Credit Evaluation School Instructor eBook - Oct 2023

People:

Borrower: Dunder Mifflin Paper Company Guarantor: David Wallace Regional paper, printing and office supply company; been in business since 1949 and a bank customer for 10+ years Purchase office building: 15 ‐ year fully amortizing term note 1st lien mortgage on office property @ 80% loan to value (LTV) Blanket lien on all business assets Non ‐ real estate collateral largely consists of paper products and office supplies No late history; full repayment from borrower anticipated at end of term 202x debt service coverage ratio (DSCR) of 1.50

Purpose: Payment: Protection:

Problem:

Prospects:

Introductory Commercial Credit Quick Hitter ‐ Pass Ask students to identify the 6 ‐ Ps Ask students to review and consider what most important fact are Ask who can explain how to calculate a DSCR Ask who can explain how to calculate a LTV Ask students to rate the loan: Pass, Criticize or Classify? Ask students to identify what information was used to arrive at determination.