Writing an Effective Credit Memorandum
In writing effective credit memoranda, it is not what you say that commands attention, but how you say it.
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.
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 and 3) they support or recommend action. 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.
- Balance Sheet Analysis
- Income Statement Analysis
- Cash Flow Analysis
- Calculating and interpreting financial ratios and cash flow
- Questions to raise with the customer after the credit analysis is 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
At the end of this course, the participant will be able to:
- Strengthen their understanding of credit analysis
- 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
- Commercial Loan Officers
- Consumer Loan Officers
- Credit Analysts
- Loan Review Personnel
- Compliance Officers
- Internal Auditors
- Branch Managers
Jeffery W. Johnson started his career with SunTrust Bank in Atlanta as a Management Trainee and progressed to Vice President and Senior Lender of SouthTrust Bank and Senior Vice President and Commercial Banking Division Manager for Citizens Trust Bank of Atlanta.
Most of his career has been spent in Credit Administration, Lending, 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 Individual, Middle Market Companies, Small Business, Real Estate and Non-Profit Organizations.
Mr. Johnson is now a training professional in the financial industry by leading various seminars covering important topics relating to issues in financial institutions. He teaches actively for fifteen state banking associations in the United States, Risk Management Association (RMA) and individual financial institutions 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; a MBA in Finance from John Carroll University in University Heights, Ohio; Banking diploma from Prochnow School of Banking at the University of Wisconsin and a Graduate Certificate in Bank Management from the Wharton School of Business at the University of Pennsylvania.
Institute of Certified Bankers: Visit http://www.icbmembers.org/login.aspx for instructions regarding self-reporting. Estimated credits: 2.5 CE Credits
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