Writing an Effective Credit Memo

Instructor: David Sawyer
Product ID: 703605
  • Duration: 90 Min

recorded version

1x Person - Unlimited viewing for 6 Months
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Recorded Link and Ref. material will be available in My CO Section

Training CD

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Read Frequently Asked Questions

This webinar will focus on strengthening participants’ understanding of credit analysis. It will help participants interpret financial trends and financial ratios, and write succinct and focused credit memoranda.

Why Should You Attend:

In writing effective credit memoranda, it is not what you say that commands attention, but how you say it. Credit memoranda serve three functions:

  1. they provide information on the condition and status of a customer relationship
  2. they provide a record of thoughts and actions
  3. they support or recommend action

This webinar will teach skills required to write an effective credit memorandum, which places emphasis on 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 writer’s thoughts and opinions. It’s important to note that anything written in a credit memorandum will become public record in case of legal disputes.

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 ensure bankers are covering the areas required by the banking regulators.

Learning Objectives:

At the end of this course, the participant will be able to:

  1. Strengthen their understanding of credit analysis.
  2. Clearly describe the financial impact of changes in financial factors and not just report on what changed.
  3. Interpret financial trends and financial ratios.
  4. Write succinct and focused credit memoranda.
  5. Meet with management armed with relevant questions and issues to be addressed.
  6. Feel more confident in defending a recommended course of action based on relevant facts and not instinct.
  7. Identify strengths and weakness in the writing process and evaluating the lender. Understand margin change analysis and liquidity along with debt to income ratios.
    1. Potential gross income
    2. Sources of repayment
    3. Key risk and structuring issues
  8. Summarize the credit memorization process in these categories: leverage, liquidity, cash flow, financial ratios, asset management, and operation/performance ratios.
  9. Organize the credit report based on leverage, liquidity, cash flow, financial ratios, asset management, and operation/performance ratios.

Knowing these factors will accurately summarize the strengths and weaknesses of the entire lending process. This process will ensure that every facet of writing the credit memo procedure has been covered.

Areas Covered in the Webinar:

  • The write up process
  • Name the purposes of a paragraph
  • Break writing into single ideas
  • Keep writing in a uniform and orderly pattern
  • Paragraph structure
  • Topic sentence
  • Each sentence should contribute to purpose
  • Balance sheet analysis
  • Income statement analysis
  • Cash flow analysis
  • Calculating and interpreting financial ratios and cash flow
  • Using analysis to determine the financial impact of changes in financial factors
  • Questions to raise with the customer after the credit analysis has been completed
  • Outline of relevant factors to include in a credit memorandum
  • How to report your finding efficiently and effectively in the credit memorandum
  • Apply the concepts to a study case
  • Purpose and basis of the credit
  • Primary and secondary source of repay
  • Written repayment program
  • Collateral valuations
  • Conformity to credit policy
  • Addresses the five C’s of credit
  • Identifies strengths and weaknesses

Who Will Benefit:

  • Commercial Loan Officers
  • Consumer Loan Officers
  • Credit Analysts
  • Loan Review Personnel
  • Compliance Officers
  • Internal Auditors
  • Branch Managers

Instructor Profile:

David Sawyer's experience in banking began in 1981 in the area of credit administration with the Central Bank of the South. Since then, he has served in the capacity of senior lender, senior credit officer and president and CEO of a community bank and two regional bank affiliates. His banking experience includes corporate, middle market and small businesses with emphasis on lending as well as SBA and lending to municipalities.

David has a B.S degree with a major in banking and finance and is a graduate of LSU School of Banking. He recently received a Credit Risk Certification from Robert Morris and Associates (RMA). David has enjoyed teaching and training other bankers throughout his career and holds numerous teaching certifications in the banking area.

He lends extensive knowledge and experience in lending, credit analysis and problem loan identification/workout in addition to his experience with banking regulators in the current environment.

Topic Background:

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. A clear understanding of how to effectively write a credit memorandum will help conduct a successful lending process with customers.

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