Credit memos and loan narratives are crucial to the loan committee, loan officers, and underwriters in making strong credit decisions; to loan review officers in understanding a credit being reviewed; and to examiners when reviewing your files. They can also document workout strategies for problem credits. This practical webinar will explain the essentials and even provide sample formats.
- Identify the objectives of a credit memo to know what to include and exclude
- Understand the components of credit analysis, including terms, exposure summary, financial analysis, collateral, etc.
- Define and consider key financial ratios
- Structure a strong summary narrative
- Know what examiners look for in a sensitivity analysis (stress testing)
- Recognize the importance of the succession plan
- Draw clear credit-risk conclusions
- Provide a detailed record of strengths, weaknesses, and mitigants
- Explain the importance of documenting and monitoring loan policy exceptions
- Avoid common examiner criticisms in credit write-ups
The purpose of the credit analysis memorandum (CAM) and loan narrative is to capture an accurate, complete snapshot of the applicant and credit request. These critical documents are the basis for making the initial credit decision and create a foundation for modifications and renewal decisions as the loan ages. This information is also used for ongoing account management and documents material developments or changes in the quality or nature of the credit or borrower over the life of the loan. The underwriter needs a clear and accurate picture to make the best risk-based decision. Whether it is a consumer, real estate, or commercial credit, an effective CAM/loan narrative is imperative to address safety and soundness and compliance risk.
This session will cover how to develop meaningful write-ups that document the credit request in a clear, concise, organized format. It will go step-by-step through the process and provide samples that illustrate development of a useful, relevant CAM/loan narrative.
Molly Stull, Brode Consulting Services, Inc.
Molly Stull began her career as a teller while working on her undergraduate degree and has continued working in the financial industry ever since. She has experienced the growth of a hometown bank, branch mergers, charter changes, name changes, etc. Molly has activated business resumption plans, performed secondary market quality control reviews, processed wires, filed SARs, and coordinated reviews with external auditors and examiners. Her favorite role has always been educating staff and strongly believes that if staff understands the reason for a process they will be more compelled to follow the procedures. Molly holds a bachelor’s from the University of Akron and an MBA from Ashland University.