RMA Lending to Municipalities 2021 | Risk Management Association (RMA) | 19 January 2021 | Virtual Event

Now offered as a virtual course, taking place in a virtual classroom setting, Lending to Municipalities teaches relationship managers and credit analysts the skills to lend to local governments. Selling credit products to and performing credit analysis on local governments is very specialized and differs in many ways from lending to commercial institutions and other nonprofits. Of special note are the following:

• The GAAP financial statements of municipalities contain a combination of fund accounting statements and full accrual statements prepared using very specialized accounting.
• The local government’s state has jurisdiction over the lending capabilities of the various local governments in the state, and this varies from state to state.
• In addition to government-type activities, many local governments run business-like endeavors, such as utilities, sports facilities, and transit authorities. Borrowing ability and structure are often different for the business-type activities than for the government activities.
• Credit structures are different for local governments than for other borrowers, partly because local governments have access to the tax-exempt bond market and tax-exempt debt for certain credit needs.
• The bond rating agencies play an important role in the credit analysis process, and it is important to understand their methodology.
The marketing process is quite different for these clients, due to their political nature.

Relationship managers need to be able to spot opportunities to market credit to these prospects, to talk intelligently with the prospects and clients about potential credit offerings and financial performance, and to ask for the appropriate information necessary to seek credit approval. Credit personnel need to be able to use the financial statements and other information to effectively underwrite or approve the municipal credits. Lending to Municipalities has been developed to provide relationship managers and credit analysts with this specialized set of skills.

Objectives:
Upon completion of Lending to Municipalities, participants will be able to:
• Understand different types of local government structures in the United States in order to determine potential credit worthy government structures in the various 50 States.
• Complete a review and financial analysis of a GAAP prepared municipal financial statement as one factor in making a credit decision.
• Perform a business analysis of the municipality as another factor in making a credit decision.
• Articulate the common credit needs of municipalities.
• Determine the best structure based on the credit need.
• Locate and use publicly available information to assist in the marketing effort for municipal clients.

Lending to Municipalities is designed for financial professionals who want to take a more solutions-oriented approach to client management, while at the same time ensuring profitability for the bank. Participants could include bankers with various backgrounds, experience, and areas of expertise including community bankers, corporate bankers, commercial bankers, specialized lenders, including government and nonprofit, credit officers, credit analysts, loan review, branch bankers, trust officers, relationship managers, cash management personnel, and anyone who deals with government clients.

A minimum of two to three years of lending or credit analysis experience is highly recommended to take this course.