How to Evaluate Your Borrower's Ability to Survive Inflation and Recession over the Business Cycle
Dev Strischek Overview:
As borrowers and lenders work their way through the business cycle, borrower's credit needs are likely to change, so lenders must be ready to recognize the changes and accommodate their clients’ requirements, and so credit approvers and portfolio managers must be prepared to evaluate, adjudicate, and manage the impact of these changes on underwriting, approval, and monitoring.
What complicates survival in this current economic environment is the combination of elevated inflation and possible recession. Business cycles are inevitable, and bankers must understand borrowers’ funding needs through a cycle's four phases-early expansion, late expansion, early contraction, and late contraction-as well as how to identify and evaluate clients’ relative vulnerability to both inflation and recession. An immediate vulnerability is revenue generation because declining revenues threaten profitability, cash flow, and repayment ability
This session offers some tips on evaluating a borrower’s survivability-what level of sales will generate a profit, how fast can revenues grow without having to borrow more to support the growth, how to reduce costs-in both inflationary and recessionary times.
Areas Covered in the Session:
- Understand how an enterprise's borrowing needs change over the business cycle
- Diagnose the strength of a company’s financial condition and operating performance in generating cash flow for debt repayment
- Liquidity and seasonal cash cycle
- Leverage-what is right balance of internal funding (retained earnings) and external funding (borrowing and new investment)
- Profitability-profit margins, satisfactory returns on equity and assets
- Solvency-ability to satisfy creditor claims, reward owners, and support firm’s growth
- Determine an organization’s ability to survive over a business cycle and defend itself against inflation
Who Will Benefit:
- Small Business Owners
- Credit Analysts
- Loan underwriters, Loan Review Officers
- Commercial Bankers, Credit Department Managers
- Senior Lenders, Chief Credit Officers, Credit Analysts
- Credit Managers, Credit Risk Managers
- Risk Managers, Enterprise Risk Managers
- Chief credit officers, Senior Lending Officer
- Bank Director, Chief Executive Officer
- President, Board Chairman
- Financial Professionals, such as Accountants, Bookkeepers, and Financial Advisors
- Entrepreneurs who are Starting a new Business and Need Financing
Speaker Profile
Dev Strischek A frequent speaker, instructor, advisor, and writer on credit risk and commercial banking topics and issues, Dev is principal of Devon Risk Advisory Group and engages in consulting, speaking and training on a wide range of risk, credit, and lending topics. As former SVP and senior credit policy officer at SunTrust Bank, Atlanta, he was responsible for developing, implementing, and administering credit policies for SunTrust's wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking, and private wealth management. He also spent three years as managing director and credit approver in SunTrust's Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, Dev was chief credit officer for Barnett Bank's Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, Dev's experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor in Hawaii, Missouri, and Florida. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii.
Dev serves as an instructor in the ABA’s Stonier Graduate School of Banking, the Southwestern Graduate School of Banking, the Pacific Coast Banking School, and the American Bankers Association's (ABA) Commercial Lending. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA.
Dev has written about credit risk management, financial analysis and related subjects for the ABA's Commercial Insights, the Risk Management Association's RMA Journal, and other business professional journals. He is the author of Analyzing Construction Contractors and its related RMA workshop. A past national chair of RMA and former Florida Chapter president, Dev serves as a member of the RMA Journal's advisory board, and an ex-officio board member of the Florida and Atlanta RMA chapters. He also serves on the advisory board of the Atlanta Chapter of the Professional Risk Managers' International Association (PRMIA), and he has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department's Financial Service Volunteer Corps (FSVC)