Writing Effective Credit Memos and Loan Narratives

Duration: 60 Minutes
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The purpose of this course is to teach skills required to write an effective credit memorandum, which places emphasis upon factors or trends that are important without the need to state the obvious. In short, the credit memo should present relevant, material facts and the writers' thoughts and opinions. Remember, anything you write in a credit memorandum will become public record if you find yourself in court with a borrower.
Effective Credit Memorandum
Instructor: Jeffery W. Johnson
Product ID: 501878
After a detailed credit analysis of a loan request has been performed, it is now time to communicate your findings in writing. Credit memoranda are a primary means of communications within the banking industry. Without a proper understanding of how to effectively write a credit memorandum is the difference between conducting a successful lending process to the consumer.

Objectives of the Presentation
At the end of this course, the participant will be able to:
  • Strengthen their understanding of credit analysis
  • Clearly describe the Financial Impact of changes in financial factors and not just report on what changed
  • Interpret financial trends and financial ratios
  • Write succinct and focused credit memoranda
  • Meet with management armed with relevant questions and issues to be addressed
  • Feel more confident in defending a recommended course of action based upon relevant facts and not instinct
  • Identifying Strengths and Weakness in the writing process and evaluating the Lender. Margin Change Analysis and Liquidity along with debt to income ratios
    • Potential Gross Income
    • Sources of Repayment
    • Key Risk and Structuring Issues
  • How to summarize the credit memorization process in these categories. Leverage, Liquidity, Cash Flow, Financial Ratios, Asset Management and Operation/Performance Ratios
  • Organizing the Credit Report based upon Leverage, Liquidity, Cash Flow, Financial Ratios, Asset Management and Operation/Performance Ratios. Knowing these factors will accurately summarize the strength and weaknesses of the entire lending process. This process will ensure that every facet of the writing the credit memo process has been covered
Why Should you Attend
In writing effective credit memoranda, it is not what you say that commands attention, but how you say it. Learn the three functions of credit memoranda: 1) They provide information on the condition and status of a customer relationship; 2) They provide a record of thoughts and actions and 3) They support or recommend action.

The webinar will also explore the underwriting and reporting on Commercial Real Estate, Construction Loans, Acquisition and Development Loans and Multi-Family Unit loans. In doing so, several samples of proven credit memos will be examined to insure bankers are covering the areas required by the banking regulators.

Areas Covered
  • Essence of Credit
    • Purpose and basis of the credit
    • Primary and secondary source of repay
    • Written repayment program
    • Collateral valuations
    • Conformity to credit policy
    • The five C's of credit
    • Strengths and weaknesses
    • Justification for exceptions to underwriting
    • Makes recommendation
    • Credit Memos
    • Primary means of communication within banking industry
    • Serves three functions:
    • Supports or recommends action
    • Provides information on the condition and status of a customer relationship
    • Provides a record of thoughts and actions relative to a customer relationship
    • Memos are to be succinct and to the point, but we violate this idea
    • Readers of credit memos are skilled bankers. Therefore, it is not necessary to state the obvious
    • Memos should present relevant material facts and writer's thoughts and opinions
    • The written opinions should be supported by facts
    • Anything you write in a memo will become public record if you end up in court with a customer
Who will Benefit
  • Branch Managers
  • Credit Counselors
  • Commercial Loan Officers
  • Consumer Loan Officers
  • Credit Analysts
  • Loan Review Personnel
  • Compliance Officers
  • Internal Auditors
$300
Recorded Session for one participant
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  • Upon purchase of the recorded session a link will be updated on your OCP Account within 24 hours
  • Please click on the link to access the Recorded Session
  • Presentation handouts in downloadable PDF format will be updated on your OCP Account within 24 hours of the purchase of the product
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  • Please share your valuable Feedback at the end of the session
Instructor Profile:
Jeffery W. Johnson started his career with SunTrust Bank in Atlanta as a Management Trainee and progressed to Vice President and Senior Lender for SouthTrust Bank (a large Southeastern Regional Bank) and Senior Vice President and Commercial Banking Division Manager for Citizens Trust Bank of Atlanta (Community Bank).

Most of his career has been spent in Credit Administration, Lending (Commercial, Consumer and Real Estate), Business Development, Loan Review, Management and Training & Development. He has managed loan portfolios representing a cross section of loan types including: Large Corporate, High Net Worth Individuals, Middle Market Companies, Small Businesses, Real Estate and Non-Profit Organizations and managed several loan officers with portfolio management responsibilities.

Mr. Johnson is now a training professional in the banking industry by leading various seminars covering important topics relating to issues in banking. He teaches actively for fifteen state banking associations in the United States, Risk Management Association (RMA) and individual banks nationwide. He co-authored a training course entitled "Lending to Service and Other Professional Organizations" for RMA in 2001.

Mr. Johnson earned a B.A. Degree in Accounting from Morehouse College in Atlanta, GA; a MBA in Finance from John Carroll University in University Heights, Ohio; Banking Diploma from Prochnow School of Banking at the University of Wisconsin-Madison and a Graduate Certificate in Bank Management from the Wharton School of Business at the University of Pennsylvania.
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