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:

Review of Introductory Commercial Quick Hitter ‐ Pass pertinent facts enabling you to evaluate loan: term; debt service coverage ratio; collateral; loan to value Loan is considered to be a Pass based upon 1.5x DSCR and 70% LTV; 15 ‐ year term is shorter than normal for commercial property leading to a lower DSCR than if term had been longer.