On Monday morning, you receive two phone calls from business owners wanting to borrow money from your bank. The first is an existing customer who needs $1 million to build a new warehouse. Her company has never missed a loan payment with your bank, and it has a solid business credit score. The other has never applied for a bank loan. Instead, the owner has borrowed money from wealthy family members to grow his business. This borrower needs $1 million to build a warehouse. Which banking opportunity sounds more attractive?
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Topics: Advisory, Commercial Banking, Commercial Lenders, due diligence, Uncategorized
Interpreting Financial Statement Footnotes: What to Watch Out For
Posted by bgoricki on Dec 9, 2016 12:09:43 PM
Financial statement footnotes can provide a wealth of useful information. Too often, however, no one bothers to read them. Experienced bankers know to look beyond the numbers and read the footnotes to find out qualitative details and narrative disclosures, as well as what’s not being said. Omissions often forewarn of financial uncertainty and even fraud. Here are some examples that bankers should watch out for.
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Topics: Advisory, Commercial Lenders, commerical banking, financial statement disclosures, Uncategorized
Five Factors to Consider for Your Due Diligence Approach
Posted by bgoricki on Oct 25, 2016 3:26:19 PM
Before reviewing a borrower’s financial statements, consider the industry in which it operates to determine what’s most relevant. Doing so will help frame your due diligence efforts and credit risk assessment.
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Topics: Commercial Lenders, due diligence, Uncategorized
Forecasts and Budgets: How Reliable are Borrowers' Estimates?
Posted by bgoricki on Oct 25, 2016 3:11:26 PM
Borrowers often provide bankers with forecasts and budgets. It’s especially common when they’re asking for additional money to start or expand business operations — or when they’ve been experiencing financial distress. But how much can you trust estimates that are prepared in-house?
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Topics: Commercial Lenders, Commercial Lending, forecasts, Uncategorized
Gain Valuable Insight With an Agreed Upon Procedures (AUP) Engagement
Posted by bgoricki on Oct 25, 2016 2:57:13 PM
When Mark, an experienced banker, received the 2015 year-end financial statements for Amped Up, an electrical subcontractor, he felt like something wasn’t quite right. Inventory had grown substantially over the last three years and the company’s profit margin had deteriorated. Additionally, the borrower had nearly maxed out its $1 million line of credit.
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Topics: agreed upon procedures, Commercial Lenders, Commercial Lending, Uncategorized
What the New Final Overtime Rules Mean for Your Borrowers
Posted by bgoricki on Oct 25, 2016 2:47:12 PM
On November 22, 2016, a federal judge in Texas issued a nationwide injunction blocking the Department of Labor's rule that would require overtime pay for millions of workers. The regulation was scheduled to take effect on December 1, 2016.
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Topics: Commercial Banking, Commercial Lenders, new overtime rules, Uncategorized
Bankers may be indirectly affected by the new rules for IRS audits of partnerships and limited liability companies (LLCs) that are treated as partnerships for tax purposes. (For simplicity, we use the term “partnership” in this article to refer to partnerships and LLCs that are treated as partnerships for tax purposes. The term “partner” will be used to refer to an owner of either of these entities.) Here’s a brief summary of how the federal partnership audit rules have recently changed.
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Topics: Commercial Lenders, Commercial Lending, Partnership Audits, Uncategorized
Global Fraud Report: 5 Takeaways for Borrowers and Bankers
Posted by bgoricki on Aug 8, 2016 10:32:17 AM
The Association of Certified Fraud Examiners (ACFE) recently published its 2016 global fraud report. Over the last 20 years, the Report to the Nations on Occupational Fraud and Abuse has taught valuable lessons about the costs, schemes and methods used to detect white collar crime by analyzing real-world fraud cases.
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Topics: Commercial Banking, Commercial Lenders, Fraud Detection, Uncategorized
Impairment testing is designed to give bankers and other stakeholders an early warning sign that the value of a company’s goodwill, brand or other indefinite-lived intangible asset has decreased. Here’s guidance on which intangible assets are subject to impairment, how it’s measured and how the accounting rules about impairment testing are evolving.
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Topics: Commercial Banking, Commercial Lenders, Impairment Testing, Uncategorized
Turning Lemons Into Lemonade: How to Embrace New Talent
Posted by bgoricki on Aug 8, 2016 10:11:22 AM
Few people stick with one employer for their entire careers. But it’s common for business owners to feel blindsided when a key person, such as a top manager, CEO, CFO or lead salesperson, unexpectedly resigns. The effects often trickle down the organization, impacting morale and productivity.
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Topics: Commercial Banking, Commercial Lenders, New Employees, Turnover, Uncategorized