2019 Credit Analysis & Underwriting Series

4-Part Series

This series will give lenders and credit analysts the skills and confidence to evaluate and present loan proposals with accuracy and consistency.

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Does your financial institution have dedicated credit analysts or are your lenders expected to underwrite their own loans? Perhaps your institution falls somewhere in between. Regardless, it is crucial that the person completing the analysis can accurately and consistently spread financial statements, tax returns, and other key financial reports to develop an effective loan narrative. Designed for credit analysts and loan officers of all experience levels, this series will give your lending staff the tools to make consistent, sound lending decisions.

Credit Analysis & Underwriting Series Topics

• Regulator Issues & Update for the Credit Analyst
• Analyzing Financial Statements for the Credit Analyst
• Debt Service Coverage Calculations in Underwriting
• Global Cash Flow Analysis for Underwriters & Credit Analysts

Session Dates & Descriptions

Click on presenters' names below for more information.

January 10, 2019
Regulator Issues & Update for the Credit Analyst
S. Wayne Linder, Young & Associates, Inc.

While asset quality continues to be generally sound industrywide, concerns over deteriorating underwriting standards and credit concentrations continue to attract significant regulatory attention, accounting for the largest share of matters requiring attention (MRAs) and matters requiring board attention (MRBAs).

Regulators will evaluate the quality and depth of financial risk and underwriting analysis, including the awareness of existing or emerging risk concerns, stressing for an uncertain future, tying current underwriting and new deals to the institution's risk appetite statement, and adequacy of post-funding monitoring and analysis.

CAMELS ratings are now forward-looking. Therefore, lenders with historically low delinquencies and charge-offs will no longer automatically get a "1" asset quality rating. It's expected that the credit analysis process will be based on the complexity of the credit and each institution's risk profile. This program will focus on regulatory credit issues and provide insight on preparing for your next safety and soundness exam.

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January 30, 2019
Analyzing Financial Statements for the Credit Analyst
S. Wayne Linder, Young & Associates, Inc.

Analyzing financial statements goes beyond EBITDA. Proper analysis focuses on determining a borrower's financial risk and assessing operating performance and cash flow, debt repayment ability, liquidity, leverage, and profitability. The task is to determine the operating entity's ability to generate sufficient cash for:

1. On-going operations
2. Paying interest payments, current portion of long-term debt (CPLTD), and shareholder dividends
3. Capital spending on plant, equipment, and other fixed assets

If the operating entity does not generate sufficient cash from operations, it would have a financing requirement. The credit analyst needs to understand what outside sources the operating entity used to get cash and how much cash was obtained from each source. This presentation will address the evaluation of financial risk through the analysis of the borrower's financial statements.

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February 20, 2019
Debt Service Coverage Calculations in Underwriting
S. Wayne Linder, Young & Associates, Inc.

Which debt service coverage ratio (DSCR) calculation method should be used: EBITDA, UCA cash flow, or free cash flow? Should the primary or global DSCR result be used for underwriting? Should there be a provision for maintenance capital expenditures? What about Section 179 depreciation expense? Should a deduction for taxes and living expenses be included? Should the underwriting be based on the DSCR before or after distributions? What should be done with missing debt service schedules? Should loans to stockholders be included? Join this webinar to learn the answers to these questions and more.

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March 27, 2019
Global Cash Flow Analysis for Underwriters & Credit Analysts
Aaron Lewis, Young & Associates, Inc.

When is global cash flow needed? What if a business can qualify for a loan with its cash flow alone? Do additional businesses owned by one or more of the guarantors have to be reviewed? Examiners expect to see a consistently applied global debt service coverage methodology, and your lending staff must be able to provide clear and consistent answers when asked. For example, who should be included? Do you use the EBITDA or UCA method, and why? What level of financial detail is needed for various related entities? What numbers are used: operating profit, net profit, or another number? How is debt repayment determined without complete debt schedules from each entity? This presentation will address key decisions and processes in global cash flow calculations.

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