loan workout 101 for financial institutions
TRANSCRIPT
Presented By:
Ancin Cooley, Founder & Principal
Synergy Bank Consulting, Inc.
Synergy Credit Union Consulting
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Financial information company that provides credit and risk management solutions to financial institutions
Data and applications used by thousands of financial institutions and accounting firms across North America and internationally
Awards ◦ Named to Inc. 500 list of fastest growing privately
held companies in the U.S.
◦ Named to Deloitte’s Technology Fast 500
Mr. Ancin Cooley, CIA, CISA, is the Founder and Principal of Synergy Bank Consulting and Synergy Credit Union Consulting. Synergy provides a suite of risk management services to financial institutions, which include loan reviews, information technology audits, internal audits, directors' exams, and regulatory compliance reviews. As principal, he manages a portfolio of clients with assets ranging from $100 million to over $4 billion dollars.
Ancin brings more than 10 years of experience to the industry. He gained deep, first-hand knowledge while serving as a regulatory examiner at the Office of the Comptroller of the Currency (OCC). During his tenure at the OCC, he performed safety and soundness examinations at community and mid-size banks that ranged from $100 million to $8 billion dollars in total assets. After leaving the OCC, Ancin worked for a regional accounting firm where he led internal audits, as well as loan and pre-regulatory examiner reviews.
When not advising clients, training for triathlons, or spending time with his young son, Ancin designs and conducts trainings for the financial industry. In addition, he is a well sought-after expert contributor to a host of financial publications. He has most recently been featured in Forbes Magazine, The Independent Banker, and the Credit Union Times.
Poll Question
What to do before a loan becomes non-performing
Preparing workouts
Taking charge of the workout
Loan resolution implementation
Warning signs and indicators ◦ Operations
◦ Reporting
◦ Investing
◦ Financing
Establish transfer criteria ◦ A loan classification of “substandard”
◦ A loan classification of “special mention” if syndication is involved and/or reputational/legal issues are at stake
◦ Actual payment default to the lender of above some “prudent” default threshold (set to avoid very small payment irregularities) that has been in effect for a minimum time (often 60 or 90 days).
Individual loan – Common doc errors ◦ Failure to name the lender as a beneficiary on the
borrower’s insurance policies
◦ Failure to have key documents signed by all of the proper authorized persons required by local company law or the borrower's own articles of incorporation
◦ Failure to perfect a security interest in the pledged collateral
Individual loan – Dunning letters
Normally associated with lenders’ demands for payment, these should also be applied to any of the following areas in which the lender considers the borrower’s action or performance to be unsatisfactory:
◦ Failure to pay principal and interest on a timely basis;
◦ Failure to pay as contractually agreed outstanding penalty fees and/or interest;
◦ Failure to provide contractually agreed information on a timely basis; and
◦ Failure to pay on a timely basis such obligations as property taxes, insurance premiums, etc.
Individual loans – Guarantees
There are two main types of guarantees: ◦ Demand guarantees, which do not require proof of default
to be initially called
◦ Surety guarantees, in which the beneficiary of the guarantee must prove that default has occurred before calling the guarantee.
Analyze, diagnose, and separate NPLs into groups
Analyze, diagnose, and separate NPLs into groups
Assess the problems
Analyze the business model
◦ Focus on the dynamics of the industry and sector to understand trends, the company’s performance relative to competitors and representative firms
◦ Understand how cash is generated, used, managed, and reported
Questions?
Ancin Cooley
Synergy Bank Consulting
Synergy Credit Union Consulting
◦ www.synbc.com
◦ (224) 475-7551
Billy Burnet
Sageworks
◦ www.sageworksanalyst.com
◦ (919) 851-7474 ext. 619