11/8/2018

FIN4345Credit Analysis and Loan Structuring
(On-line or Blended) Syllabus

  • Course Description
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  • Hardware & Software Requirements
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  • Dropping the Course

  • Virtual Office Hours
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  • Course Objectives
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  • Assignments & Due Dates Overview

  • Technical Assistance
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  • Required Textbook
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  • Grading Policy

  • Student Requirements
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  • Attendance
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  • About the Instructor

  • Students with Disabilities

Course Description:

This is an advanced course in Finance and Banking. Principles and concepts addressed in ALLprior courses are incorporated. This course examines the nature and role of the Lending and Credit Management process; a crucial and fundamental skill of banking professionals. Students will examine the credit and lending decision, evaluating the credit capabilities of prospective retail and commercial borrowers, and fulfilling economic development by specifying appropriate credit facilities. It is intended to blend theory with appropriate application to create strategies to achieve successful value creation. The characteristics of consumer and commercial communities will be addressed. 47 contact hours.

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Course Objectives:

  1. The student will understand and demonstrate the ability to assess the creditworthiness of retail and commercial loan applicants.
  2. The student will understand the nature and characteristics of various types of loans and loan arrangements.
  3. The student will understand and demonstrate the ability to design, specify, and perfect loan agreements.
  4. The student will demonstrate the ability to specify loan strategies to reduce the institution’s credit and repayment risks.

Course Organization and Structure

This is an advanced course in Finance. Students will have already completed at least FIN4324 Commercial Bank Management, FIN3403Financial Management, and FIN3461 Financial Analysisbefore attempting this course. Consequently, entering students are expected to have a familiarity with the principles of banking, bank performance and risk management, credit risk, and the role of lending. Students are also expected to be grounded in the principles of basic financial statement analysis, risk/return, diversification, CAPM, TVM calculations, bond valuation, and financial analysis & evaluation. Students are also required to have a sound foundation in calculus, statistics, and accounting.

This is an advanced professional business course that is intended to prepare competent practitioners. The course emphasizes a mastery of fundamentals AND the competent application of those fundamentals to achieve practical results in “real-world” situations. Furthermore this course emphasizes critical thinking v. a “question & answer” format. It also emphasizes “active” v. “passive” learning & participation.

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Course Requirements:

Student Requirements:
Prerequisite(s): FIN4324, FIN3403, FIN4345 (co-requisite), FIN3461, and admission to the Banking BAS or BS BA program, or permission of the Dean.

To be successful students are expected to have completed all lower division Banking program prerequisites including but not limited to: ECO2013, ECO2023, MAC2233, STA2023.

A working knowledge of Statistics and Calculus is required. Advanced banking concepts require quantitative analyses and topics frequently incorporate concepts from Statistics. Students will be expected to understand basic probability distributions, expected values, means & standard deviations of distributions, and correlation coefficients.

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Required Textbook(s):

There is no single textbook required for this course. Instead, students will be required to usetexts from previous courses and an extensive portfolio of supplied readings. In addition to the readings, students will be required to use:
The text from FIN4324 – Commercial Bank Management

The text from FIN3461 – Financial Analysis

The text from FIN3403 – Financial Management

Excel Expertise:

Credit Analysis and Loan Structuring is a “quant” course, meaning it will involve a considerable amount of computation. Students will use two “tools” to reduce the burden of the computational workload.

First, students are required to use Excel to do course related computations. Excel models have been addressed in the pre-requisite courses and will be important and efficient tools for addressing the more complex and time-consuming computations addressed in this course. Among other things students must be capable of performing time value of money (TVM), cash flow valuations, IRR, YTM, exponentials, standard deviations, bond valuations, durations, risk analyses, and regulatory compliance measures.

Second, students are required to use Excel and Word to do class exercises, homework assignments, case analyses, and Tests. Basic Excel competence is expected. Please be aware that specific Excel “programming” issues will not be addressed in the class. In particular, students will find that the use Excel will expedite homework preparation.

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Hardware and Software Requirements:
Students should have regular access to a computer that is connected to the Internet.It is strongly recommended that students havea broadband (high-speed) internet connection such asDSL or a cable modem. When taking on-line quizzes and exams (or viewing on-line video), students should have an internet connection that is stable and will not drop their connection.

Studentswithout a stable high-speed internet connection should consider making arrangements to take on-line quizzes and exams at one of the St. PetersburgCollege libraries (or a similar facility) where a stablehigh-speed internet connection is available. Internet Explorer is the preferredbrowser to use to access course materials.

Because of the use of teams in many classes, we require a common format for all students to share documents. Studentsare required to submit assignments and share team documents in Microsoft Office (Word, Excel) formats. No other formats (such as .RTF, .WPS, etc) will be accepted.

For FIN 4345, students will work primarily with ANGEL and Excel.

All actual assignments must be submitted to dropboxes. You must submit a Microsoft Excel file, with all problems on the same worksheet (do not use separate worksheets). Excel spreadsheets should use equations to calculate the answer to the problem. It is the tool of choice among business & financial professionals. Using Excel in this class can increase your productivity and accuracy, help you get the most out of this course, and prepare you to work on a professional level.

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About the Instructor:

Dr. Irv DeGraw

Please note: the appropriate salutation is either Professor DeGraw or Dr. DeGraw.

Virtual Office Hours:

The best way to reach me is via email. My e-mail address is: . I keep extensive virtual office hours and am generally available via email seven days a week. Typically, I also check emails several times over the weekend. Please be aware that email is the preferred means of contact.

On the other hand, due to College demands, my physical availability for face to face meetings is erratic and absolutely requires an appointment. Drop-ins are discouraged.

Telephone calls are also not encouraged. Not because I don’t want to chat with you - but because missed connections, incomplete messages (the no message “please call”), and the inevitable “telephone tag” are inefficient and frustrating for all. Over the past year several students have actually expressed disappointment because I did not return telephone calls made to the office on weekends or on late weeknights. Be aware that, in general, we are not in the office over weekends or around the clock.

However – and on the other hand, I do try to keep a close watch on my email traffic – at all hours - and prior students will report that emails were frequently returned promptly.

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STUDENT RESPONSIBILITIES

Time Commitment:

This is a 3-credit course conducted over 8 weeks. In order to meet accreditation standards, on average, students should to expect to spend between 12-15 hours per week on course activities and assignments. Spending less time would be insufficient for success in this course.

Class Attendance & Participation:

Class participation and attendance are expected and required. Participation is defined as reading and preparing for class, completing and submitting assignments on time, and taking part in all course activities. The Assignments and Due Dates Overview has assignment and Test due dates listed.

Consistent with the policies of St. PetersburgCollege, attendance will be taken in every course – including both blended and online. Failure to attend classes may jeopardize federal & state financing arrangements and scholarship awards.

St. PetersburgCollege requires all professors to monitor student attendance and participation in educational activities on a weekly basis. Students are required to attend blended classes and/or participate in their on-line course each week as verified by activity within the ANGEL Learning Management System, such as a discussion board posting, submission of an assignment, messaging your instructor, chat, and completion of polls, quizzes or tests.

If you exceed two weeks of unexcused or otherwise undocumented absence, you will either be administratively withdrawn by the instructor if this occurs before the 60 percent point in the term, or be given a grade of WF if it occurs later in the term. If you are in your third attempt at completing a course, you will be given a WF grade at any point in the term that you exceed the maximum number of weeks absent. Excused absences, of course, will not count against you

Students should also realize that missing more than two class sessions can jeopardize their success.

For students enrolled in blended courses, attendance is measured by your physical presence in the class. For students enrolled in online only courses, attendance is measured by your on-time assignment submission. Requests for an excused absence MUST be made at least 7 hrs BEFORE the class. Requests made after the class (ex post) will not be honored.

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Academic Honesty:

Academic honesty and plagiarism falls under theAcademic Honesty Policyof the college.

Within the College of Business there is a zero tolerance for any violation of the St. PetersburgCollege Academic Honesty Policy. Any student violating this Academic Honesty Policy should expect to receive an immediate grade of “F” for the course. Students further need to recognize the zero tolerance nature of this policy – there will be no warnings or second chances.

Academic integrity is submitting one’s own work and properly acknowledging the contributions of others. Any violation of this principle constitutes academic dishonesty and is liable to result in a failing grade and disciplinary action. Forms of academic dishonesty include:

  • Plagiarism – submitting all or part of another’s work as one’s own.
  • Cheating – using, or attempting to use, unauthorized materials on an examination or assignment.
  • Facilitating – helping another commit an act of academic dishonesty.
    (source: FranklinUniversity)

Academic dishonesty is inexcusable and students should not embarrass themselves, or jeopardize their careers, by misrepresenting the work of others as their own.

Please note that in a profession such as banking, where professionals are entrusted with other people’s money and are subject to rigorous legal and regulatory requirements, the highest standards of personal integrity are absolutely required.

Students exhibiting lax academic integrity should expect to be precluded from professions in this industry.

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Dropping the Course:

Students may drop a course through the registration process and may receive a refund during the first week of classes. After the first week students need to notify the instructor and then withdraw from the course. Students should refer to the academic calendar for the exact dates and should also review the Withdrawal Policy

Please note that it is solelythe student’s responsibility to drop classes in a timely manner in order to qualify for any tuition refund. It is also solelythe student’s responsibility to complete a withdrawal within the published deadlines. Notifying the course instructor of an intent to drop or withdraw is insufficient. Only the student, not the instructors, may perform a drop or withdrawal.

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CLASS POLICIES

1.Grading Policy

Reflecting the Policies of the College of Business - Students MUST submit all of the assignments for each week – by the deadline – or they will not receive credit for the week. There will be absolutely no exceptions to the deadlines and under no circumstances will partial credit be applied for late submissions.

In this course, my absolute “drop-dead” deadline is 9:00am on Monday mornings (see specific dates and assignments in the Assignments and Due Dates Section. After that time, I will not accept submissions and those assignments receive an automatic grade of zero.

In the business world, if you are late with your bid, analysis, or evaluation, you will not get the contract; if you are late with an assignment, you may not receive any further pay. The very same principle applies here – just like the business world, it is all or nothing!

Now, in the event of an ANGEL problem, there is no crisis. Just submit your assignments directly to my college email account. That works for me – and I’d understand.

Since there are absolutely no exceptions to this rule, be sure to view the assignments and expectations in the Course’s Contents Section, and ensure you will be able to meet them.

  1. Classes are conducted using a "team" format. Student teams (2-3 members) are ASSIGNEDin the first class. Teams collaborate and make joint submissions of homework assignments and receive common team grades for these activities.

Tests and certain other assignments, of course, are conducted on an individual basis only.

Previous students have found that team collaboration is beneficial to enriched performance and to workload management. However, there are certain rules.

  1. Student teams are permanent and may not have more than 3 members (without explicit instructor approval).
  2. Team rosters are due following the first class.
  3. Individuals may not "float" among teams. Any change in membership requires the instructor's explicit permission.
  4. All team members are required to actively participate and contribute to the team’s work products.
  5. If a team member fails to contribute to any assignment, the team – at its sole discretion - may choose to not include that member’s name on the assignment. In that case, the member would receive no credit for the assignment. However, should the team choose to include the member’s name anyway, the individual would receive full credit. It is the team’s call. NOTE: it is also not uncommon for teams to complain (typically at the end of a term) that one team member did not contribute – but they named them on each assignment. If you carry someone, you are responsible. If they are not contributing – do you really want to carry them?
  6. There is no room for "free-riders"(permanently non-contributing team members) and such non-contributing members may also be "fired" from their team (with instructor notification). Fired team members will be responsible for completing all remaining assignments individually.
  1. However, there is one crucial reservation. I just ask that you delay any questions – without firstseriously reading the tools & materials provided.
  2. Blended classes are conducted using a combination of lecture, exercise, and seminar formats.
  3. Students should not expect the class lectures to be limited to the text. We will not “teach the book”.
  4. All students are required to complete class readings and assignments IN ADVANCEOF THE CLASS so class time may be used to clarify issues and analyze the application of concepts. This is necessary to provide a basic understanding of the materials to be covered, identify questions, and prepare the student to actively participate in class discussions. Previous students have found that consistent class preparation was beneficial to class performance.
  5. Additional and supplementary issues and clarifications, not contained in the text materials, will be introduced from time to time, as appropriate.

Course Assignments and Activities

Assignments in this course consist of:

1.Written & reading homework assignments

2. Exercises & discussions

3.A final Project & Presentation

4. A Mid-Term Test (Test #1)

4.An End-Term Test (Test #2)

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Assignments and Due Dates Overview For details see Content and Week 1-8 in Angel.

PLEASE NOTE CAREFULLY – all assignments are due by no later than 9:00am on the due date specified (a Monday morning). ANY Assignments received after that time will not be accepted and will receive a grade of zero.

FIN4345 Introduction to Credit Analysis & Loan Structuring

Week / Class
Date / Class Topics / Assignments / Due
Date
1 / Introduction to Loans & Lending
The Lending Decision / Infrastructure
- roles, responsibilities, organization
Principles & Policies
Credit decision models
Collateral & secondary sources
Loan Policy / Readings:
Reading #1
Rose (Ch. 16)
BB&T Loan Policy
Written:
See Class #1 assignment
2 / Loan Characteristics & Requirements
Components of a loan facility
Seasonal (LOC)
Term
Bridge / Project
Permanent
Real Estate (CRE) / Construction lending / Readings:
Reading #2
Moorsman article
Written:
See Class #2 assignment
3 / Consumer Lending
Mathematics of Lending
Real Estate Loans / Readings:
Reading #3
Reading #4
Reading #5 - FDIC
Reading – Project Finance
Written:
See Class #3 assignment
4 / Financial Analysis Principles
Working Capital; Cash Cycles; Liquidity
Cash flow analysis & Statements
Pro-formas
Test #1 Distributed / Readings:
DeGraw – Liquidity, Cash Flow Statements, & Pro-formas
Gitman (Ch.3, Ch.4,Ch.14 pp.542-551)
Written:
Test #1
5 / Commercial Lending Principles
Evaluating a Term Loan
Test #1 due / Readings:
DeGraw – Liquidity, Cash Flow Statements, & Pro-forma’s
Reading #6
Hudgins model
Written:
Class #5 assignment
6 / Evaluating a Seasonal Line of Credit
Test #2 Distributed / Readings:
DeGraw – Cash Budgeting
Written:
Project Case
Test #2
7 / Case Presentation Workshop
Test #2 Due / Readings:
Written:
8 / Case Presentation / Readings:
Written:
Project Case

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Grading Policy:
NOTE: I try to break the course into a series of smaller “grading events”. That way, a single “bad day” (which we have all had) doesn’t ruin your overall performance.

5Homework assignments15%

Project25%