrual Assessment NA NA NA Basic Intermediate

Troubled Debt Restructure (TDR) Assessment

NA NA NA Awareness Basic

Risk Rating Awareness Awareness Basic Intermediate Intermediate

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T Planning NA NA Awareness Basic Intermediate

Execution NA NA Awareness Basic Intermediate

Assign Ratings and Conclusions NA NA Awareness Basic Intermediate

1 NA – Not Applicable

Examiner Development Committee Office of the Comptroller of the Currency Page 5

570 SERIES COMMISSIONING TRACK EXAMINER CREDIT COMPETENCY MODEL PROFICIENCY LEVEL SCALE

DEFINITIONS

The table below provides a breakdown of the scale this model uses for competency proficiency. Descriptions are provided for each scale level.

LEVEL DESCRIPTION

Not Applicable The employee is not required to apply or demonstrate this competency. This competency is not applicable to their position.

Awareness (general knowledge)

The employee has a general knowledge or understanding of techniques and concepts.

The competency is developed primarily through exposure and learning.

Basic (limited experience)

The employee has a level of experience gained in a classroom and/or experimental scenarios, or as a trainee on-the-job. The employee typically requires more oversight at this level.

The competency is developed primarily through on-the-job experience;

The employee understands and can discuss basic terminology, concepts, principles, and issues related to this competency;

The employee can research, access, and utilize the full range of reference and resource materials in this competency.

Intermediate (practical application)

The employee is typically able to successfully complete tasks in this competency. Help from an expert may be required from time to time, but the employee can usually perform independently at this level.

The competency is developed by applying and enhancing knowledge or skill;

The employee understands and can discuss terminology, concepts, principles, and issues related to this competency;

The employee understands and can discuss the application and implications of changes to processes, policies, and procedures in this area.

Advanced (applied theory)

The employee can perform the tasks associated with this competency without assistance. They are recognized within their business unit as "a person to ask" when difficult questions arise regarding this skill.

The competency is developed by engaging with broad organizational/professional issues;

The employee has consistently provided practical/relevant ideas and perspectives on process or practice improvements;

The employee is capable of coaching others in the application of this competency by translating nuances into easy to understand terms;

The employee participates in senior level discussions regarding this competency;

The employee assists in the development of reference and resource materials in this competency.

Expert (recognized authority)

The employee is known as an expert in this area. The employee can provide guidance, troubleshoot and answer questions related to this area of expertise, and the field where the competency is used.

The competency is developed by engaging in strategic activities;

The employee demonstrates consistent capability in applying this competency across multiple projects and/or organizations;

The employee is considered the “go to” person in this area within OCC and/or outside organizations;

The employee creates new applications for and/or leads the development of reference and resource materials for this competency;

The employee is able to diagram or explain relevant process elements in relation to organizational issues and trends in sufficient detail during discussions and presentations, to foster a greater understanding among internal and external colleagues and constituents.