Company Logo Wednesday, September 06, 2006

Case Study: Libro Financial Group Uses Covarity to Deliver Superior Customer Service While Driving Process Efficiencies and Improving Risk Management Controls

(Kitchener, Ontario, September 6, 2006)

Over its 55 year history, Libro Financial Group (formerly St. Willibrord Community Credit Union), a $1 Billion full-service financial institution, has built its reputation by "helping our owners to be successful" says Frank Kennes, Vice President Credit. Libro's commitment to customers is so strong, the company refer to customers as "owners". The goal of making its owners successful has been achieved through a long history of innovative projects put in place to better serve their needs. This progressive approach has helped the Libro Financial Group maintain growth in excess of ten percent annually.

In its quest to be southwestern Ontario's "preferred choice for financial services" Libro is known for pushing the envelope. For example, the company was the first to offer online ATMs and to publicly promote weekly mortgage payments. Maintaining this tradition of innovation, Libro's most recent endeavor is an automated system for margin-based lending. The company was looking for a way to improve this process in order to provide better value and service to its primary customers, small- and medium-size businesses. Libro turned to Covarity, the leading provider of Commercial Loan Management solutions. Using the Covarity solution, Libro has been able to automate the underwriting and ongoing monitoring of commercial loans, achieve greater consistency in risk management, improve efficiency, and offer its borrowers a broader range of services.

The Business Challenge

For financial institutions offering margin-based loans, the manual process by which these loans are set-up, monitored, and adjusted creates a number of challenges. Borrowers often fail to meet reporting requirements and lenders waste valuable time chasing the required information. This often results in adjustments to credit availability not being made in a timely manner and when they are, the adjustment rationale not always being clear to the borrower. Ultimately the entire process is subject to error, delinquency, higher risk, and inconsistency of analysis.

These challenges are pervasive throughout the industry, with over 200 credit unions in Canada offering commercial lending and representing some 5,000 margin-based loans. In 2003, Credit Union Central of Canada (CUCC), the national trade association and central finance facility for Canadian credit unions, recognized the business problems associated with these loans and decided it needed to take action. Working with the National Lenders Policy Committee, CUCC set a direction to help address these challenges including identifying the Covarity Dashboard as a platform solution for automating the commercial loan process.

Libro Financial Group was an early adopter of the Covarity Dashboard, implementing the solution throughout all 13 of its branches. With the Covarity Dashboard in place, account managers' emphasis on growth is now supplemented with an orientation toward monitoring and collateral security. The streamlined and automated nature of the solution prohibits people from sweeping aside the activity; instead "the solution provides visibility to problems with security months in advance" says Ken Filson, Senior Account Manager, Agriculture and Commercial.

The Business Solution

The Covarity solution has two main components, the Lender Dashboard and the Borrower Dashboard. When a loan is established, Libro uses the Lender Dashboard to capture the margin-based rules for credit availability and the customer's reporting requirements. Customers are automatically sent a reminder email following which they upload whatever data is requested through their Borrower Dashboard. Uploads take place over the Internet directly from most leading accounting packages, customized Excel templates or numerous file formats.

The Covarity process expedites credit evaluation and adjustment, making available all the rationale for such adjustments, based on individual accounts receivable, accounts payable and inventory position. Users of the Covarity Lender Dashboard benefit by having access to timely information that enables a more effective management of their risk. Users of the Covarity Borrower Dashboard benefit by complete visibility into credit availability and access to a range of reports that capture trended financials.

The Business Result

For many financial institutions, the practices around margin-based lending are not well defined, leading to poor audits, loans going bad, high risk exposure, time-consuming analysis, and labour-intensive paper-based systems. As a result account managers can be inhibited in building and maintaining high quality books of business.

With the transparency created by the Covarity Dashboard, problems get elevated and addressed earlier. Libro's account managers can get a daily picture of their portfolios – who is late in reporting, who is in covenant breach. The account manager spends less time monitoring and has more information about existing loans, so he or she can place more emphasis on growing the business. According to Greg McQueen, Branch Manager, "Covarity helps us to focus on elements of the business building role."

Credit Analysts who use the Covarity Dashboard say the solution helps them to see a true picture every month, enabling them to measure the state of business loans in a single screen. "The Covarity process instills a discipline where loan losses on margin can be more effectively avoided," according to Owen Smelski, Account Manager.

Borrowers using the Covarity Dashboard appreciate both the on-line support and the direct line back to Covarity technical specialists. System features like the standard email reminder and statement upload help users to meet their reporting requirements. And, the Covarity Dashboard reporting capabilities have been identified by borrowers as practical and convenient tools for internal presentment of financial trends and comparisons.

 "The number one benefit of the Covarity Dashboard is a better quality loan portfolio derived from greater productivity and better quality risk management. It is good for Libro Financial Group and it is good for our owners."  Frank Kennes, Vice President, Credit, Libro Financial Group.

About Libro Financial Group
Libro Financial Group is southwestern Ontario's full-service financial institution operated by a community of owners and open to everyone. With over 47,000 owners and more than $1.2 billion in assets under administration, Libro Financial delivers a full range of chequing, savings, investment, RRSP, insurance and loan products along with financial coaching and advice for consumers, and farm and business owners. For more information visit

About Covarity Inc.
Incorporated since 2001, Covarity is the leading provider of commercial loan management software solutions. The Covarity Dashboard helps financial institutions attract new business by harnessing the internet to improve customer service, while reducing the risk and effort associated with capturing borrower financial statement data and monitoring commercial loans. Please see for additional information.

All company and/or product names are trademarks and/or registered trademarks of their respective owners.


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