Before they wrapped up their spring semesters, close to 100 students on track for careers in the financial services industry had a chance to show what they know about credit risk in competitions held by RMA chapters.
In these “case competitions,” teams of students often put together financing packages for fictional companies and then explain and defend them to judges who play the role of loan review committees. The cases may be fictional, but the prize money is real: The total awarded per competition ranged from $5,000 to $7,500 this year.
RMA’s Alberta, Empire, North Central, and Wisconsin chapters held case competitions, drawing a total of 94 participants from 10 colleges and universities in the U.S. and Canada.
“These case competitions are important to us because they support one of RMA’s strategic pillars: to provide the banking industry with high-quality, emerging talent,” said John Sullivan, RMA’s Academic Market Director. “The competitions are challenging, and valuable, for the students. They have to apply critical thinking skills to real-world risk management scenarios, and then defend their decisions to professional bankers.”
Wisconsin saw its second annual Risk Management Association Commercial Lending Case Competition, where the judges included Wisconsin Banking Association Vice President and Chief of Staff Daryll Lund, Byline Bank Chief Credit Officer Tom Carls, First Business Bank Chief Credit Officer Brad Quade, and Johnson Financial Group Portfolio Manager David Wilbik.
For the 2021 Credit Analysis Competition organized by the RMA North Central Chapter, whose reach includes the Dakotas, Minnesota, and parts of western Canada, the following banks provided prize money, volunteers, or both: AgCountry Farm Credit Services, American Federal Bank, Aspire Financial, BankNorth, Bank Forward, Bell Bank, Bremer Bank, Choice Bank, First Western Bank & Trust, Ramsey National Bank, Starion Financial, Toronto Dominion Bank, US Bank, and Western State Bank.
While the details and procedures of different competitions vary, a good example is the North Central competition, which, like all the competitions except for Alberta’s, was held over Zoom. In it, teams were provided with a case involving a commercial loan request from a mock borrower, Tilly Toys, Inc. Each team was asked to consider the company’s request for assistance in purchasing commercial real estate from the owners as part of their retirement transition strategy.
The case also included direction from the bank president to assess the structure of the existing line of credit which included stale, evergreen funds due to an extending working capital cycle. The teams battled to make appropriate decisions around financing commercial real estate, stale inventory, and working capital for a company that was projecting growth and had high dividend expectations.
They were provided with financial information on the company, a lender / borrower dialogue transcript, and industry resources to assist with their decision. They were then asked to prepare a written loan presentation including a thorough analysis of the company, industry, and all key components of the loan request, and to recommend approval or denial along with an appropriate structure, including financial and reporting covenants. In addition to the written presentation, each group presented their solutions orally to a panel of judges made up of four lending professionals.
The teams were given approximately one month to prepare their analysis and each team was paired with a mentor from the local banking community to assist with industry-specific questions and provide guidance as needed.
The North Central Chapter supported the competition by providing guidance, oversight, and industry contacts to identify judges and mentors. A cash contribution from the Chapter was paired with additional donations from the National RMA organization, the Manitoba chapter of RMA, and donations from 12 institutions within the marketplace to make up a $7,500 pool of prize money to divide between the teams. RMA, though its RMA Foundation, provided a total of $17,000 toward the 2021 case competitions.
“The payoff is more than the prize money,” Sullivan said. “Participants get exposure to and coaching from experts who make important financial decisions every day. Then there is the benefit of collaborating with your college friends in a competitive situation. RMA is proud to be affiliated with all the schools and students who participate. It’s important to them, and us.”
Details for each competition are below:
Participating Schools: The University of Manitoba, Valley City State University, the University of Mary, North Dakota State University
Number of Students: 20
Winning Team: University of Manitoba
Participating Schools: University of Wisconsin-Madison, University of Wisconsin-Platteville, University of Wisconsin-Stevens Point, University of Wisconsin-Eau Claire
Number of Students: 16
Winning Team: University of Wisconsin-Eau Claire
Empire (New York state)
Participating School: State University of New York-Oswego
Number of students: 18
Winning Team: Intra-school
Participating School: Mount Royal University
Number of students: 40
Winning team: Intra-school