2020 Commercial Lending School Agenda

2020 CCBN COMMERCIAL LENDING SCHOOL
​Monday, August 17-21, 2020
Four Points by Sheraton Anaheim​

AGENDA 
 
Day One
 
Introduction to the Commercial Lending Process
 

• Importance of commercial banks to the national, regional and local communities
• Importance of commercial lending to banks
• Organization of credit administration in banks
• Role of credit administration within the bank
• Role of the commercial loan officer (relationship manager)
• Characteristics of a good commercial loan officer

 
Introduction of Comprehensive Case Study
 

• This case study will be used to apply and practice the credit analysis concepts and tools presented over the course of the program, culminating in the credit memorandum write up.

 
Analyzing Industry, Business and Management Risks
 

• Study of industry characteristics and industry life cycles
• Study of business and product life cycles
• Study of management risks and how management should respond to a changing environment
• Discover sources of information on various industries
• The impact of macroeconomic factors on businesses and industries

 
Review of Corporate Financial Statements and Tax Returns
 

• For commercial and industrial relationships
• For commercial real estate relationships
• Identify the major accounts displayed on financial statements
• Review the accounting of major asset accounts that banks rely upon as a source of repayment including the allowance for doubtful accounts, inventory costing methods and depreciation methods and their impact on earnings of a borrower

 
Day Two
Review of Corporate Financial Statements and Tax Returns (Continued)
 
Determine a Commercial Borrower’s Creditworthiness by Examining Financial Factors including:
 

• Liquidity
• Leverage
• Asset management capabilities
• Operating performance

 
Loan Structuring by Utilizing Ratio Analysis to Calculate the Asset Conversion Cycle and the Net Working Investment to Determine:
 

• When a commercial borrower will require funds on a short-term basis
• How much funding a commercial borrower will require on a short- term and long-term basis
• When to expect repayments on short-term and long-term loans

 
 
Analysis of Borrowing Causes and Matching the Causes to the Required Analytical Tools and the Proper Loan Structure
 

• Identify the ten most common reasons why companies need to borrow funds
• Recommended loan structures to match the borrowing cause(s) based upon the circumstances
• Know the financial data required to analyze the borrowing cause(s) and to differentiate from the borrowing purpose
• Know the proper credit and ratio analysis required to prove and verify the borrowing cause

 
Analysis and Interpretation of Cash Flow
 

• The statement of cash flow will be utilized to teach the creation of this most important statement with emphases upon interpretation of the data and using it to make good loan decisions
• Describe how decisions can be affected by utilizing Traditional and EBITDA versus the Uniform Cash Analysis Method and the Indirect Cash Flow Analysis Method
• Applying the appropriate method of cash flow to various types of borrowers to determine financial stability

 
Day Three
Financial Forecasting, Capital Budgeting and Sustainable Growth Rates
 

• Convert management’s assumptions into a projected income statement, balance sheet and cash flow analysis statement to determine the ability to pay debts from future earnings
• Determine questions to ask management to substantiate the assumptions provided and precast those assumptions into a sensitized financial forecast
• Perform a capital budget utilizing internal rate of return, average rate of return, discounted cash flow and payback period methods of determining the best option among several investment opportunities
• Determine the sales growth level a company can achieve given a higher leverage position or without taking on new debt

 
Global Cash Flow Analysis Utilizing a Self -Employed Borrower with Interest in Various Entities
This analysis will consider the combined cash flow and debt service requirements from:
 

• The primary business (utilizing uniform cash flow analysis)
• The owner(s) by converting income into cash
• All related people and businesses
• Then applying a life style factor for individuals and combining them in the proper way to arrive at global cash flow to determine its ability to cover debts and living expenses of all entities.

 
Underwriting Commercial Real Estate Transactions
 

• Defining commercial real estate and the unique differences from commercial & industrial lending
• Analyzing real estate investors, builders / developers
• Fundamentals of construction lending for commercial and residential properties

 
Day Four
Review the Commercial Loan Documentation Process Including Documents Required to:
 

• Identify the borrower
• Identify and value the collateral
• Evidence the debt
• Attach the collateral
• Perfect the security interest

 
Writing an Effective Credit Memorandum
 

• Understand the purposes of the credit memorandum
• Know the primary and secondary audiences of credit memoranda
• Topics to be covered in a credit memorandum
• How to plan, organize and structure credit memos to obtain desired results
• Importance of paragraph development, writing styles and form and appearance in writing credit memos

 

• Group Assignment: Apply concepts covered in the Commercial Lending School to compose a detailed credit memorandum

 
Review the Credit Memorandum Assignment

• Compare group memos with each other and the instructors

Day Five
 
Best Practices in Loan Portfolio Management
 

• Review of key credit policy issues
• Review of effective credit approval systems
• Utilizing loan documentation for loan covenant tracking
• Maintaining well documented credit and loan documentation files

 
Review of Credit Administration Issues
 
·       Utilizing credit risk rating to determine asset quality
·       Problem or impaired loan management
·       Identifying trouble debt restructuring and accounting for them
·       Calculating the allowance for loans and lease losses under current and the proposed current expected credit loss method
 
Check Your Understanding – Online Multiple-Choice Final Exam
 
Wrap-up
 
Awarding of Certificates

---

Upcoming Events