credit analyst interview

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CFAcountry

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I have an interview for a credit analyst position at a bank friday. What are the main/most essential things to know/freshen up on going in to this? Any advice is welcomed (especially from QQQBEE followers).
 
CFAcountry,
Is there any particular industry that you are applying for?
A large part of the interview will probably be some kind of case study. For example, they may say, “Let’s suppose that Apple approached our firm wanting to take out a $50M loan. What type of analysis would you perform before you made a decision?” They may even print out the company’s financials and hand them to you. Personally, I would give them an answer in a top-down format. Talk about the economy in which the industry operates, briefly go into Porter’s five forces, and walk them through how you would look at the company’s financials (ratio analysis, adjustments, etc).
You may also want to be familiar with:
1) Value at Risk
2) Rating agency reports (long-term and short term credit ratings, neg/pos outlooks etc)
3) Risk mitigants (collateral thresholds, additional termination events, etc)
4) Ratio analysis (as discussed previously)
If you own or have access to the level 2 curriculum, there is a whole chapter dedicated to credit analysis.
Good luck!
 
JensensalphaMale Wrote:
——————————————————-
> Credit Analyst is a pretty generic title. Can you
> be more specific?
>
> EDIT: Check this out.
>
> http://www.analystforum.com/phorums/read.php?1,113
> 1081
Here is what the job description is:
JOB SUMMARY:
Analyzes financial information and credit reports to evaluate degree of commercial loan risk and prepares recommendations on the quality and terms of the loan.
QUALIFICATIONS:
Bachelor’s Degree in related field of study or a minimum of three years experience in credit analysis. Excellent analytical, mathematic, and verbal skills required. Strong reasoning ability. Excellent written communication skills as well as attention to detail. Proficiency in Microsoft Office applications and ability to work with spreadsheets
This bank is a smaller one ($360M in assets), and much of the commercial loans i believe will be/are to private companies.
 
As a QQQBEE follower, I think I can help:
1) Understanding BS/Statement CF/Income statement - every credit interview I’ve had asked which one was most important (I went BS, and with the conservative nature of banks that’s probably the best option in my opinion - then again I didn’t get the last one I interviewed for, to give you full disclosure)
2) Know some ratios and the rationale for them (liquidity/solvency ratios), which ones you consider the ‘best’.
3) Fixed income stuff (convexity/duration/estimated life).
4) Economic stuff: Rates and their impact on the banking environment/investment approaches of banks currently - unemployment. Where you see things going and why. Understanding some of the quantitative easing and the like. What do you see as long-term trends, short-term, etc…
QQQBEE has blessed you with this interview - don’t blow it.
 
@golden_slacks….I am a L2 candidate so ill check that out. thanks.
 
I was just hired to the same position in May at my bank. Remember you’re just an analyst, not a lender yet. So they won’t kill you with too hard of questions.
1. The most important one is definitely “Which statement is more important and why” It WILL be the balance sheet. I said it was because I wanted to know if we are financing them to stay afloat or to grow (ie. tangible net worth). (If x, y, and/or z happened, what would happen to their financials)
2. Be able to talk about basic/intermediate accounting concepts. (What would the balance sheet look like after we grant xxx loan? How will this affect their ability to pay us?)
3. Cash Flow. Anything you can talk about here is bonus points. (its how you get paid back.
4. How to monitor your borrowing base (depreciation). This usually will raise a lot of questions in your analysis (is depreciation being reinvested back into the company)
5. Illustrate that you understand business/economic cycles and how that affects manufacturing, services, distributors, etc.
The core of my work is the writeup. So income statement, balance sheet, and the interims (YTD) analysis’s require the most detail (CFA material has helped impress my lenders so far).
Remember to stay relaxed and confident when interviewing, so that you can show how you have a cool head when faced with stress and most importantly that you know what’s expected of you. They’re hiring you to become a lender within 14-20months. Proving that you know alot already and they won’t be wasting their time/money on you will help.
 
In addition, remeber that with that small of a bank you’ll probably be analyzing small businesses. You’ll be suprised by how many financials you look at are done by an old lady bookkeeper with basic knowledge of Quikbooks. That being said, we put them into a universal format (spread). This lets you compare line items side-by-side over a a few years to see more specically what’ causing the net loss, liquidity ratios to decline, etc.
 
Also consider stress cases and degrees of it, and what you would look for, for the company to be able do to respond, adapt or change their strategy about it (or the degress of financial flexibility, tying it into the business enviornment.)
 
Thanks all…this info will be a great help in preparing.
Also, I would say that im an intermediate when it comes to excel. Do I really need to have that down, or would you think there will be some training around that? I learn pretty quickly, but is that a necessity or is interpreting the information given a higher priority when hiring?
 
I would say your excel level is fine. The standard vlookup, Hlookup, pivot tables, is all I brought to the table. They’ll want you to be able to follow along in what they’re doing.
I’d expect more on the job training than anything.
Good luck. Let us know how it goes.
 
CFAcountry Wrote:
——————————————————-
> JensensalphaMale Wrote:
> ————————————————–
> —–
> > Credit Analyst is a pretty generic title. Can
> you
> > be more specific?
> >
> > EDIT: Check this out.
> >
> >
> http://www.analystforum.com/phorums/read.php?1,113
>
> > 1081
>
> Here is what the job description is:
>
> JOB SUMMARY:
> Analyzes financial information and credit reports
> to evaluate degree of commercial loan risk and
> prepares recommendations on the quality and terms
> of the loan.
>
> QUALIFICATIONS:
> Bachelor’s Degree in related field of study or a
> minimum of three years experience in credit
> analysis. Excellent analytical, mathematic, and
> verbal skills required. Strong reasoning ability.
> Excellent written communication skills as well as
> attention to detail. Proficiency in Microsoft
> Office applications and ability to work with
> spreadsheets
>
>
>
>
> This bank is a smaller one ($360M in assets), and
> much of the commercial loans i believe will be/are
> to private companies.
360 M in assets ? That’s really tiny.
As someone mentioned, they will be granting loans to very small companies, whose financial reporting will be often questionable and incomplete.
So I would be more focusing on questions like what would do if information X is missing.
I believe that duration and convexity would be irrelevant for your job.
The people matching assets and liabilities won’t be in your department.
I wish you the best. Commercial banking is extremely underrated. Everybody around here wants to get jobs where they will do shit. In commercial banking you will get responsibilities faster.
 
Viceroy Wrote:
——————————————————-
> CFAcountry Wrote:
> ————————————————–
> —–
> > JensensalphaMale Wrote:
> >
> ————————————————–
>
> > —–
> > > Credit Analyst is a pretty generic title.
> Can
> > you
> > > be more specific?
> > >
> > > EDIT: Check this out.
> > >
> > >
> >
> http://www.analystforum.com/phorums/read.php?1,113
>
> >
> > > 1081
> >
> > Here is what the job description is:
> >
> > JOB SUMMARY:
> > Analyzes financial information and credit
> reports
> > to evaluate degree of commercial loan risk and
> > prepares recommendations on the quality and
> terms
> > of the loan.
> >
> > QUALIFICATIONS:
> > Bachelor’s Degree in related field of study or
> a
> > minimum of three years experience in credit
> > analysis. Excellent analytical, mathematic,
> and
> > verbal skills required. Strong reasoning
> ability.
> > Excellent written communication skills as well
> as
> > attention to detail. Proficiency in Microsoft
> > Office applications and ability to work with
> > spreadsheets
> >
> >
> >
> >
> > This bank is a smaller one ($360M in assets),
> and
> > much of the commercial loans i believe will
> be/are
> > to private companies.
>
>
> 360 M in assets ? That’s really tiny.
>
> As someone mentioned, they will be granting loans
> to very small companies, whose financial reporting
> will be often questionable and incomplete.
>
> So I would be more focusing on questions like what
> would do if information X is missing.
> I believe that duration and convexity would be
> irrelevant for your job.
> The people matching assets and liabilities won’t
> be in your department.
>
> I wish you the best. Commercial banking is
> extremely underrated. Everybody around here wants
> to get jobs where they will do shit. In commercial
> banking you will get responsibilities faster.
Do you think a 360m bank will have a hugely segregated ALM department? I’ll give you a hint - the answer is no.
 
I know its pretty small. It is a somewhat local bank in a town of about 130K or so (not including surrounding areas). I am hoping a position like this one would lead me somewhere nice down the line with a comfortable salary.
 
@ jcole 21: I believe that these departments are typically segregated, regardless of size.
 
how do business schools look at credit analyst positions?
how do the exit opps look? some people had mentioned fixed income.
Thanks
 
starbuk Wrote:
——————————————————-
> how do business schools look at credit analyst
> positions?
>
> how do the exit opps look? some people had
> mentioned fixed income.
>
> Thanks
Also, what would be the exit opps for a small bank such as this? I know it would probably be harder. Thoughts?
 
Viceroy Wrote:
——————————————————-
> @ jcole 21: I believe that these departments are
> typically segregated, regardless of size.
They’re not at the 2.5B bank I work at…
 
^^
Really ? I find that surprising… But hey if you say so….
I think a fundamental difference to be made is if this job description applies to new credits or to the portfolio of credits. If it’s for new credits, I doubt very much that the guy will bother about ALM.
However if it’s an internal department and the guy does some risk management, then that’s a different story.
Do we agree ? Or how does it go at your bank ?
I also work for a small bank (18B) and these functions have nothing to do with one another.
 
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