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Board of Governors of the Federal Reserve System
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Board of Governors of the Federal Reserve System

International Training & Assistance (ITA)
for Bank Supervisors

Credit Risk Analysis SchoolFederal Reserve System Courses

Type of Participant Targeted

The Credit Risk Analysis School is a course designed for individuals with one to three years of supervision and regulation experience. The curriculum provides an introductory learning experience designed to provide a basic set of credit analysis and examination skills that are applicable to the asset quality review function. The typical student will (1) have bank examination experience, (2) have been introduced to loan analysis, and (3) have participated in the examination of loan portfolios during the examinations or inspections of several financial institutions.

Prerequisites

The pre-course assignments consist of a self-instruction module, reading assignments, and an accounting quiz. The pre-course assignments will take approximately 40 hours to complete. The accounting quiz is collected on the first day of class and counts towards the final course grade.

Course Overview

This one-week school is composed of a workshop on basic financial statement analysis and cash flow analysis, loan underwriting case studies, and loan grading exercises. Homework assignments will take approximately eight hours.

The curriculum recognizes that, while the fundamentals of extending credit are similar for all types of lending activities, their application may differ to meet the needs of specific credit transactions. This course gives the participants a systematic strategy for analyzing credits. Participants will benefit by learning analytical skills and applying those skills to actual loan case studies. It is expected that significant additional on-the-job training, experience, and academic opportunities will be necessary to develop a graduate of the Credit Risk Analysis School into a fully competent loan examiner.

Course Objectives

Upon completion of this one-week course, the participant will, at a minimum, be able to

  • Identify and analyze the borrowing causes for a loan and determine the proper loan structure and pricing for the risk
  • Analyze both business and personal income statements and balance sheets for strengths and weaknesses, and cash flow for loan repayment ability
  • Analyze loan documentation for content, completeness, and efficiency
  • Analyze the credit risks in personal and business loans of moderate complexity
  • Classify loans according to regulatory classification definitions
  • Identify the factors to consider when managing a problem loan

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Last update: February 7, 2014