Credit Where Credit Is Due

 

"The Bankers' Little Helper" (Hands On, March) shows an ignorance of commercial bank methodology. Do our credit analysts and account officers use reference books? Of course. Without such analytical tools, which provide a jumping-off point for discussion with customers, we would be faking more than we know. Are such books as Annual Statement Studies (published by Robert Morris Associates) the sole criterion for making credit decisions? Of course not. A bank that turned down credit requests solely on the basis of RMA ratios would not maintain its customer base for long.

The Annual Statement is an excellent tool for examining a potential borrower within the context of its industry. However, such factors as relationship, character, track record, and trends are as important to a bank analyst as whether or not the borrower fits into a particular RMA range.