We review hundreds of credit memorandums every month from a wide variety of community banks across the country. Generally, the credit memos are carefully considered, well planned and appropriately formatted. We read memos from banks ranging in asset size from $100mm to over $10B and loans ranging from $250k up to just over $50mm. We look at memos for annual reviews and submission for new CRE and C&I loans. While most bankers are skilled and proficient at form
Tag: Credit Process
We are currently considering an interesting loan opportunity for a community bank. The loan is an $11mm term credit to finance the construction and operation of a cold storage facility. The warehouse will be operated by a medium-sized regional company. Our bank was asked to participate in the credit, and our analyst took only a few hours to spread the numbers. All of the cash flow, liquidity, and leverage ratios were analyzed.
Many banks have a formal or informal expectation that certain decisions need to be unanimous. We often see this in credit committees, strategic planning sessions, hiring decisions and operational moves. If you find your bank committees often achieving votes where 100% of the members agree, chances are you have a flawed system. While unanimity in decision making seems like a positive attribute, we will show you how it counterintuitively leads to more risk, not less.