2024 Credit Analyst Series

Do you wish your loan presentations were more effective? Are they a struggle to write? Do you wonder if they answer the key questions the loan approvers have? How much detail you include is driven by the complexity of the credit and the type of credit being underwritten. This program will include samples of good (and not so good) content. Join us to learn how to write an effective, real-world loan presentation.

This session will explore the five vital financial factors all lenders must understand to determine a borrower’s overall financial condition: liquidity, leverage, asset management, operating performance, and cash flow. Liquidity measures the ability to meet short-term obligations as they become due. Leverage measures the degree to which a company’s assets are supported by creditors compared to support provided by owners. Asset management measures management’s ability to utilize capital assets to generate revenue. Operating performance measures management’s ability to generate profits from operating their companies. Cash flow measures management’s ability to generate cash from operating, investing, and financing activities. This session will define each factor and explain why they are important in the credit analysis process. Methods to determine each factor will be explored using financial statements, ratio analysis, reconciliation procedures, working capital analysis, and best practices in determining true cash flow.

Calculating debt service coverage (DSC) is a fundamental building block of credit analysis (AKA how do we get paid back?). One of the most important concepts is that today’s loans are paid with tomorrow’s cash flow. In addition to the basic techniques of cash flow analysis, including traditional DSC versus UCA, this program will explore the items that must be considered when assessing a borrower’s ability to sustain adequate cash flow over the term of the loan. The emphasis will not only be on how to make the calculations, but also on making an appropriate decision about the type of analysis based on the expected loan repayment. This presentation will also address the impacts of cash- vs. accrual-based accounting choices and how changes on the borrower’s balance sheet affect cash flow. It will cover the use of tax returns, internally prepared financial statements, and accountant-prepared financial statements in constructing accurate cash flow analyses.

In this highly scrutinized industry, it is critical to understand the regulatory agencies’ expectations, which are often influenced by economic factors. With the recent rise in interest rates and potential for challenges with CRE borrowers, it is more important than ever to be in sync with regulators. Irrespective of the economy, understanding regulators’ general expectations contributes to effective credit underwriting and management. What are regulators’ expectations for 2024? What are they most concerned about regarding effective credit management? Get expert insight on how to practically meet their expectations and effectively communicate with them, including how to constructively discuss any criticisms or disagreements.