Loan Processing at Capital One Essay Example for Free

Loan Processing at Capital One Essay This marketing effort, which was planned to take the form of a major mail drop, was designed to increase the volume of funded loans in about six weeks when potential customers start returning these applications. It was clear to everyone at Capital One that the operations of loan processing would play a major role in determining if the upcoming mail drop would be a success. With 14 funded loans processed per associate every month and a total of 25 associates on the team, the department does not have the capacity to handle the application volume leading to our target of 700 funded loans per month that we set following our increased marketing effort†, observed one of the managers working for Rick, â€Å"What we need is a significant increase in staff. We also need to heavily invest in information technology to further increase the productivity of the existing staff†. While it was clear that the forecasted increase in loan applications would provide a serious challenge for the underwriters, there was no consensus on what actions should be taken. As was observed by one of the executives in charge of consumer loans: â€Å"When I benchmark the productivity of our underwriting team with other companies in the industry, 14 funded loans per associate per month is not a number we can be proud of. It takes about 3 hours of actual work to fund a loan, and that includes everything from the initial interview to underwriting, quality inspection, and closing. We have 25 associates, that each works about 150 hours per month. So each associate should be able to process 50 applications per month, which gives us 1250 applications per month for the team. Even if we fund only every other loan that we underwrite, we would just need a little bit of over time to get 700 units funded. † Several others at Capital One agreed. As it was put by one of the associates in charge of direct marketing: â€Å"Frankly, if you asked me, there seems to be a lot of potential for improving productivity in our processes. I am optimistic that our upcoming mail-drop will lift productivity and utilization scores in the underwriting process since there will be a lot more work coming in. † As the person in charge for operations management, Rick had mixed feelings about these comments. On the one hand, it was true that his department’s productivity metrics had not been stellar in the past. But his associates worked very hard and were very capable. This case was developed solely as the basis for class discussion. It is not intended to serve as an endorsement, source of primary data or illustration of effective or ineffective management. All data in the case has been disguised. Rick was relatively new to this role, though he was a highly accomplished operations manager with a history of taking on tough challenges and producing strong results by redirecting his teams towards better prioritization, teamwork and focus on strategically important activities. As he looked over the marketing forecast and the target of 700 funded loans for the next month, Rick wondered what the upcoming mail drop would do to his department? And, more importantly, what could he do to help Capital One grow its consumer loan business in the most optimal way? Capital One: Background Information After graduating first in class from the Stanford business school in 1981, Richard Fairbank joined Strategic Planning Associates (SPA), a strategy-consulting firm. In 1986, Fairbank met Nigel Morris, a young associate at SPA. While analyzing the operations of a major money center bank, the two reviewed the firm’s credit card operations. Both of them were struck by the enormous profitability relative to the rest of the bank. The young consultants concluded, â€Å"Credit cards are not banking – they are all about collecting information on 200 Million people that you’d never meet, and, on the basis of that information, making a series of decisions about lending money to them and then hoping they would pay you back. † Fairbank and Morris recognized the potential of customizing credit card products based on characteristics and behavior of their customers and taking advantage of the technological advances in computers that offered companies the ability to record, organize and analyze large amounts of customer data. They realized that few products in the credit card industry were being direct marketed and that even fewer firms were fully exploiting the power of statistical analysis. Fairbank and Morris were able to convince the bank to run a test using this strategy. The test worked remarkably well, however, the bank was unwilling to adopt this new strategy. Convinced that they were onto something really big, the two pitched their idea to more than 20 national retail banks before Virginia-based Signet Bank invited them to launch its Bank Card division. Over the next several years, Fairbank and Morris ran thousands of statistical tests and eventually introduced the first balance transfer product in 1991 that revolutionized the credit card industry and saved a struggling Signet Bank. Four years later, in 1995, Signet spun off its credit card division to create the publicly held Capital One. Recognized for its innovation, customer service, information technology, and financial management, Capital One now is one of the largest issuers of Master Card and Visa credit cards in the world. Today, the company’s global customer base is close to 49 Million with managed loans totaling over $83 Billion. From its IPO in 1994 to 2005, Capital One’s stock price had increased more than 1400%. In recent years domestic diversification has become a primary component of Capital One’s strategy. After going public, the company progressed on geographic and This case was developed solely as the basis for class discussion. It is not intended to serve as an endorsement, source of primary data or illustration of effective or ineffective management. All data in the case has been disguised. product line expansion through organic growth in credit cards and a series of acquisitions in non credit card businesses. In 1998, the company acquired Summit Acceptance Corporation, an auto loan provider. In 2001, it acquired the nation’s largest online provider of direct auto loans – People First, and a leading provider of financing solutions – Amerifee. The acquisition of Onyx Acceptance Corporation ® made Capital One Auto Finance the second-largest independent auto lender in the United States. The company also acquired Kansas City-based eSmartloan, an online originator of home equity loans and mortgages; Hfs Group, a home equity loan broker in the United Kingdom; and InsLogic, an insurance brokerage based in Tennessee. A number of these diversified businesses along with some organically grown businesses reside in the Global Financial Services (GFS) organization of Capital One. The Loan processing center is one such business that supported a variety of loan products such as small business loans, Line of credits and Jumbo loans. The Loan Approval Process In the division in charge of consumer and small business loans, the marketing department solicits potential customers through direct mail and/or email campaigns, that highlight the loan product features and specials of various products that are offered by Capital One. These campaigns, which are typically carried out at a nationwide level, have an information card that can be returned by the customer. The customer uses this card to provide information concerning their name, the type of loan they are interested in and the phone number/time range that is best to reach them. Customers who respond by sending this information back enter the process and are referred to as an â€Å"App†. Each App flows through a process that consists of five steps: Interview, Workflow Coordination, Underwriting, Quality Assurance (QA) and Closing. Exhibit 1 shows the process flow with a brief description of the activities and the number of associates in each role. Interview The interview step consists of seven associates who call the telephone number specified on the information card. On a typical day between 200 and 500 potential customers are called depending on the incoming volume of customer requests. Federal privacy regulations require that financial institutions can speak about the loan only to the person who actually requested the loan. Hence, if this person is not home at the time of the call, the call has to be repeated at a later point. During the call, the associate interviews the applicant about her loan needs. Based on the customer needs, the associate offers a range of products to the customer and the loan terms such as the maximum loan amount and the interest rate associated with each product (usually a range of interest rates is provided). This case was developed solely as the basis for class discussion. It is not intended to serve as an endorsement, source of primary data or illustration of effective or ineffective management. All data in the case has been disguised. If the customer is interested in one of the products, she will start an application process with the associate. The associate follows a scripted questionnaire and enters the information being provided by the customer into a computer system. The interview associate sets the expectation with the customer on the next steps: if additional information is necessary to complete processing and approving the application, an underwriter will get in touch with the customer in 2-5 business days to get the necessary information. If all the information is complete and accurate, the applicant will receive a phone call from an Underwriter in approximately 5-10 business days outlining the next steps in the closing process. Exhibit 2 summarizes some sample data that was collected over the course of a week. The Exhibit shows it takes on average 22 to 24 minutes for an associate to process one extra app. This includes the time the associate spends talking with the applicant. It also includes the time it takes the associate to reach the applicant.

Robert Hayden’s Those Winter Sundays Essay -- Poem Poet Hayden Winter

Robert Hayden's â€Å"Those Winter Sundays† In Robert Hayden’s â€Å"Those Winter Sundays† a grown person, most likely a man, recounts the winter Sundays of his childhood. He remembers the early morning events that took place and how much the events portrayed his father’s love for him. The man realizes that as a child he failed to appreciate the hard work his father did in order to provide him with some basic necessities and some small additional perks at times. The theme of the poem is sad, and lonely. Assuming that the speaker is a man looking back on his childhood, the child was lonely, and possibly even afraid of the father. The child seemed to associate the father with â€Å"the chronic angers of that house.† The speaker, who may also be the author, uses images and imagery to help the reader focus on the important parts of the poem.   Ã‚  Ã‚  Ã‚  Ã‚  Imagery is a plays a major role in this poem. The images used appeal to almost all the reader’s senses with the exception of tastes. Beginning in the first stanza, the reader’s senses of touch and sight are appealed to. For instance, when the speaker described the cracked hands that ached,† the reader sees an older man with dry, cracked hands. This can lead the reader to a number of assumptions again of the man being worn out from his job, or possibly having arthritis which would lead to the dry and sore hands. It also appeals to the sense of touch and sight when it describes the father’s hands and also when he â€Å"puts his clothes on in the blueb...

Solutions Tovfinancial Accounting

2 Company Operations Tutorial Solutions Chapter 3 Company operations Review Questions 11. When do dividends become a legal debt of the company? When are they to be recognised as liabilities? Where a company has a constitution that provides for directors to declare a dividend, then a dividend becomes a debt of the company once the dividend is declared. Where no such statement exists in a company’s constitution, then the debt will only arise when the time for payment of the dividend arrives.However, a dividend determined or publicly recommended by the time of completion of the financial report but not on or before the reporting date must not be recognised as a liability as at the reporting date. Instead such a dividend must be disclosed in notes as an event after reporting date. See sections 3. 4. 1 and 3. 4. 2 of the chapter. 14. Discuss the nature of a reserve. What reasons may there be for no definitions being given for a reserve in the legislation, accounting standards and t he Conceptual Framework 2010?The term reserve is not defined in any accounting standard or the Corporations Act. AASB 101 describes the equity of a company as consisting of issued capital and reserves (para. 54(r)). In addition to retained earnings, the most common type of reserves are general, revaluation and foreign currency translation reserves, all of which can be considered as ‘direct adjustments to equity’. There appears to be no clear reason as to why the term ‘reserve’ is not defined in the legislation, standards, or the Conceptual Framework. Retained earnings’ is one category of reserves, according to AASB 101. Selected solution from Leo, K. , Hoggett, J. , and Sweeting, J. , (2012) Solutions manual to accompany Company Accounting 9e, John Wiley and Sons, Australia. Practice Questions QUESTION 3. 1 1. Retained Earnings/Interim Dividend Cash (Payment of interim dividend) Retained Earnings/ Dividend Declared Dividend Payable (Declaration of a final dividend) Revaluation Surplus General Reserve (Transfer from revaluation surplus to general reserve) Retained Earnings/ T’fer to ReserveGeneral Reserve (Transfer to general reserve) General Reserve Share Capital (Being bonus dividend out of general reserve) Dr Cr 200 000 200 000 2. Dr Cr 420 000 420 000 3. Dr Cr 65 000 65 000 4. Dr Cr 120 000 120 000 5. Dr Cr 300 000 300 000 QUESTION 3. 10 GERALDTON WAX LTD General journal 2013 Sept 15 Dividend Payable– Ordinary Dividend Payable– Preference Cash (Payment of ordinary dividend [400 000 x 16c +300 000 x 16c x 3/5 = $92 800] and preference dividend [$75 000 x 6%]) Dr Dr Cr 92 800 4 500 97 300Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to accompany Company Accounting 8e, John Wiley and Sons, Australia. 2 Oct 20 Share Capital – Preference Retained Earnings/Redemption Premium (75 000 x 5%) Shareholders’ Redemption (Redemption of preference shares out of profits) Note: dividends do not accrue on the preference shares Retained Earnings/Transfer to Share Capital Share Capital – Ordinary (Retained earnings transferred to capital.NOTE: no dividends will be paid on this share capital) Oct 25 Shareholders’ Redemption Cash (Payment of cash to redeem preference shares) Nov 30 Cash Share Capital – Ordinary ‘A’ (Renounceable rights issue) [400 000/5 = 80 000 x 1. 90] Dec 20 Share Issue Costs (Share Capital) Cash (Payment of share issue costs) 2014 Jan 10 Retained Earnings/Transfer to reserve General Reserve (Transfer to general reserve) Feb 28 Cash Share Capital – Ordinary ‘C’ (Issue of shares to options holders) [70 000 x $1. 0] Share Options Share Capital – Ord ‘C’ Lapsed Options Reserve (Transfer of options account, 35 000 exercised and 5 000 lapsed) [70 000/2 = 35 000 x 60c = 21 000] Dr Dr Cr 75 000 3 750 78 750 Dr Cr 75 000 75 000 Dr Cr 78 750 78,750 Dr Cr 152 000 152 000 Dr Cr 3 000 3 000 Dr Cr 35 000 35 000 Dr Cr 126 000 126 000 Dr Cr Cr 24 000 21 000 3 000 Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to accompany Company Accounting 8e, John Wiley and Sons, Australia. April 30 Call – Ordinary ‘B’ Share Capital – Ordinary ‘B’ Call of 80c per share on Ordinary B shares) Calls in Advance (20 000 x 80c) Call – Ord ‘B’ (Transfer of calls in advance) May 31 Cash Call – Ord ‘B’ (Cash received on call) [(300 000 – 20 000 – 15 000) x 80c] June 18 Share Capital – Ordinary ‘B’ Call – Ordinary ‘B’ Forfeited Shares Liability (Forfeiture of 15 000 Ordinary B shares) 26 Cash Forfeited Shares Liability Share Capital – Ordinary ‘B’ (Reissue of 15 000 shares paid to $2 for payment of $1. 0) 27 Forfeited Shares Liability Cash (Refund to former shareholders) June 28 Retained Earnings/Dividend Declared Dividend Payable (Dividend declared) [Workings from the entries above: 400 000 + 300 000 + 80 000 + 70 000 – 15 000 + 15 000= 850 000 x 20c] Dr Cr 240 000 240 000 Dr Cr 16 000 16 000 Dr Cr Dr Cr Cr 212 000 212 000 30 000 12 000 18 000 Dr Dr Cr 27 000 3 000 30 000 Dr Cr 15 000 15 000 Dr Cr 170 000 170 000 Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to accompany Company Accounting 8e, John Wiley and Sons, Australia. 4

Strategic Management - Business Management Free Essay Example, 2500 words

Fashion industry has seen a lot of revolution and even the giants in Paris and Milan have not been spared. With the rise of USA and ASIA and fashion centres of the world, the company needs to wake up to the changes taking place in the market. As part of the strategic management, the company should first embrace the e-commerce models to have more links between designers and customers. It should also look into expansion strategy to widen its operation base. This model should be in line with the following analysis of the business and its operation environment. The company should not be disposed to tycoon McQueen since it can use this proposed model to turn round its fortunes. (Michael and Jude, 1997) External Analysis (a) Political The company operates in an enabling political environment. The fusion of the political and business environment is suitable for its operation. The business commission has already barred McQueen from acquiring the company as per its rules. With the formation of the European Union the company should move on with its deal with Romania to implement the RFDI project which will help link its customers with designers to ensure that it places in the market what customers want. We will write a custom essay sample on Strategic Management - Business & Management or any topic specifically for you Only $17.96 $11.86/pageorder now The European Union provides a wide customer base from where it can operate. (Brandford et al. , 2000) (b) Economic The Economic fortunes of the market are changing as consumers have gained more disposable income. With this knowledge the company should move from low fashion industrial segment which has become crowded to fast fashion segment in line with its competitors. The formation of European Union provides a large customer base that can provide a huge economic base for the company. With a 30 million pounds overdraft, and thinking of expansion strategy, the company should seek external funding for its operation. A merger with another fashion industry operating in an outside market but with a sound financial base can be an option in the operation and expansion strategy. Falling economic fortune and operation capital for the company is a threat that should be addressed immediately. (c) Social The changing social trends in the market should be used to the advantage of the company. Customers have changed their loyalty to clothe stores and flock where they can find the latest fashions regardless of the price. In line with this, the company should see an opportunity of attracting the customers by providing the fast fashion designs. The strategy of holding cat walks with its designs should not be dispensed off as it has a lot of social effect to the customers but only if the company retails the current fashions.