In a previous post, we provided guidance on creating annual volume projections for your branch that marry top-down directives from executive leadership with input from boots-on-the-ground loan originators (LOs). In this post, we focus on projections and how they can be used as a reference point for the rest of the year. The truth is, no matter how well you plan, there will be unexpected surprises — some good and some bad. This doesn’t mean the work you spent planning was not worthwhile.
l like to think of projections as the roadmap that guides you to your destination. Just like traffic, weather, construction, and missed turns will influence how your trip unfolds, a number of variables shape the week-in, week-out performance of a branch. Being aware of potential roadblocks when there is still time to take a detour is the key to success.
Data points the way
It wasn’t that long ago when GPS-equipped cars were a luxury. Now, apps like Waze tap into real-time data to improve the way you respond to unexpected slowdowns and detours. You always know where you are, how far you are from your next turn, what your next turn is, and how much longer you have until you reach your final destination. Similarly, by comparing your branch projections to actuals throughout the year, you gain immediate insights into the performance of your LOs, what’s pending in the pipeline, and where you may need to make adjustments to hit annual targets.
When performance falls short, talk with the originator about how to make up the difference next quarter. An effective way to engage employees in bridging the performance gap is to bring the conversation back to earnings. If Olive isn’t hitting her monthly closed-loan target, she’s not on track to reach her commission goal for the year. What actions can she take to get to where she wants to be?
A branch manager who understands the strengths and weaknesses of each LO is well equipped to coach their team to avoid roadblocks. For instance, if Olive is not taking enough applications each month and her pull-through rate is lower than expected, she might need to switch up her marketing tactics or expand her network of referral partners. Monitoring actual performance against your volume projections will signal you when changes need to be made.
Use Historical Data to Get Out of Gridlocks
Sometimes events unfold that are out of your control, and your GPS has to adjust on the fly and recalculate a new route. Just like bad weather or road closures, unexpected factors might significantly threaten your ability to meet your volume projections. Consider what may happen if one of your producers leaves mid-year. How will you offset this loss?
With access to the historical data you used to create the branch budget and pipeline data from your LOS, you can forecast how the next month or quarter will look based on your current capacity. Review opportunities in the pipeline and calculate their chance of closing based on variables such as LO pull-through rate and lock expiration.
This recon provides you the opportunity to proactively manage files that may be headed for trouble and make sure your team has the tools it needs to get the deals done. Taking proactive steps to better the chances of attaining targets is essential to getting ahead of the events you can’t control. With fewer surprises, you can take control of your numbers, improve decision making, and reduce risk.
In a few short years, GPS navigation has gone from a luxury to something anyone with a smart phone can use to adapt to the inevitable challenges of travel. At work, let your branch projections set the destination and use real-time performance data to navigate the best route to success.