This webinar presentation was given by Jay Borkowski of Sageworks and Joe Waites of CECO Management Consultants. Sageworks provides credit risk management solutions and data to financial institutions. CECO provides consulting services in areas like strategy, credit, and operations to financial services companies. The webinar discussed relationship-based banking and lending, balancing relationships with risk management, and examples of effective strategies like outlining credit metrics and defining staff roles. Questions from attendees could be entered in the chat box.

1. Presented by:
Jay Borkowski, Vice President, Sageworks
Joe Waites, President, CECO Management Consultants

2. To ask a question during the webinar, feel free to enter it into the chat box
along the right hand side of your screen. Slides are available there, too.
Link to download slides
Area to enter questions or
write-in poll answers

3. 
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Financial information company that provides credit
and risk management solutions to financial
institutions
Data and applications used by thousands of
financial institutions and accounting firms across
North America
Awards
◦ Named to Inc. 500 list of fastest growing privately held companies
in the U.S.
◦ Named to Deloitte’s Technology Fast 500

4. 
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CECO (Capital Efficiency Consulting) has provided
consulting services to financial services companies
for over nine years
Areas of expertise include strategy, credit, revenue
optimization, operational effectiveness, market and
customer build and others
We are committed to delivering tangible,
measurable benefits to the operating results of our
clients

5. 
Jay Borkowski
Jay Borkowski is a principal of Sageworks and vice
president of the company’s financial institutions
division. He oversees a team responsible for
assisting banks and credit unions with risk
management.

Joe Waites
Joe Waites is the founder and president of CECO
Management Consultants. He has over 30 years of
financial services consulting experience. He
manages many of CECO’s practice areas.

6. 
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What is Relationship-Based Banking?
What is Relationship-Based Lending?
Advantages of Relationship-Based Lending for the
Institution & Borrower
Areas of Caution
3 Ways to Balance Risk & Relationships
◦ Outlining key credit risk metrics & thresholds
◦ Defining roles and responsibilities among staff members
◦ Implementing standardized credit risk analysis systems
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Benefits of Balancing Relationships & Risk
Examples

7. 
Provision of financial services by a financial
intermediary on the basis of long-term investment
in obtaining firm-specific information through
multiple interactions with the customer

8. 
When, in lending, financial institutions use
personal knowledge of the business borrower over
time to overcome issues of information opacity

Smaller financial institutions have traditionally held
an edge over larger financial institutions

9. 
Boosts likelihood of winning the borrower’s future
loan business

Could mean more revenues from multiple product
lines and referral business

Businesses may be willing to pay a slight premium
to borrow from a local bank

10. 
Longer duration of the relationship, greater credit
availability and understanding of needs
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Lower collateral requirements for the borrower
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Personalized service and increased chances of loan
approval

11. 
Minimal analysis of credit risk during underwriting
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Subjective assessments of creditworthiness
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Less comprehensive annual review
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Difficulty justifying relationship-based loan
decisions in exams and to board

12. 
When determining the market capacity, with
regards to lending, relationships must be
considered
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When determining the industry capacity, with
regards to lending, relationships must be
considered

13. 1. Outline key credit risk metrics and thresholds
2. Define roles and responsibilities among staff
members
3. Implement standardized credit risk analysis
systems

14. Business credit scores
Personal credit scores
Probability of default
metrics
Debt service coverage
ratios
Loan to value ratios
Overall ratio analysis
Global cash flow analysis
UCA cash flow analysis

15. 
Outline, in policy, who is assigned to:
◦ Initial credit analysis
◦ Loan review
◦ Post-funding analysis
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Assign responsibilities and reinforce accountability
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Components of post-funding analysis that tend to
slip through the cracks:
◦ Who must obtain financial statements or other documents
◦ Who must conduct a global credit analysis

16. 
Can improve consistency and objectivity by separating
credit analysis function from lending
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With proper responsibilities defined processes with
approval will not be skipped
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Train staff not only in the institution’s products and
policies, but also in understanding all of the client’s
needs to offer relationship-based solutions
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Educate staff so they can properly set expectations with
clients

17. 
Standardized credit risk systems in a relationshipbased banking environment help with:
◦ Uniformity of credit analysis and loan files across borrowers
◦ Objective assessments of creditworthiness
◦ Efficiency in annual reviews
◦ Documentation of credit analysis and loan reviews for
examiners and board
◦ Better insight into borrower’s industry

18. 
Solutions can specifically assist with:
◦ Spreading financial statements and tax returns
◦ Calculating key ratios
◦ Consistent global cash flow analysis
◦ Accessing personal and business credit scores
◦ Comparing the business to industry peers
◦ Structuring workflow

19. 
Customer service
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Better able to justify risk-based pricing
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Open up dialogue with businesses that don’t
currently meet financial institution’s credit risk
criteria
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Improved efficiency in the lending process
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Ability to address credit deterioration earlier
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Relationships with regulators

20. Jay Borkowski
Vice President, Sageworks
(919) 851-7474 ext. 502
jay.borkowski@sageworks.com
www.sageworksanalyst.com
Joe Waites
President, CECO Management Consultants
(678) 318-1755 ext. 101
sjwaites@cecoconsultants.com
www.cecoconsultants.com