CRM Toolbar Training

August 3-4, 2010      (click class date at left for details and pricing)

Valued Credit Risk Management, L.L.C. clients have multiple spreadsheet tools provided to assist in proper underwriting and structuring of consumer, commercial and real estate credits. In response to growing demand, we are offering a unique training course, dedicated to maximizing your investment in CRM's spreadsheet underwriting tools.

Course Outline and Content:

• Day One:
  
  • Consumer and Small Business Risk Grade
  • Global Cash Flow Analysis Workbook
  • Income-Producing Property Workbook
• Day Two:
  
  • Residential Construction Line
  • Builder Line of Credit
  • Builder Liquidity Analysis Worksheet
  • Developer Line of Credit
  • Financial Spreads and Projections
  • Borrowing Base Calculation Worksheet

Who Should Attend: Any personnel new to the online credit manual and/or toolbar client bank that has not received formal training on the CRM Toolbar or clients who wish to brush up on their CRM Toolbar skills.

Commercial Lending

September 14-16, 2010         (click class date at left for details and pricing)

Commercial lending at community banks is relationship-based, and often requires understanding both the borrower's and owner's repayment capacity. This course focuses on many of the basic underwriting fundamentals required in underwriting commercial loans for operating companies and owner-occupied real estate. The following topics will be addressed:

• Identifying and analyzing different types of financial statements.
• Calculating cash flow and understanding methodology, ratio analysis, detailed income and balance sheet analysis.
• Understanding cash flow repayment.
• Detailed analysis of lines of credit and asset conversion to better understand accounts receivables, inventory and the cash cycle.
• Identifying problem loan red flags and solutions.
• Understanding the borrower and performing due diligence to include sound banking principles.
• Loan approvals and concise credit memos.
• Course includes a group case study and loan committee presentation simulation.

Who Should Attend: Any bank personnel desiring to deepen their understanding of commercial lending from an introductory level.

Advanced Commercial Lending

October 5-7, 2010         (click class date at left for details and pricing)

Commercial lending at community banks is relationship-based, and requires understanding of sometimes complex commercial transactions and projections. This course focuses on advanced analysis fundamentals required in underwriting commercial loans for operating companies as well as holding companies. The following topics will be addressed:

• Identifying differences in various legal entities and their cash flow.
• Analyzing financial projections to identify multiple potential sources of cash.
• Analyzing business financials to determine the business operating gross and net cash flows.
• Industry specific analysis to include: religious organizations, distributors, convenience stores/gas stations, and manufacturers.
• Determining sources and uses of cash for a business beyond the simple cash flow approach.
• Identifying differences in lending to holding companies in regards to cash flow and structure.
• The use of covenants and guaranties to monitor performance of the entity on an ongoing basis and to ensure compliance.
• Identifying complex concepts of owner-occupied commercial real estate structure and analysis.
• Course includes a group case study and a loan committee presentation simulation.

Who Should Attend: Senior lending personnel who have satisfied the prerequisite of attending the Commercial Lending course.

Lending Compliance - Beyond the Basics

October 20, 2010         (click class date at left for details and pricing)

Regulators want to make sure that no stone goes unturned and technical compliance does not become the next wave for a media frenzy. Today their "Deep Dive" goes beyond the basics. This is just the beginning. In this workshop we will explore the technical requirements behind recent regulatory exam reports. Have you revised your compliance procedures to reflect your practices in relation to all of the regulatory changes? Bring a copy of your compliance procedures and we'll revise them together during this interactive, informative session.

Course Content:

• RESPA 2010 - Good faith estimate - before you can even begin to complete the GFE you must know if you have a "higher priced" loan AND if you are subject to escrow.
• Truth-in-lending - are you waiting 7 days to close a loan? Can you identify a "higher priced" loan? Where do you obtain the APR to use in the FFIEC calculator?
• Escrow - are you over-reserving? - Strict guidelines mandate exactly how much you can and cannot reserve.
• Adverse Action - are you denying loans solely based on credit score thus requiring a different disclosure on the adverse action letter?
• HMDA - more errors than ever, typically in the application date, income, and rate spread.
• FACT Act - Credit Score Disclosure - Are you providing it on denied loans? There is no 3 day exclusion.
• Disclosure, disclosure, disclosure - What are you providing? How are they getting created? What is the lender telling the applicant?

Who Should Attend: Any lender, underwriter, administrator, manager, credit officer or executive who wants to learn how to address current lending compliance issues and provide practical solutions to compliance management.

Loan Documentation

October 21, 2010         (click class date at left for details and pricing)

Has your lending staff's basic knowledge of loan documentation kept up as doc prep systems and centralized delivery systems have evolved? Loss prevention requires community bankers to maintain a good working knowledge of documentation concepts and proper lien perfection. This course focuses on the key risk issues related to real estate loans, Uniform Commercial Code, title opinions and insurance, legal entities and more.

Course Outline:

• Legal Documentation Overview - Organizational Documents, Uniform Commercial Code, Title Insurance, Real Estate Documentation and Other Aspects of Collateral Lending.

Course Content:

• Determining the documentation requirements for secured and unsecured consumer, commercial and real estate loans.
• Managing the documentation and closing process.
• Perfecting security interests in collateral with regard to UCC, titled personal property and real estate.
• Discussion of recent court decisions relating to collateral perfection.
• Suggestions for enhancing the secondary review process.

Who Should Attend: Any lender, underwriter, administrator, manager, credit officer or executive who wants to expand their general knowledge of current legal documentation.

Understanding Real Estate Appraisals

November 3-4, 2010         (click class date at left for details and pricing)

Understanding real estate appraisals and evaluations is an imperative step in the underwriting and review process given the current market, economic and banking environment. This course focuses on:

Course Content:

• Understanding the regulatory environment, how it directly impacts the Bank's appraisal practices and how the bank can design its policies and processes to meet the examiners expectations.
• Identifying the key components of an appraisal and how they affect the appraised value.
• Enabling the bank to perform reviews on residential and commercial appraisals with confidence that the appraisal meets compliance and prudent underwriting standards.
• Enabling the bank to perform internal real estate valuations.
• Introduce the bank to a full range of common valuation methods for loans related to Construction, Development, Residential properties, Commercial projects and special purpose properties.

Who should attend: Any bank personnel involved in real estate lending and reviewing appraisals as well as any individual who wants to learn how to prepare real estate evaluations instead of appraisals

Commercial Real Estate Lending

November 16-18, 2010         (click class date at left for details and pricing)

It's no secret that community banks and regional banks have historically relied heavily on commercial real estate for loan portfolio growth. This course focuses on a deeper understanding of the primary source of repayment for commercial real estate loans, how sensitivity analysis can help determine how close to the edge the loan is, and how banks can mitigate that risk as long as it is identified early enough. Specific factors in this course include:

• Analyzing income property cash flow streams and their continued viability, in order to determine a realistic cash flow repayment and work out plan, then modeling and stress testing loan terms in order to match the loan need with the property's cash flow.
• Properly structuring residential builder credit facilities, identifying the risks in residential construction, and managing construction draws.
• Analyzing proposed and existing residential development projects, mitigating market risks, and assessing guarantor strength and properly structuring loan requests and renewals to minimize the credit risk.
• Discussing various problem loan indicators for residential construction and development as well as basic workout strategies.
• Analyzing financial and non-financial underwriting concepts for income-producing properties.
• Addressing key appraisal concepts and approaches important to the evaluation of residential and commercial real estate appraisals in the underwriting process.*
• Identifying the important customer information needed to ensure a full understanding of the borrower/guarantor as well as discussing pertinent credit memo and loan approval techniques.
• Course includes a group case study and loan committee presentation simulation.

*CRM offers a separate, more-detailed Understanding Real Estate Appraisals course that ensures an overall understanding in real estate repayment analysis when coupled with the subject course.

Consumer Lending School

November 30 - December 1, 2010   (click class date at left for details and pricing)

Consumer lending entails more than just looking at a credit score, especially given the turbulent credit environment. A lender must look beyond the score and objectively judge each credit on a case-by-case basis. Learn how to evaluate credit bureau reports, calculate debt ratios, review personal financial statements, and consider unsecured lending standards using case analysis and classroom discussion.

Course Content:

• Calculating loan-to-value and the debt ratio.
• Review, analysis and comparison of credit reports and Personal Financial Statements.
• Determining a borrower's actual net worth.
• Determining when and what mitigating factors to use for exceptions.
• Making use of the three methods (Adjusted Net Worth, Gross Annual Income and Stable Liquid Assets calculations) to analyze unsecured loans.

Who Should Attend: Lenders or other bank personnel new to consumer lending.

Note: Adding CRM's Small Business Lending course will deepen your understanding of consumer lending by addressing borrowers with multiple sources of income and small businesses.

Small Business Lending

December 2, 2010   (click class date at left for details and pricing)

One of the strongest competitive advantages of a community bank is catering to small business owners, but it is extremely important to properly underwrite the cash flow with this type of borrower. This course will help lenders identify when to use tax returns to evaluate requests, calculate simple business cash flow, and global cash flow concepts.

Course Content:

• Understanding the different business entity types.
• Establish the difference between profit and cash flow.
• Calculating simple business cash flow using the tax return.
• Calculating monthly disposable income standard expense deductions.
• Analyzing several cash flow sources and calculating a global cash flow.

Who Should Attend: Lenders or other bank personnel familiar with basic consumer lending concepts who handle more complex consumer and smaller business requests.

Note: This class requires a basic knowledge of consumer lending concepts such as debt ratios and minimum unsecured lending standards. It may be taken in conjunction with CRM's Consumer Lending School.

Advanced Commercial Real Estate Lending

December 7-9, 2010         (click class date at left for details and pricing)

Real Estate lending during this weak economic period is especially challenging, compared to ten years ago, when every loan worked. Now, more than ever lenders need to understand real estate specific cash flow analysis, the relationship with guarantors and the pitfalls in work out strategies. This course focuses on complex real estate transactions and issues. You will gain a deeper understanding of the primary source of repayment for commercial real estate loans, how sensitivity analysis can help determine how close to the edge the loan is, and how you can mitigate that risk. Topics include:

• Net Lease Analysis - This is an alternative to traditional underwriting that tests actual cash flows based on actual lease terms. This analysis models replacing tenants and the cost of unoccupied spaces.
• Commercial Construction Management and Risk - Identify construction risk. Define the relationship between the owner, the bank and the builder. Determine the acceptable risks when the building process goes awry.
• Contingent Debt Analysis - Create a strategy to identify guarantor contingent liabilities, and address that risk. Determine those liabilities that matter and those that don't.
• Specialized Properties - Examine unique risks tied to specific property types. These include hotel underwriting concepts and adult assisted living facilities.
• Specialized Appraisal Topics - Discuss the pressures faced by appraisers in the current market and how that affects your lending decision.
• Course includes a group case study and loan committee presentation simulation.

Who Should Attend: Senior lending personnel who have satisfied the prerequisite of attending the Commercial Real Estate Lending course.

Impaired Loan Analysis

        

Synthesizing market conditions, regulatory guidance and accounting rules into a reasonable and consistent impairment procedure is difficult. In response, CRM has developed a two day course which will provide you with an understanding of the current issues, practical solutions and best practices. This class includes our observations, research and experience with banks having regulatory challenges, dealing with potential investor expectations, and conforming to accountant demands.

Common questions that continue to challenge Community Banks include:

• What defines an Impaired Loan?
• When and how should required Individual Loss Reserves be calculated?
• What is an appropriate Risk Grades, Accrual Status, etc.?
• At what point should an Impaired Loan be charged off (partial or full)?

What will participants acquire in this course? -- Critical, practical tools in the following areas:

• Realistic examples to illustrate at what point a loan crosses over from merely being problematic to meeting the regulatory definition of Impaired.
• Selecting the appropriate method for calculating corresponding Individual Reserve for Impaired Loans that is allowable under federal regulations.
• Understanding what information is generally needed to calculate Individual Reserves. This includes what adjustments and assumptions are justifiable, as well as what supplemental documentation should be maintained.
• Identifying at what point the Individual Reserve calculation is no longer necessary - either due to the loan no longer being Impaired, or the progression to charge off being necessary per regulatory requirements.
• How does recent regulatory guidance on Commercial Real Estate Workouts impact the practical definition of Troubled Debt Restructure (TDR), and how does that impact both a potential designation as Impaired and the required method of calculating Individual Loan Loss Reserves?
• What are the most common mistakes made by Community Banks in attempting to resolve Problem Loans?

Who Should Attend: This fast-paced, hands-on, two-day course is designed to provide the most benefit to anyone with direct responsibilities for any aspect of Problem Loan Management or ALLL maintenance. This generally includes Senior Lenders, Chief Credit Officers, Loan Officers, Credit Administration personnel, Internal Audit or Credit Review personnel. However, the insight provided will also benefit CEOs and CFOs charged with verifying both the methodology and sufficiency of your Bank's ALLL.

Interest Rate Hedging and Risk Management -
Free online webinar

        

Credit Risk Management is hosting a free Interest Rate Hedging and Risk Management webinar on October 8 to show community banks how to use interest rate swaps to manage rate risk. The session will focus on using interest rate swaps as part of your loan origination platform. Interest rate swaps and other derivatives create their own unique risk management problems such as credit risk, documentation, market valuations and establishing effective policies and procedures. With the help of our swap partner, Provident Risk Management, we will demonstrate the risk management techniques and support services available to community banks.

Who should attend: CFOs, Portfolio Managers, Senior Credit Officers and Senior Lenders

Course Content:

• Using Interest Rate Swaps as a Risk Management Tool
• The Back-to-Back Swap Structure and your commercial loan business
• The nine derivatives risks regulators have highlighted
• Developing effective Policies and Procedures for interest rate hedging
• Defining, measuring and approving swap credit exposure
• ISDA Documentation: An industry standard document
• Best practices for executing swaps
• Operational issues for swaps and related loans
• Risk Reporting for swaps: Market risk; credit risk; FAS 133 reporting
• Provident Risk’s on-line document origination system
• Negotiating and closing ISDA documentation with commercial borrowers
• Managing Swap Dealer Relationships: Credit exposure; collateral posting; pricing and execution
• Return on Capital: An analysis of the typical returns made by regional banks from their swap business

To join the online event
1. Go to https://creditriskmgt.webex.com/creditriskmgt/onstage/g.php?d=803797446&t=a
2. Fill in the required fields
3. Click "Join Now"

To join the teleconference
Dial the Conference Number: 866-479-6576
Enter the Participant Pin Code: 43138024#

For assistance
You can contact Doug Hitchen at:
919-846-1601

Non-Real Property Collateral Valuation

  

Real estate isn't the only collateral a bank can take to secure a loan. There are many types of non-real property collateral, but bankers must be aware of the diverse factors to consider during evaluation of appraisals or the collateral itself.

Non-Real Property Collateral Valuation, presented by Credit Risk Management, will explore these diverse and varying factors for several types of non-real estate collateral to ensure bankers feel comfortable handling this imperative step in the underwriting process. Ultimately, a high level of comfort with different types of collateral will reduce the bank's risk and enhance borrower relationships.

Who Should Attend: Any bank personnel involved in non-real estate lending, underwriting, and evaluation/appraisal review.

Course Content:

• Machinery and Equipment
• Commercial Vehicles
• Specialty Plant and Equipment
• Inventory and Receivables
• Intellectual Property and Other Intangible Assets
• Livestock
• Feed and Other Farm Products

Problem Loan Management

     

The credit cycle has turned - abruptly! Regardless of size, portfolio structure or geographic footprint, almost every Community Bank is now challenged by the worst combination of credit and economic fundamentals in two decades. Effective management and resolution of emerging problem credits is critical to protecting a Bank's long term earnings and independence

This is a fast-paced one-day course is designed for anyone with problem loan management duties -- whether the responsibilities are full-time or occasional, significant or cursory. The course is geared toward Commercial credits, but will touch on some critical points related to Consumer problem loans as well.

The training would benefit any institution concerned with the risk of significant deterioration in credit quality, whether that issue is:

• Already at hand and must be dealt with immediately and aggressively, or
• Visible in the foreseeable future, but still largely avoidable with appropriate modification to Bank strategy, practice and priority.

Who would specifically benefit most from this training?

• Lending Officers - Bank's first line of defense against problem loans.
  
  • In the best position to identify potential problems.
  • Frequently tasked to investigate and devise early stage resolution proposals.
  • Usually responsible for additional reporting and documentation associated with problem loans.
  • Often completely responsible for cradle to grave management of all resolution efforts.
  • The face of the Bank on a day to day basis for both problem loan borrowers and the remainder of the community.
• Internal Loan Review personnel - Tasked with maintaining underwriting consistency and policy adherence to limit future problem loans. May also be tasked with initial identification of potential problem loans.
• Management/Executive Officers - Responsible for overall portfolio management and performance. Involved in resolution of individual problem loans or indirectly managing efforts of subordinate personnel. In the best position to fully appreciate the impact of:
  
  • Direct problem loan costs - impact on Bank earnings from charge offs, increased administrative expenses, etc.
  • Indirect, but tangible problem loan costs - increased reserve requirements, potential increase in Bank administrative overhead, etc.
  • Intangible problem loan costs - loss of productive time, impact on employee morale, potentially diminished community standing, increased regulatory scrutiny, etc.

What will participants acquire in this course? -- Critical, practical tools in the following areas:

• Potential impact of problem loans on the Bank's portfolio, reputation, and customer base.
• How to identify potential problem loans as far in advance of default as possible.
• Practical, tactical steps to mitigate risk and maximize collection for a wide variety of individual loan types once they are correctly identified as potential problems.
• General issues related to litigation, bankruptcy and lender liability.
• Understanding which commonly overlooked underwriting issues can significantly increase or decrease future problem loans.
• Overall recommendation for organizational structure and high level problem loan portfolio management strategies.
• Understand exactly what does (and does not) make a loan "Impaired" and the corresponding regulatory requirements related to Allowance for Loan and Lease Losses (ALLL).

Lending to Non-Profit and Religious Organizations

        

Defining and then resolving unique underwriting challenges associated with lending to Non-Profit Entities and more specifically, Religious Organizations

By their very nature, non-profit organizations create underwriting challenges for cash flow based lenders. Having an active volunteer based Board of Directors can wreak havoc with any continuity of management analysis. The idea that the organization spends everything it brings in as revenues makes the traditional "Net Income plus Depreciation and Interest Expense" cash flow analysis difficult. When you add to this weak secondary repayment sources like specialized real estate and non-recourse terms, then repayment becomes difficult to support.

This class will present an underwriting framework and tools to enable you to underwrite non-profit entities using cash flow based and ratio analysis. Key concepts will include:

• Understanding the financial differences between non-profit and for-profit entities
• Understanding the various entity types by looking at revenues; giving-based organizations versus program-based organizations
• Adjusting the non-profit's cash flow statements to determine where debt repayment fits
• Testing budgets and projections to determine if they are reasonable and determine how much repayment depends on them
• Determining management's and member's ability to meet these projections and budgets

The class will also discuss key non-financial underwriting issues, like:

• Identifying the entity's decision makers and ensuring that they support the loan
• The importance of having the membership support the loan request and how to identify that support, or lack of it
• When guarantees make sense and when they add risk
• Whether the bank can and should liquidate its collateral for these loans

A significant amount of the class involves lending to Religious Organizations. Many of the general topics are applicable to these groups. More specifically, the class will tailor these concepts for Religious Organizations by:

• Presenting a financial underwriting tool that allows the bank to underwrite historic cash flows, adjust those cash flows for discretionary spending and also test projections
• Results will include traditional debt coverage ratios but also giving and debt service by Giving Unit and by Total Revenues

Bonus – You will receive a CD with an outline of the underwriting concepts in a draft underwriting guideline discussion that can be added to the bank's lending manual, along with a copy of the Excel based underwriting tool.

Loan Portfolio Concentrations & Stress Testing Seminar

        

Loan concentrations! Stress Testing! Hot topics for community banks and the regulators in today's banking environment.

CRM's one day seminar will provide guidance on how to address both issues in your bank and provide sample reports and policies as take a ways from the seminar.

Over recent years, Commercial Real Estate loan growth has been at unprecedented levels at community banks, which has caught the attention of regulators. Regulators' concerns are further exacerbated with the recent examinations showing relaxed underwriting standards due to increased competition for CRE loans. In response, the regulators issued their interagency guidance entitled Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices.

Has your bank moved to adapt its policies and procedures, produced detailed reports via a robust Management Information System, developed contingency plans to reduce any concentration risks, developed market and industry analyses, performed rudimentary stress tests, and adjusted underwriting standards to meet all the detailed requirements as specified within the interagency guidance?

CRM understands the need to be reactive in banking today, and is proactive in assisting our clients in updating their policies and procedures. Banks must start to comply with more stringent regulatory guidance regarding any loan portfolio concentration.

This seminar provides assistance for determining if your Bank has concentrations within the loan portfolio. Customized policies and supporting worksheets will be provided to address concentrations. Areas to be discussed in the seminar are:

• Board and management oversight
• Determining concentration limits based on loan and product type
• Identifying, managing, and reporting of concentrations
• Developing contingency plans to reduce concentration risks
• Market and industry analysis
• Credit underwriting standards
• Stress testing
• Maintaining capital adequacy

BONUS – In addition to the program presentation and reference materials, you will be provided with an electronic file containing a sample of Loan Concentration Management policy and sample reports that can be utilized to detect and monitor loan concentrations within your portfolio.

"UN"Fair Lending Seminar

        

Have you heard about HUD's new Fair Lending Division created July 2007? HUD launched a record number of investigations this year with several major fair lending settlements.

Don't be on the Regulator's Radar – Fair Lending is where it is happening! The regulatory agencies continue heated enforcement of fair lending issues. Fair lending compliance continues to be a key component to the success of all lenders.

• Learn how Barney Frank, House Financial Services Committee Chairman's new chant "Use it or lose it" will effect you. This refers to the Federal Reserve's handling of writing specific criteria for unfair and deceptive practices. He wants tougher enforcement whenever it is determined that borrowers did not receive disclosures, they were not timely, they were inaccurate or the terms and conditions of the loan were not adequately explained prior to closing i.e. Unfair and Deceptive Practices.
• Will your Spousal Signature practices end up on the front page of the newspaper with your name associated with conduct described as "immoral", "unethical", "unscrupulous" and "offensive to public policy"? Spousal Signatures continue to be a priority for the regulators. In the Attorney General's 2006 Report to Congress a significant number of referrals involved allegations of marital status discrimination, where the lender improperly required spousal signatures on loan documents.

These are just a few of the fair lending issues on the horizon. No matter how good the program, continued vigilance is essential. It is time to revisit the basics and understand the current regulatory environment. Specifically the class will focus on:

• Brief history of fair lending and equal credit laws
• Recent fair lending enforcement litigation and lessons learned
• Unfair and Deceptive Credit Practices – what is it?
• Identifying level of assistance provided to applicants and regulatory expectations
• Discuss the relationship between unfair treatment and illegal discrimination
• Identifying lending practices that give the appearance of discrimination
• Mystery shoppers and what testers are trained to report
• Managing a fair lending investigation
• Identify the best practices to ensure compliance with fair-lending laws