How To Become a Chief Lending Officer: Step-by-Step Guide
Learn about the steps important to pursuing a career as a chief lending officer, including education, skills, salary and more.
A chief lending officer (CLO) is responsible for the overall management and direction of a financial institution’s lending activities. The CLO is responsible for ensuring that the institution’s lending portfolio is profitable and compliant with all regulations. If you are interested in becoming a CLO, it is important to understand the role and responsibilities of this position, as well as the steps you need to take to pursue this career. In this article, we will discuss the role of a CLO, the responsibilities of this position and the steps you need to take to become a CLO.
What Does a Chief Lending Officer Do?
A chief lending officer is responsible for the overall management and direction of a financial institution’s loan portfolio. They work with other senior executives to develop lending policies and procedures that meet the needs of the institution and its customers. Additionally, they oversee the underwriting and approval process for all loans.
The duties of a chief lending officer typically include:
- Developing and implementing lending policies and procedures
- Overseeing the loan underwriting and approval process
- Managing the loan portfolio
- Monitoring compliance with lending regulations
- Identifying risk factors associated with loans
- Recommending changes to lending policies and procedures
- Training and supervising loan officers
- Negotiating loan terms with borrowers
- Approving or denying loan applications
Chief Lending Officer Salary and Job Outlook
The average salary for a chief lending officer is $180,250. This figure can vary based on the size of the institution that the officer works for, as well as the location and industry.
The Bureau of Labor Statistics expects job prospects for chief lending officers to grow at an average rate over the next decade. This is due to many factors such as the growing use of data analysis in marketing. Companies often need the expertise of a market research analyst to gather, interpret and leverage that data into effective marketing strategies.
How to Become a Chief Lending Officer
Here are several steps you should take to become a chief lending officer.
1. Earn a bachelor’s degree in business, finance or a related field
A chief lending officer typically needs a bachelor’s degree in business, finance or a related field. Common degrees for this position include a Bachelor of Business Administration (BBA), Master of Business Administration (MBA) and Bachelor of Science in Finance (BSF).
While there are some variations between employers, most chief lending officers have at least five years of experience in the banking industry. Earning a bachelor’s degree can help you gain this experience while also preparing you to work as a chief lending officer.
2. Gain experience in the banking industry, including lending and credit
Before pursuing a career as a chief lending officer, you may want to work in other roles at a bank. Entry-level positions that can help you gain experience in the banking industry include personal banker, credit analyst and loan processor.
Working as a personal banker involves interacting with customers and helping them open new accounts or apply for loans. This role can help you develop your customer service skills and learn about different types of financial products. Working as a credit analyst involves analyzing an individual’s credit score and determining whether they qualify for certain loans. You can use this role to learn about risk management and how it affects lending decisions. Finally, working as a loan processor involves reviewing applications and ensuring all necessary documents are included before presenting them to a committee for approval. This role can help you understand the lending process from start to finish.
3. Consider earning a master’s degree in business administration (MBA) or a related field
While a master’s degree is not always required for this position, many chief lending officers hold a Master of Business Administration (MBA) or other advanced business degree. Earning an MBA can help you develop your skills in areas such as leadership, management and strategic planning.
An MBA program typically takes two years to complete, but some programs offer part-time options that take longer to finish. You may also consider pursuing a specialized master’s degree in banking or finance.
4. Develop strong interpersonal skills
As a chief lending officer, you interact with many different people on a regular basis. You need to be able to communicate effectively and build relationships with clients, other bank employees and vendors. Strong interpersonal skills can help you manage your staff and work well with others in the banking industry.
You may also have to meet with potential clients or negotiate loan terms with current ones. Having strong communication and negotiation skills can help you get favorable deals for your bank.
5. Understand financial analysis and risk management
Chief lending officers must understand the risks associated with different types of loans and how to manage those risks. For example, a bank may decide to offer home improvement loans because it expects these loans to have a high rate of return due to the improvements made to the homes. Understanding financial analysis can help you make decisions about which loans your bank should offer and how to manage risk if some loans go into default.
6. Stay up to date on changes in the banking industry
The banking industry is constantly changing, and new laws and regulations can affect how banks operate. To stay informed about these changes, it’s a good idea for chief lending officers to keep up with current events and read trade publications.
For example, the Federal Reserve Board sets interest rates for loans that banks offer. It also regulates other aspects of the banking industry. Reading articles from the Federal Reserve Board can help you understand its policies and how they may impact your role as a chief lending officer.
7. Join professional organizations such as the American Bankers Association (ABA)
The American Bankers Association (ABA) is a professional organization that provides training and education to bankers across the United States. The ABA offers several opportunities for professionals in banking to network with others, learn about industry trends and earn certifications.
The Certified Bank Loan Officer (CBO) designation from the ABA requires candidates to have at least five years of experience working in lending or credit management. Candidates must also complete an exam on loan products, underwriting guidelines and risk management practices.
