Credit Evaluation School Instructor eBook - Oct 2023

People:

Borrower: Medical Associates of San Helena, LLC (MASH) Guarantor: Hawkeye Pierce, MD (100% owner) Fully amortizing 25 ‐ year term note to buy out retiring partner • 1st lien on medical practice real estate @ 95% LTV • Closely held shares of business • Dr. Pierce's Guaranty New customer who only banked with this bank due to the low rate offered 202x debt service coverage ratio (DSCR) of 1.05x

Purpose: Payment: Protection:

Problem:

Prospects:

Potentially a very profitable relationship for the bank

Commercial Credit Quick Hitter – Higher LTV & Lower DSC Ask students what changed from previous slide:

DSCR declined from 2.75 to 1.05 Is this still a pass? Why or why not? Loan is intended to be a pass, but is marginal; mitigating factors may warrant such low initial DSCR, but higher level should be required by policies.