On Demand Course

Lease Capitalization - Impacts Your Borrowers' Leverage, Liquidity, Profitability and Repayment Ability

This presentation will provide a comprehensive breakdown of lease capitalization, its implementation timeline, and how it will impact financial condition and
borrower underwriting.

Learning Objectives

After attending this presentation, participants will be able to:

  • Define lease capitalization
  • Describe differences between capital and operating lease
  • Explain how lease capitalization affects borrower's financial statements
  • Recognize how the capitalization process is determined by the flow of lease payments and the incremental borrowing rate
Dev Strischek 1 HR
Included with Team Membership

About This Course

Lease capitalization has significantly impacted financial reporting by requiring borrowers to disclose their lease liabilities on their financial statements. This provides lenders with a more accurate and comprehensive view of a borrower’s total obligations, allowing for better-informed decision-making. With a clearer picture of a borrower’s financial commitments, lenders and creditors can now more accurately assess the borrower’s ability to repay debts, ensuring a more precise evaluation of their overall financial health.

Topics covered in this session

Lease capitalization GAAP  (ASC 842)

  • Implementation date
  • Elements of capitalization—capitalization rate, amortization, right-of-use asset, lease liability

Operating leases and financing leases

  • Analysis and underwriting
  • Impact on cash flow
  • Ratio covenants most sensitive—leverage ratio, current ratio

Lease cap’s impact on liquidity, leverage, solvency, and profitability

  • Liabilities—additional long-term debt and short-term debt
  • Right of use (ROU) asset—additional fixed assets and treatment as intangible assets

Portfolio management

  • Identification of industries and borrowers most sensitive to lease cap
  • Changing interest rates—impact on capitalized lease asset and ROU asset
  • Review and restructuring as needed of loans with financial covenants affected by lease cap

 Who Should Attend:

  • Credit policy managers
  • Commercial lenders
  • Business bankers
  • Commercial loan underwriters
  • Credit managers
  • Credit Risk Managers
  • Credit approval officers
  • Risk Managers
  • Enterprise Risk Managers
  • Chief Credit Officers
  • Senior Lenders
  • Senior Lending Officer
  • Bank Director
  • Chief Executive Officer
  • Bank President
  • Board Chairman

 

*This program does NOT qualify, nor meet the National Standard for NASBA accreditation. 

Your Instructor

Dev Strischek
Dev Strischek

A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek is principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is the former SVP and senior credit policy officer at SunTrust Bank, Atlanta. He was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management. Prior to SunTrust, Mr. Strischek was chief credit officer for Barnett Bank’s Palm Beach market. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC).

Training your team?

This course is covered under team memberships.

See Team Memberships
Buying for yourself?
$ 99
Included with Team Membership
Training your team?

This course is covered under team memberships.

See Team Memberships
$ 99
per attendee