Credit Evaluation School Instructor eBook - Oct 2023

People:

Borrower: Stop, C&L, LLC Guarantor: Robert Van Winkle Retired musician turned home improver and (now) real estate developer Loan to fund a mixed ‐ use commercial building which has stalled. Building is 2/3 finished

Purpose:

Payment:

Loan is now 101 days past due Loan is on internal watchlist.

Protection:

Funded 100% of construction costs with minimal equity from borrower Current loan balance of $1,000M and accrued interest of $55M

Problem:

Loan is fully funded and construction is not complete. Foreclosure being considered.

Prospects:

Property is valued at $755M. Management reports borrower intends to sell project for $1.2MM and has provided copy of contract; sale closes next month.

Commercial Credit Quick Hitter – Nonaccrual & Split Rating Who can tell me what a split rating is? Possible split rating: $755 Substandard; $300 doubtful Why would split rating not be substandard and loss? Because we do not know the amount of loss yet, if any, and will know with a short amount of time. Nonaccrual: Loan should be on nonaccrual because it is over 90 days past due; borrower has walked away.