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Title:

Welcome to Acadia Bank

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Foreclose or Workout? ... a workout with Mr. Ortiz, or foreclose the loan. ... of our loan workout, and consequently, our decision to foreclose or workout. ... – PowerPoint PPT presentation

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Title: Welcome to Acadia Bank


1
Welcome to Acadia Bank
Sample pages from report.
  • Presented by
  • Team 1
  • Jennifer Copenhaver
  • Cheryl Kleiman
  • Kelly Peck
  • Darby Sinding

2
William Ortiz
  • Borrower Information
  • 13 years Business Experience
  • Graduate Degree
  • Booming Economic Times
  • Loan Information
  • Full Value 2,400,000
  • Foreclosure Value 1,750,000
  • Default Value 480,000

3
Foreclose or Workout?
It is our responsibility to decide whether to
attempt a workout with Mr. Ortiz, or foreclose
the loan. If the workout succeeds
2,400,000.. (100) If we foreclose
1,750,000.……….... (73) If the workout fails
480,000……... (20)
of Full Value
4
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5
Bayes Theorem
  • We must consider all three criteria,
  • P(SY n? T n? C )
  • To do this we use Bayes Theorem.

We must first show P(Yn? Tn? CS )
.0048133211 P(Yn? Tn? CF ) .0023836145
P(SY n? T n? C ) .6361099503 P(FY n? T n? C )
.3638900557
6
Expected Value with Mr. Ortizs Criteria
  • The random variable, Z, now takes into
    consideration all three criteria.
  • When we compare this Expected Value of Z to our
    other values, we find that it is 48,669 less
    than our known Foreclosure Value, and only 71 of
    the Full Value of the loan.

E(Z ) Full Value P(SY n? T n? C ) Default
Value P(FY n? T n? C )
E(Z ) 1,701,331
7
What If ???
  • Throughout our experimentations with the
    criteria, we have come across discrepancies that
    significantly affect the expected value of our
    loan workout, and consequently, our decision to
    foreclose or workout.

What if we changed some of the criteria?
Lets take a look…
8
Workout!!
  • By increasing the years of experience to include
    a range
  • of 10 to 13 years, the expected value of our
    loan workout increased to 1,769,992.

When taking into consideration these newly
computed values, we have concluded that a
workout would be the best decision for
Mr.. Ortizs Loan.
9
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10
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