Credit analysis is the process of identifying and evaluating a borrowerâ€™s ability to repay a specific extension of credit while following prudent lending practices that comply with safety and soundness standards. Unfortunately, bankersâ€™ actions do not always reflect this understanding. In practice, credit reviews and loan committee presentations can all look the same. Some would have a hard time distinguishing the analysis for one credit request from the work performed for every other request. Although credit analysis is considered important and often serves as a training ground for future lenders, in many institutions the credit analysis process consists of performing quasi-clerical tasks such as spreading financial statements and preparing â€œfill in the blankâ€ or â€œstandard formatâ€ written loan presentations. Although these tasks are well suited for new analysts and trainees, they hardly describe credit analysis as it should be defined and performed. If this sounds like your institution, it may be time to revisit the basics of the credit analysis process.
No matter what techniques are employed in the credit analysis process, itâ€™s important to always approach the effort rigorously. Thorough credit analysis and proper loan structuring can keep loans from becoming problems. Proper credit analysis never loses sight of four basic but important concepts:
1. Every industry presents unique issues for the lender
2. The key issues that must be addressed will be different for each borrower
3. The amount and structure of the proposed loans must be matched to the borrowerâ€™s situation
4. Good credit analysis requires detective work
During this important webinar, Gary Deutsch will discuss the essential components of the credit analysis process to benefit both new and seasoned analysts.
WHAT YOUâ€™LL LEARN
The discussion of the credit analysis process will cover the following topics:
- The keys to superior credit analysis
- The five "C"s of credit
- Knowing the borrower
- Types of borrowing entities
- The analystâ€™s tool kit
- Other information sources supplied by applicants
- Information supplied by third parties
- Background and comparative information
- AND MUCH MORE!
YOUR CONFERENCE LEADER
Your conference leader for "The Credit Analysis Process: Back to Basicsâ€ is Gary Deutsch, president, BRT Publications LLC. Mr. Deutsch is a licensed CPA in Maryland and has a B.A. in accounting and an MBA in finance from Loyola University Maryland. He has also achieved the Certified Management Accountant, Certified Internal Auditor and Certified Bank Auditor designations. Mr. Deutsch is the founder and president of BRT Publications LLC. Mr. Deutsch has trained thousands of financial institution professionals in all aspects of risk management and has written numerous books in the U.S. and Europe on topics such as credit risk, internal audit and compliance with Generally Accepted Accounting Principles. Mr. Deutsch has extensive risk management and internal audit experience through his association with financial institutions of all sizes as well as through his role leading the KPMG financial institution consulting practice in the Mid-Atlantic region.