Credit Evaluation School Instructor eBook - Oct 2023

Internal Use Only

Taylor Exteriors, Inc. - Loss • Slowdown has impacted, but especially hurt by a new competitor coming to town and undercutting Taylor. • AR listing is old. Banker does not give any value to the AR. • No value in the 4 th lien position. • Banker drove past the business over lunch hour and appears it is closed. • The overdraft (kite) was 72M this morning. Bank will likely have to charge off the OD as well as the loan. May take opportunity to explain a kite and how it worked – may not be relevant any longer as checks now clear much faster.

People: Taylor Exteriors, Inc. is involved in installing siding, windows, and gutters for new construction. The principals in the business are Brandon and Brenda Walsh. Operations have been successful in past, but current slowdown is having an impact.

Purpose: 7869 – Restructure of debt originally advanced as a line of credit in 2010. Payment: 7869 – Three year, fully amortizing note, monthly payments of 3,736.

Protection: 7869 – Note is collateralized by general business assets and a fourth lien on the owners’ residence. No value in the 4 th lien position. Most significant collateral is an AR listing from September 2014 showing 241M due to the business. However, AR listing is old. Banker does not give any value to the AR. Performance: Banker drove past the business over lunch hour and appears it is closed. Loan originated in late 2013 and has been amortized to 62M. Payments have been as agreed, although running one to three weeks late in past few months. DDA balances have been erratic with considerable overdrafts and the overdraft (kite) was 72M this morning. Bank will likely have to charge off the OD as well as the loan. Slowdown in housing market has impacted, but especially hurt by a new competitor coming to town and undercutting Taylor. Essentially no collateral protection, currently past due after cut-off date, large overdraft, and the business is no longer in operation.