News & Updates

 

Banks Use RMA’s Credit Risk Certification as a Key Training Tool

 

( December 08, 2011 )

The following article appears in the December 2011 - January 2012 edition of the RMA Journal.

SunTrust and Capital One say the RMA-CRC is an objective measure of credit knowledge and aptitude.

By Kevin McLaughlin

RMA’s credit risk certification (CRC) is widely considered to be the industry’s premier designation for the commercial credit risk professional. To date, more than 800 candidates have passed the CRC exam. Two banks, Capital One and SunTrust, use the RMA-CRC as an integral part of their training curriculum for experienced credit professionals.

RMA-CRC Helps Capital One Create a Common Credit Culture
After Capital One acquired three banks during the 2005- 08 period, creating a Capital One credit culture became a priority.

"Each bank had a long history of success in commercial banking, but each had its own culture, lending specialties, and approval process. They were very different organizations," said Patrick Hickey, CRC, senior vice president and head of credit policy and training.

Since then, we've done a lot of work in Capital One to create a credit culture. We’ve created common credit policies, we've trained people, and we’ve communicated our changes and practices to get everyone on the same page," he said.

One piece of the framework used to create a common credit culture is RMA’s credit risk certification (RMA-CRC).

“We decided to use the CRC exam as an objective, thirdparty measure of a person’s technical skills,” Hickey said. “We’re spread out from New York to Texas, so it’s tough to personally assess every person in the credit chain in a timely way. We think this third-party measure allows us to jump-start that effort.”

The RMA-CRC designation is one part of a three-pronged effort at Capital One to evaluate associates already holding or being evaluated for credit authority, the other two parts being product training specific to Capital One and personal evaluations by managers.

Capital One incorporated the RMA-CRC as a formal part of its credit-training program in the summer of 2010. To date, 41 Capital One associates have earned the right to put CRC after their names. The CRC exam is valuable, Hickey said, because it tests not only book knowledge, but also credit judgment that comes only with experience.

“Experience is really critical in assessing risk,” Hickey noted. “We want people who can analyze the entirety of the credit, and so five years’ experience is the minimum requirement for our associates to sit for the exam. Five years is a fairly hard line for us.”

Suzette Prechter, CRC, Capital One’s manager of middle market underwriting in Louisiana and Texas, agrees that experience is key. She passed the CRC exam in 2009, before Capital One made a corporate commitment to the certification.

“There are a number of questions in the exam relating to the character of borrowers or handling a difficult situation,” she said. “Those require credit judgment and years of experience to be able to discern the key nonfinancial elements of commercial lending.”

Prechter took and passed the CRC exam in 2009 because she wanted to know firsthand what was involved.

“I wanted to see for myself that it was going to be sufficiently rigorous and also on point to really assess people’s credit judgment,” she said.

“I found that it does both. It was a challenging test that is not so detail-oriented that you need to have recently completed academic study to pass it. And it did have a number of questions related to credit judgment.”

At the time, Prechter was managing small-business credit officers. After her positive experience, she encouraged her staff to take the CRC exam, which they did in the spring and fall of 2010.

Capital One takes a top-down approach to the CRC, with senior credit managers taking the exam first and setting an example for associates with less experience and responsibility, noted Prechter and Hickey.

“It speaks highly to the respect we have for our associates that we don’t want to ask them to do something we’re not willing to do ourselves,” said Prechter. “It demonstrates that the entire company and the individual managers are committed to ensuring that people with credit authority know what they are doing and are exercising good judgment.”

At Capital One, the CRC designation is taken very seriously as an important signifier of credit competence, Hickey said. Candidates who successfully complete the CRC exam are recognized in Capital One’s risk publication.

“To a person, no one takes this lightly,” Hickey said. “They do quite a bit of work to prepare for it, and they take the practice test that points out areas of weakness. It’s considered an accomplishment to pass the test, a feather in their caps. Capital One is a place that recognizes professional achievements and designations.”

At SunTrust, RMA-CRC Is Integrated into Credit Training
At SunTrust Banks, RMA’s credit risk certification is embedded in the institution’s comprehensive credit-training program.

“We have an integrated approach using the credit-training materials provided by RMA,” said Thomas E. Freeman, corporate executive vice president and chief risk officer. “We start by testing our lending officers and credit officers with the RMA diagnostic materials. We identify where they have shortfalls and where their skill base is substantial, and then design individual coaching and training parameters for them using training materials primarily provided by RMA.”

For SunTrust, it’s important to baseline the skill set for everyone with credit authority.

“Then we can figure out who’s got the best sets of skills and align their level of credit authority with their capabilities,” Freeman said.

While SunTrust has a core credit curriculum—a “credit boot camp” that covers the fundamentals—RMA’s credit risk certification is for experienced credit professionals.

The CRC exam complements and enhances SunTrust’s credit curriculum and training, said Marcie Simmons, SunTrust’s learning consultant for credit risk management. Preparation includes studying the Body of Knowledge—a downloadable document containing the minimum material a qualified candidate is expected to know—participating in Web seminars that review topics covered in the exam, and taking a practice exam.

SunTrust has 50 CRCs on staff. The first group sat for the exam in fall 2009, and the fall 2011 class was the bank’s fifth. Each class has roughly 20 participants, and the program becomes more popular as each class completes the RMA-CRC process.

“The word has spread, and now I’m contacted directly by people who want to do it,” said Simmons. “For the last two exam periods I had wait lists for people, and already I have a spring 2012 list started.

“When they contact me, I direct them back to their managers. We want to be sure their managers are identifying the right candidates and working with them on their development plans.”

One benefit of having 50 CRCs on staff at SunTrust is that they can mentor colleagues going through CRC study and preparation.

“When I ask for feedback from participants who take the exam, in every instance I’ve heard that having SunTrust employees who passed the exam serving as mentors is the biggest benefit in preparation,” said Simmons. “They love that. It really helps them go into the exam so much more prepared than if they were trying to do it on their own.”

While the mentoring is done informally and study and preparation are self-directed, Simmons makes sure Sun- Trust’s CRC candidates aren’t alone. She sets up a kickoff call for staff members nominated by their managers for the RMA-CRC and sends them information and an application. Then she holds monthly conference calls for those participating in the CRC process—for example, in September, October, and November for the fall exam. In addition, she’s available to take calls at any time during the process.

“The monthly calls are just to check in on everybody and see how they’re doing as they prepare,” Simmons reported. “Is anything hanging them up? Do they have questions?”

Simmons sees SunTrust’s inclusion of the CRC in its comprehensive credit curriculum as one response to the credit crisis that ravaged the banking industry.

“We have seen a renewed focus on having a strong credit foundation,” she said. “It’s important to have a cadre of credit professionals who have the right skills and knowledge.”

Meanwhile, Freeman noted that credentialing goes a long way toward affirming the professionalism and capability of staff members. “It’s important to have really good folks who are doing a really good job,” he said. “With the CRC, you can point to industry-wide recognition of their skill base and capabilities. It’s something I look for and something we reward in the institution.

“RMA’s broad set of credit products is consistent, it follows a logical sequence, and it builds toward a crescendo at the end with credit risk certification,” he added.

What the RMA-CRC Means to Credit Professionals
Suzette Prechter, CRC, of Capital One, took the CRC exam very seriously as she prepared for it in 2009. She started by printing out the Body of Knowledge.

“I read the course material and identified areas where I might have some weakness,” she said.” In those areas, I went back to training materials to beef up my skills. Then, just a few weeks prior to the exam, I reviewed the whole Body of Knowledge a second time cover to cover.

“I took the practice exam several times. The standardized test was probably the single most intimidating factor to most of us in management. Taking the practice test gave me a lot of confidence to actually step into the test room.

“It is a point of pride to have worked as hard as I did to prepare for the exam and then to pass it the first time,” Prechter added. “I am a strong advocate for the CRC. The certification is highly respected both in our company and in the industry. It is a real indication of achievement.”

Continuing education to maintain the RMA-CRC is now a priority for Prechter. CRCs must complete 45 continuingeducation credits every three years to stay current.

“Having worked so hard to earn the certification, I’m now focused on how many hours of continuing education I have and need to retain it,” she said. “RMA offers a large number of opportunities to get continuing-education hours.”

Like Prechter, Scott Clemmons, CRC, of SunTrust Banks took the exam in 2009, after he had been appointed Sun- Trust’s wholesale lending credit training manager.

“I was relieved to find out I passed,” he said. “After all, I was the new credit training manager!”

Clemmons wrote down and adhered to a weekly study plan to prepare for the exam.

“I took the Body of Knowledge, spaced it out in weekly increments, and thoroughly read and studied the materials,” he said. “After I took the practice exam, I felt fairly confident. One thing to remember is that, while the CRC exam does mirror the practice exam, there are still some significant case studies to work through,” he said.

“My background was instrumental in my success with the exam. You can be very textbook-smart, but it’s the practical application of the training to the job that really prepares you.”

For Michelle Aurelius, CRC, senior vice president and region credit portfolio manager at SunTrust, Web seminars offered by RMA were key in helping her prepare for the exam, which she took and passed in April 2010.

SunTrust’s commitment to the CRC designation as part of its credit-training program gives it tremendous in-house credibility, Aurelius said. And credit risk professionals at SunTrust who already have the CRC are a big help to candidates preparing for the exam, she added.

Kristen Anthony, CRC, vice president and middle market underwriter at Capital One, took her preparations very seriously.

“The month prior to the exam, I studied about five hours every night and five to seven hours on the weekends,” she said. “I read all the Body of Knowledge material, read the fundamentals material, took the fundamentals exam,1 took the end-of-module practice tests, answered all the end-ofmodule questions, took the practice exam multiple times, and organized all the reading material into a consolidated study guide that I reviewed a number of times before taking the exam.”

Her dedication paid off; she passed the CRC exam in April 2011.

“The exam was challenging,” she said. “I’ll be sure to get my 15 hours of credits each year for the next three years so I don’t have to take it again!”

Kevin McLaughlin is the senior writer for The RMA Journal. He can be reached at kmclaughlin@rmahq.org.