Large Bank Supervision Forum 2023

The 2013 Guidance Underwriting Standards

Regulator Concerns  Bank does not employ the incremental underwriting expertise required for leveraged lending  Cash flow analyses rely on overly optimistic or unsubstantiated projections of sales, margins, and merger and acquisition synergies  Independence of analysis Best Practices  Consistent with the Guidance levels– Six essential underwriting disciplines  Repayment Capacity • Free Cash Flow Calculation and Justification • Debt Leverage Levels (Senior and Total) …more

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The 2013 Guidance Underwriting Standards, Cont’d.

Best Practices, Cont’d  Transaction Structure (Jr Debt, Covenant Lite, Greenshoe, R/C, TLA, TLB)  Diversification: Individual Borrower and Industry Concentrations  Problem Credits: Flags and Procedures  Use of Third Parties  Documenting the Analysis – The Credit File, Approval Documents and Written Analyses

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

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