Commercial and Industrial Lending: Pitfalls and Risk Mitigants
September 13, 2012
As the economy continues its modest recovery, some community bankers are looking to expand their commercial and industrial, or C&I, lending as a potential source of growth. We have seen C&I lending grow significantly over the last 5 years, and community banks appear poised to supply an increasing volume of C&I loans as borrower demand increases. With commercial real estate (CRE) valuations remaining under pressure and the memory of significant CRE losses still fresh, C&I lending appears to be the bright light on the horizon.
Download presentation (PPT – 2.7MB)
This presentation will focus on problems and best practices San Francisco Fed examiners have observed with C&I lending. Included in the topics to be covered are loan underwriting and administration strategies, cash flow calculations and covenants, the key elements of a collateral inspection, attributes to look for from a third party collateral inspection service, and moving a borrower out of the bank.
Our presenters have industry experience in a wide range of areas including loan underwriting, ongoing monitoring, collateral inspections as well as workouts, and they have reviewed lending practices at a variety of banks in their current role as bank examiners:
- Tim Marder (Facilitator) is Examining Manager at the San Francisco Fed for a group of community banks and holding companies in California. Prior to that, he worked as a safety & soundness examiner for nine years.
- Dante Tosetti joined the Federal Reserve Bank of San Francisco in 2011 as a credit risk examination specialist. He has 15 years of credit experience, primarily as a commercial lender with community and regional banks.
- Randy Santos joined the San Francisco Fed in early 2011 as a Senior Analyst initially focused on credit risk. Previously, he was a Vice President with several large regional banks in an internal credit review capacity.
- Kevin Cragholm joined the Federal Reserve Bank of San Francisco in early 2011 as a Senior Analyst initially focused on credit risk. Prior, he was a Vice President and Portfolio Manager at Sierra West Finance LLC, a licensed commercial finance lender and alternative investment manager.
- Adrienne Thompson is Examining Manager for a group of community banks and holding companies in California. She has worked as a safety & soundness examiner on large, regional and community banks over the past 13 years. Prior to joining the Fed, Ms. Thompson had related industry experience as an Asset Based Lending Relationship Manager, and also worked in residential lending and loan servicing, a commercial real estate investment trust, and with the Resolution Trust Corporation/FDIC.
Due to the broad subject and time limitation, we will not discuss regulatory guidance, regulatory interpretations, nor a comprehensive approach to risk management. A portion of the time will be devoted to questions and answers.
This webinar is part of the Federal Reserve Bank of San Francisco’s Outreach Program on topics of interest and importance to financial institutions in the 12th Federal Reserve District. Please share this invitation with colleagues at your institution.