The Five Cs Of Commercial Credit: The Basic Elements Of Credit And Lending

Duration 60 Mins
Webinar ID IQW22L1228
Level Basic & Intermediate & Advanced

Financial Performance

  • Operating performance
  • Revenue
  • Sustainable sales growth
  • Break-even sales 
  • Sales productivity
  • Profitability
  • Financial condition
  • Liquidity
  • Leverage
  • Solvency
  • Cash flow

Financial Projections

  • Basics of projections
  • Viability of underlying assumptions
  • Linkage of the income statement to balance sheet to cash flow
  • Projecting income statement
  • Projecting balance sheet
  • Projecting cash inflows and outflows
  • Sufficiency of cash flows to repay debt, reward owners, and sustain enterprise

Shareholder Value

  • Role of shareholder value as a reward to owners
  • Key drivers in the projection of enterprise shareholder value growth
  • Sales growth rate
  • Tax rate
  • Profitability
  • Working capital investment
  • Fixed asset investment
  • Weighted cost of debt and equity capital
  • Short-term and long-term alternatives to accelerate shareholder value growth

Overview of the webinar

First, banking commercial borrowers require lenders to evaluate both repayment abilities, and, in turn, necessitates analyzing both the short-term and long-term potential of borrowers.  Enough positive cash flow to repay creditors and reward owners comes from solid financial performance, sustainable operating performance, and a stable financial condition.

Second, projecting a borrower’s financial performance means analyzing the underlying assumptions, e.g., revenue growth rate, productivity, profitability ratios, cost of debt and equity capital, etc., and employing these factors to forecast the income statement, balance sheet, and cash flow statement to quantify the future cash flow available for debt repayment, dividends, working capital and fixed asset investment sufficient to keep the borrower operating successfully.

Third, building shareholder value keeps the owners engaged and committed to sustaining the business.  What is the discounted value of those future cash flows?  What are the key drivers?  See how well working capital management—inventory, receivables, payables—can build up shareholder value faster and how productive capital expenditures can enhance shareholder value.

Who should attend?

  • Credit analysts
  • Loan underwriters
  • Commercial bankers
  • Loan review officers
  • Credit department managers
  • Senior lenders
  • Chief credit officers.
  • Credit analysts
  • Credit managers
  • Credit risk managers
  • Loan review officers
  • Risk managers
  • Enterprise risk managers
  • Chief credit officers
  • Senior lenders
  • Senior lending officer
  • Bank director
  • Chief executive officer
  • President
  • Board chairman

Why should you attend?

  • The first four C’s -
    capacity, conditions, collateral, and character- evaluate a borrower’s ability to repay, but character forces the lender to examine closely the borrower’s willingness to repay.
  • Learn how to employ the first four C’s to analyze repayment ability
  • Learn how to use the fifth C- character - to judge a borrower’s willingness to repay
  • Capacity is measured by the ability to repay from cash flow
  • Conditions evaluated in terms of how borrowing needs change over the business cycle and what makes some industries more vulnerable to downturns than others
  • Collateral analysis in terms of relative liquidation values
  • Capacity considered in terms of the borrower’s equity cushion and the degree of relative leverage possible
  • Character assessed in terms of willingness to repay as evidenced by payment history as well as tips for fraud prevention

Faculty - Mr.Dev Strischek

A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek is principal of Devon Risk Advisory Group based near Atlanta, Georgia.  Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC).  PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are more appropriate for privately held firms.  He also serves as the PCC’s representative to FASB’s Credit Losses Transition Resource Group supporting the new current expected credit loss (CECL) standard. Dev is the former SVP and senior credit policy officer at SunTrust Bank, Atlanta. He was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management. He also spent three years as managing director and credit approver in SunTrust’s Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, Mr. Strischek was chief credit officer for Barnett Bank’s Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, his experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor in Hawaii, Missouri, and Florida. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii. Mr. Strischek serves as an instructor in RMA’s Florida Commercial Lending School, the American Bankers Association's (ABA) Advanced Commercial Lending School and ABA’s  Stonier Graduate School of Banking, and the Southwest Graduate School of Banking. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA. Recent conference presentations have ranged from the new GAAP accounting principles for revenue recognition, lease capitalization, and current expected credit losses (CECL) to commercial real estate concentration management, from character in lending to leveraged lending, from credit risk management techniques and tools to why EBITDA doesn’t spell cash flow. Mr. Strischek has written over 200 articles about credit risk management, financial analysis and related subjects for the ABA’s Commercial Insights, the Risk Management Association’s RMA Journal, and other business professional journals. He is the author of Analyzing Construction Contractors and its related RMA workshop. A past national chair of RMA and former RMA Florida Chapter president, Dev serves as a member of the RMA Journal’s advisory board, and an ex-officio board member of the Florida and Atlanta RMA chapters. He also serves on the advisory board of the Atlanta Chapter of the Professional Risk Managers’ International Association (PRMIA), and he has consulted on credit risk and policy issues with banks in Morocco, Egypt, and Angola through the US State Department’s Financial Service Volunteer Corps (FSVC).



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