There are many professional development courses aimed at helping commercial bankers enhance their credit analysis and corporate finance skills.
Unfortunately, the course sponsors do not appear to provide the comprehensive take-away software tools needed to implement the techniques taught in the classes. If you are looking for such tools, please consider trying ours (see Final Thoughts below).
Continuing Professional Education (CPE) Courses
Commercial bankers interested sharpening their credit analysis and corporate finance skills have a variety of CPE vendors and course options available to them.
For example, both the Risk Management Association (RMA) and the American Management Association (AMA) offer courses covering commercial banking and corporate finance subjects. RMA is a professional association focused primarily on education and research for the banking industry. AMA is a world leader in professional skill development for individuals, organizations and government agencies.
A sample of RMA courses dealing with credit and corporate finance matters includes the following:
- Financial Statement Analysis (2 days, Member price $760).
- Corporate Finance & Business Valuation (2 days, Member price $775).
- Credit Risk Analysis for Commercial Bankers (3 days, Member price $1,065).
AMA courses dealing with the same subject matter include:
- Financial Statement Workshop Seminar (2 days, Member price $1,895).
- Financial Analysis Seminar (2 days, Member price $1,995).
- Applying the Tools of Corporate Finance Seminar (2 days, Member price $1,995).
- Valuation of Companies: The Practical Aspects Seminar (3 days, Member price $3,595).
These and other related RMA and AMA courses appear to be rich in practical content; as a group, they provide a foundation in financial statement analysis, cash flow analysis, cash flow drivers, debt capacity and forecasting. However, after reviewing the course outlines it appears that none of the courses provide students with comprehensive take-away software tools to implement the analyses that are taught.
There are, of course, workshops and seminars in financial model building offered by various vendors (e.g., AMA’s Financial Modeling and Forecasting Workshop and K2 Enterprises’ Excel Budgeting and Forecasting Techniques), but the courses I reviewed appear to teach model building methodology (Excel) and do not supply attendees with completed models.
My personal experience is that CPE courses that provided or specify take-away tools (e.g., finance - HP 12C Financial Calculator; statistical methods - Minitab or SAS software; etc.) to tackle the subject matter of the courses are the ones whose concepts I retained and used. Those that did not were soon forgotten.
My general reaction to finance-related CPE courses that do not provide take-away tools is summarized in two rhetorical questions:
- If I am taking a course to increase my knowledge of a certain subject area, how am I supposed to know, after a one or two day course, all of the issues that need to be incorporated in a spreadsheet model?
- What makes the course sponsor think that I have the time, or know or care enough about modeling, to develop my own analyses tools?
A Few Observations About Commercial Bankers and Lending
Unlike accountants, commercial bankers are usually not employed because of their spreadsheet development prowess. Rather, commercial bankers’ success and personal advancement depend on their sales and customer service skills; a thorough grounding in credit analysis and corporate finance principles; and good judgment.
While the analysis of borrowers’ historical financial statements is important in making credit decisions, commercial bankers know that commercial loans are serviced by future operations - which may be very different from past performance. This is why some bankers create forecasts of their customers’ businesses.
The forecasting process generates important benefits for both bankers and their customers, including:
- It complements the traditional credit analysis approach and leads to hands-on insights into expected future cash flow drivers and customer debt capacity.
- It quantifies the potential risks and rewards of the customer relationship, and identifies the lender as a value added advisor who has more to offer than money and price.
- It leads to meaningful discussions with customers about future sales volume, operating margins, inventory requirements, capital expenditures, etc.
- It provides a very efficient “needs checklist” for marketing purposes, and demonstrates the bankers financial expertise and his interest in his customer’s success.
Mastery of financial forecasting and corporate finance analyses methods (as compared to general principles) is particularly important to those commercial bankers who aspire to become private equity or mezzanine fund principals.
Corpfin.Net software is a very efficient web-native tool for use in the analysis of both historical and forecast financial statements, including generating the traditional ratios and other metrics favored by lenders. Some specific uses of the software include:
- Generating five-year financial forecasts, and monthly forecasts within year. The output of the forecast models (in both HTML and PDF formats) include:
- the primary financial statements - income statements, balance sheets and cash flow statements.
- several pages of documentation detailing the key assumptions underlying the forecasts.
- a narrative report that organizes and provides an interpretation of the forecast results.
- actual and forecasted financial ratios and other important metrics.
- Determining debt capacity and coverage.
- Credit facility structuring.
- Demonstrating to customers and prospects the role of debt and equity in capital structures.
- In depth modeling and analysis of proposed transactions such as business acquisitions; LBOs and MBOs; sales of businesses; and business recapitalizations.
Unlike spreadsheets, the Corpfin.Net software is designed to be a fast, presentation-oriented planning, analysis, and valuation tool suitable for CEO/CFO-level collaboration.
If you are intending to take a credit analysis or corporate finance CPE course that does not provide take-away tools, or if you are looking for corporate finance-oriented software to accomplish some of the tasks outlined above, please consider using Corpfin.Net.
Our software is fast, easy to use, and fully integrated (our financial forecast models integrate seamlessly with our corporate finance analyses models). Accentuating these positives is its Web-native design and sharing function, which give team members the ability to collaborate using a common platform.
If you would like to tryout our software located at www.corpfin.net on a no-obligation basis, please send me a note at firstname.lastname@example.org.
If you are a client or friend of a banker, please send her/him the link to this post.