Day 1

Day 1 begins by focusing on the process of conducting a credit analysis of a commercial borrower. Beyond the technical analysis of the financials, attendees review how interpretive analysis plays a major role in underwriting commercial loans. In this first day, we set the stage for how a commercial bank evaluates credit risk.

Seminar Topics 

• The Financial Analysis Process: The Steps in Performing a Credit Analysis.
• The Chief Credit Officer’s Perspective

• Understanding the Key Accounting & Financial Terms found in Financial Statements.
• Sources of Information for Performing a Credit Analysis.
• Basic Structure of the Income Statement and Balance Sheet
• Analyzing the Income Statement:  Identifying the Key Accounts.
• Operating Factors Affecting Revenue, Costs and Income.
• Recognizing the Differences between Cash Basis and Accrual Accounting.
• Analyzing the Balance Sheet: Estimating Liquidity, Capacity and Leverage.
• Reconciling Net Worth 
• Identifying Contingent Liabilities of a Business.
• Evaluating Compiled, Reviewed and Audited Financial Statements.

• Determining Net Operating Income and Debt Service Coverage for a CRE Property.

Case Study:
Using a business owner’s personal financial information and their federal tax 1040 tax return with schedule C & E, we determine the borrower’s Global Cash Flow. We judge the ability of the business owner to service a proposed real estate loan.