Commercial Lending School, Day 1
The week begins with an introduction to the fundamentals of banking, focusing on risk management, loan evaluation, and the skills of a successful lender. The day continues with a deep dive into understanding the unique financial dynamics of different types of businesses and the importance of aligning loan structures with their specific needs.
Watch Recording COMING SOON!
Day 1 Resources
IBA Education Programs
Coming Soon!
Link
2025 GSB Schools
Coming Soon!
Link
Voya Bank Advisory Group
Coming Soon!
Link
Commercial Prospecting
Coming Soon!
Link
Top
Day 1 Session Information
MONDAY, SEPTEMBER 8 | 8:30am - 3:30pm
FOUNDATION CONCEPTS IN LENDING
The week kicks off with an overview of the business of banking and the role of the lender. This session introduces risk appetite, risk tolerance, risk culture and the risks assumed in the loan portfolio.
Learning Objectives
At the end of this session, you will be able to:
- Identify six major categories of risk banks assume in commercial lending
- Define risk appetite, risk tolerance and risk culture
- Enumerate at least five personal and technical skills of a successful commercial lender
- Enumerate the four key lending questions
- Describe the Loan Evaluation Process
- Identify the 5 Cs of credit
- Define the Loan Evaluation Equation
- Identify seven elements of the external environment in which a company operates
- Identify and explain the significance of the key variables
UNDERSTANDING THE BORROWER’S BUSINESS
Each type of business and industry has a unique mix of assets, liabilities, margins, asset utilization and financial leverage. It is essential that the lender understand these critical differences among businesses.
Learning Objectives
At the end of this session, you will be able to:
- Explain the concept of working assets
- Define and apply the concepts of the operating cycle, the fixed asset cycle, the profit cycle, the life cycle, and the cash cycle in the operation of a typical business
- Define net working capital and recognize its role in the typical business
- Utilize the concept of financing gap to project working capital requirements
- List the major functions performed by typical businesses and explain the unique financing requirements of each
- Define excess cash and explain its role in defining borrowing needs and ability to repay debt
- Use the operating, fixed-asset, profit, and cash cycles to explain how financing requirements can arise in the typical business, identify the appropriate loan structure to meet the financing need and define the appropriate sources of repayment
EVALUATING MANAGEMENT
Examine the management process, with emphasis on evaluating the management team focusing on aspects of management including and apply the techniques.
Learning Objectives
At the end of this session, you will be able to:
- Describe the traits of a good manager and leader
- Identify members of the borrower’s management team
- Evaluate management requirements to meet the challenges of the company’s position in its life cycle
- Evaluate the quality of management’s internal systems
- Evaluate the quality of banker/borrower communication
- Utilize three tools to evaluate management
- Define the “Do Right” Rule and the Purpose of a Corporation
- Apply the techniques in a short case study (optional)
BANK PRESIDENT CONVERSATION ASSESSING THE RISKS FACING THE BORROWER
Explores the risks impacting any business including risks introduced by the economic environment, the borrower’s industry and the borrower’s market.
Learning Objectives
At the end of this session, you will be able to:
- Identify and explain the causes of economic fluctuations
- Describe the tools available to the Federal government to influence economic activity
- Describe the operation of fiscal and monetary policy
- Understand the impact of recent legislative and regulatory initiatives
- List four tools that can be used to determine the current state of the economy and discern its future direction
- List at least five sources of economic information
- Explain what is meant by the strategy of a business and why a strategy is important
Top
Day 1 Speaker
Mark Tyrpin
President & CEO
Mercantile Bank
Top