The banking industry is a much different place now than it was before the mortgage meltdown and financial crisis. Banks are more hesitant, careful and measured when doling out loans, and BB&T is among the banks playing it safe with a new strategy on credit.
BB&T’s enterprise risk management team has revisited and altered the way it evaluates consumer loan decisions, in part by instituting a Credit Risk Review system, according to Bank Systems & Technology.
More Thorough Credit Risk Review
One of the main reasons the banking industry nearly plunged off the ledge during the financial crisis was the sheer number of loans it issued to marginally qualified or flat-out unqualified borrowers. Iffy home loans were a huge problem and credit card loans also turned into a substantial source of delinquencies and loan losses for banks. Although BB&T didn’t issue many sub-prime loans during the real estate bubble period and consequently escaped the crisis largely unscathed, the bank has still taken steps to strengthen its risk evaluation when signing off on loans.
The bank augmented its enterprise risk management division by enhancing its study of analytics and business intelligence. These changes gave the bank better ability to monitor whether prospective commercial or consumer borrowers are fully qualified. A BB&T official told the magazine the bank now has the tools to screen out many more of the prospective borrowers who do not meet lending minimums based on credit scoring screens. The new system can provide more accurate predictions of how a loan might turn out during an 18-to-30-month window.
Branch Banking & Trust, or BB&T, is a large bank based in Winston-Salem, N.C. The bank currently holds $157 billion in total assets. The bank in 2008 accepted about $3 billion in bailout money as part of the government’s TARP bailout plan. The bank operates branches in a large cluster of states in the Southeast U.S. from Florida to Alabama to Indiana to Maryland.