Financial Accounting for Lenders & Credit Analysts

A banker’s understanding of accounting fundamentals is essential to the application of sound financial statement and credit analysis. Accounting is the language employed to communicate financial information. It is the process of identifying and measuring economic events, then classifying, recording, and summarizing the measurements and reporting the information to permit judgments and decisions by the users. Bankers rely on this accountant prepared information to make such decisions.

Financial Accounting for Lenders presents the fundamentals of accounting, with a focus on the accounts that will be of most interest to a banker, identifying economic events and how they are reported in financial statements. By learning how the Balance Sheet, Income Statement, Reconciliation of Net Worth and Cash Flow Statement are developed and connected to each other learners gain insights that will be critical in further developing their credit analysis skills. And having an instructor who is a banker ensures the approach will be from a banker’s perspective. Case studies will be used to reinforce concepts presented. Specifically, the course will cover:

• Underlying Assumptions Used by Accountants
• Rules of Debits and Credits
• Construction of the Balance Sheet, Income Statement, Reconciliation of Net Worth, and the Statement of Cash Flow
• Difference between Accrual and Cash Basis Accounting
• Analysis of Accounts often used as Collateral such as:
  • Accounts Receivable (Aging Schedules, Allowance Calculations, etc.)
  • Inventory (Effect of LIFO, FIFO, and Average Cost Costing Methods)
  • Fixed Assets (Effect of varying Depreciation Methods)
• Analysis of the Notes to the Financial Statements
• Types of Financial Statements and meaning of CPA’ Opinions
• Review of Major Accounting Standards and Where to Find Them

OBJECTIVES

After completing this course, the participant be able to:

• Identify inaccurate and/or unreliable financial statements
• Describe the purpose of each financial statement and how they are constructed
• Define line items and give examples of underlying transactions
• Determine how specific business activities impact the financial statements and how they are connected
• Calculate earnings, equity, cash flow for a business
• Describe the accounting used for major collateral accounts

PRESENTER

Jeffery W. Johnson, Principle, Bankers Insight Group is a banking training professional who leads seminars on key industry issues across the U.S. He actively teaches for over 20 state and community banking associations, the Risk Management Association (RMA), and banks nationwide. Co-author of the RMA course “Lending to Service and Other Professional Organizations” (2001), he began his career at SunTrust Bank, advancing to senior roles at SouthTrust Bank and Citizens Trust Bank in Atlanta. His expertise spans Credit Administration, Lending, Business Development, Loan Review, and Training, with experience managing diverse loan portfolios and teams. 

AUDIENCE

Commercial Lenders, Consumer Lenders, Branch Managers, Credit Analysts, Loan Review Officers, Credit Officers and Directors requiring a better understanding of financial statements.