HBS Case Project
FINS5530 HBS Case Assignment
Semester 2, 2013
Instructor: Lixiong Guo
Readings:
1. Note on Bank Loans.
2. US Bank of Washington case.
Assignment:
Please prepare a Credit Proposal Memo similar to the one shown in Exhibit 1 of “Note on Bank
Loans”. Given the limited information you have from the case, you are not expected to include all components of Exhibit 1. The following is a suggested structure of your report:
Purpose of the credit extension o Keep this part short
Financial statement analysis, cash-flow projections, and debt service capacity. o This should be one main part of your report. You should use an excel spread sheet to conduct a sensitivity analysis on the projected cash flows and the ability of the borrower to repay the loan.
Assessment of major risks, including impact of forecasted economic trends and the strength of competitors. o This is another main part of your report. In this part, you should examine the credit risk of the loan both as an individual loan and as a part of the bank’s loan portfolio.
You should also consider whether the loan would fit the overall strategy and objective of the bank.
Based on you analysis above, make a decision on whether the loan should be granted or not and under what condition. o Please provide a brief reason for your decision and the condition, if any.
Regardless of your decision above, assuming that you decide to make the loan, what is your recommended loan structure? o Please specify the maturity and interest rate on the loan.
In the last section of the case “Financing the Deal”, the case mentions several things that Mal Harding would do and some of his concerns. That should be taken as a hint on what you should do and what concerns you should have and more.
Submission and Due Date:
Your report should be double-spaced using 11 or 12 points font. The maximum length of the text part of the report is 10 pages. Tables and figures can be put at the end of the
Semester 2, 2013
Instructor: Lixiong Guo
Readings:
1. Note on Bank Loans.
2. US Bank of Washington case.
Assignment:
Please prepare a Credit Proposal Memo similar to the one shown in Exhibit 1 of “Note on Bank
Loans”. Given the limited information you have from the case, you are not expected to include all components of Exhibit 1. The following is a suggested structure of your report:
Purpose of the credit extension o Keep this part short
Financial statement analysis, cash-flow projections, and debt service capacity. o This should be one main part of your report. You should use an excel spread sheet to conduct a sensitivity analysis on the projected cash flows and the ability of the borrower to repay the loan.
Assessment of major risks, including impact of forecasted economic trends and the strength of competitors. o This is another main part of your report. In this part, you should examine the credit risk of the loan both as an individual loan and as a part of the bank’s loan portfolio.
You should also consider whether the loan would fit the overall strategy and objective of the bank.
Based on you analysis above, make a decision on whether the loan should be granted or not and under what condition. o Please provide a brief reason for your decision and the condition, if any.
Regardless of your decision above, assuming that you decide to make the loan, what is your recommended loan structure? o Please specify the maturity and interest rate on the loan.
In the last section of the case “Financing the Deal”, the case mentions several things that Mal Harding would do and some of his concerns. That should be taken as a hint on what you should do and what concerns you should have and more.
Submission and Due Date:
Your report should be double-spaced using 11 or 12 points font. The maximum length of the text part of the report is 10 pages. Tables and figures can be put at the end of the