Commercial and Industrial Lending Flashcards
What are the characteristics of commercial lending clients and the types of loans they typically use?
What are the characteristics of commercial lending clients and the types of loans they typically use?
- Characteristics
- Typically generate in excess of $20MM in Revenue Annually (most are far larger)
- Diversified Industries: Manufacturing, Gaming, Education, Medical, Contractors, C-Stores, Technology Logistics, etc.
- Types of loans
- Loan Products are typically: Real Estate, Lines of Credit for Working Capital, Equipment financing, Commercial Cards, Acquisition/Partner Buyouts
What are the steps in the onboarding/approval process for C and I loans?
What are the steps in the onboarding/approval process for C and I loans?
- Meet with client – Complete Discovery
- Preflight with Approvers
- Issue Term Sheet to be signed by prospect/client
- Complete Credit - Presentation
- Submit for Approval
- Issue Commitment Letter/Negotiate
- Close the Deal
What were the sections of the credit presentation and what information is contained in each section?
- executive summary
- . business description/history/assessment
- . industry risks
- . relationship strategy
- . key credit risks
- . Risk Grading/Structure
- Sources of Repayment
- Borrower/Guarantor Financial Analysis
- Background/Credit
Executive Summary
Executive Summary
- Action you are requesting
- Overview for high level Executives
- Recommendation
- Pricing Discussion
Business Description/History/Assessment
Business Description/History/Assessment
- Identify Entities and People Involved
- Describe Background/History
- Management Strengths
- Describe what they do – Markets, locations, products
- Competitor discussion
- Very thorough evaluation of character of the owners/managers
Industry Risks Describe the Borrower’s Industry Identify risks associated with the industry Discuss key components of industry Environmental/Regulatory Concerns
Industry Risks
- Describe the Borrower’s Industry
- Identify risks associated with the industry
- Discuss key components of industry
- Environmental/Regulatory Concerns
Relationship Strategy Why are you requesting this deal? Describe Existing Relationship (if Any) Describe any business with other banks Discuss additional opportunities Relationship Status – growing , holding or declining
Relationship Strategy
Why are you requesting this deal?
- Describe Existing Relationship (if Any)
- Describe any business with other banks
- Discuss additional opportunities
- Relationship Status – growing , holding or declining
Key Credit Risks Identify and quantify the primary risks that could negatively impact repayment. Market Risk Interest Rate Risk Financial Risk Business Risk Concentration Risks Legal Risks
Key Credit Risks Identify and quantify the primary risks that could negatively impact repayment. Market Risk Interest Rate Risk Financial Risk Business Risk Concentration Risks Legal Risks
Risk Grading/Structure Submit through our model Collateral Analysis Covenants Structure
Risk Grading/Structure Submit through our model Collateral Analysis Covenants Structure
Sources of Repayment
Primary Source
Secondary Source
Tertiary Source
Sources of Repayment
Primary Source
Secondary Source
Tertiary Source
Borrower/Guarantor Financial Analysis Income Statement Balance Sheet Interim Financials UCA Cash Flow Business Cash Flow Projections with Assumptions and Sensitize
Borrower/Guarantor Financial Analysis Income Statement Balance Sheet Interim Financials UCA Cash Flow Business Cash Flow Projections with Assumptions and Sensitize
Background/Credit
Pull Credit
Full Background on owners and key personnel
Discuss any findings
Background/Credit
Pull Credit
Full Background on owners and key personnel
Discuss any findings
What is elevator analysis? Is it a good way to analyze a credit?
What is elevator analysis? Is it a good way to analyze a credit?
- Many bankers use the uncomplimentary term “elevator analysis” to describe how some analysts discuss companies: “This ratio is up, that ratio is down; this metric is up, that metric is down.” Elevator analysis focuses on how metrics change from one period to another rather than on what the changes mean.
