Commercial Lending Review articles from November 2006

Commercial Lending Review archives from November 2006

Reviving the branch role in small business banking: at many banks, the priorities of the retail branch network are quite different from those of the dedicated small business division.
November 1, 2006... Branches traditionally have anchored the banking outreach to small businesses, but many major institutions backed away from that model in recent years. Seeing an opportunity to cover wider market areas with focused expertise, large players...

Assessing the risks of accounting fraud: what are the signs of accounting fraud, how is it committed, and what can be done to prevent it?
November 1, 2006... Lenders must regularly confront the risk of fraudulent financial reporting in their credit decisions and loan management. Given that accounting fraud by definition involves chicanery, and in some instances elaborate cover-up of the borrower's...

Commercial loan premium for firms prior to bankruptcy: do banks adjust loan pricing for firms that are close to bankruptcy?
November 1, 2006... The commercial lending and borrowing process is not simple. In order to borrow money, borrowers need to disclose their financial condition to lenders. However, companies that have higher need for fresh capital infusion may not be willing to...

The use of management metrics to identify early warning signs: seven "management metrics" can make a crucial difference in assessing prospective borrowers.(BEYOND THE NUMBERS)
November 1, 2006... Over the past several decades, considerable research has been conducted into the causes of business distress and business failure. Many of these studies suggest that most severe business difficulties are rooted in nonfinancial issues, most...

Detecting warning signs in Coleco's interim report: how can accepted disclosure practices obscure trends?(FINANCIAL REPORTING PUZZLER)
November 1, 2006... This column focuses on a seemingly positive second-quarter interim report filed by Coleco Industries. The data reported in the firm's Securities and Exchange Commission (SEC) Form 10-Q were factual and supported the CEO's observation that sales...

SBA resources for small business bankers: in addition to guaranteed loan programs, the SBA offers a range of services to lenders to small businesses.(SMALL BUSINESS LENDING)
November 1, 2006... Commercial banks have been the leading supplier of debt capital to small firms in the United States. This market has become more competitive over the past decade, evidenced by the emergence of a nationwide market for credit lines and credit...

Enhancing the standard-setting process for private companies: how can accounting rules better serve the needs of users of financial statements of private companies?(ACCOUNTING)
November 1, 2006... The Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA) recently issued an invitation to comment on a joint proposal, Enhancing the Financial Accounting and Reporting Standard-Setting...

Job layoffs: "a festering national crisis"? Is more government the appropriate response to global competition?
November 1, 2006... Louis Uchitelle is nostalgic for the 1950s. He has fond memories of his first job as an Associated Press (AP) reporter in 1957. The AP job provided a paid vacation, overtime pay, annual wage increases, health insurance, and--most important--job...

Detecting warning signs in Coleco's interim report: solution.(FINANCIAL REPORTING PUZZLER)
November 1, 2006... Analysis of the data described on pages 29-31. Recast the sales and earnings data from Exhibit 1 in such a way that recent trends in sales and earnings are not obscured. If Coleco's second-quarter numbers are subtracted from its...