Four page, maximum, report on your answers to questions:

As a loan committee member at the Park Bank, would you approve the request?Why or why not? Evaluate the decision using each of the four Cs of credit. Use the Collateral Analysis Template to evaluate the Collateral C. Use the Debt Service Template to evaluate the Capacity C. Templates are in Canvas. The Report is to be four pages maximum (the two templates plus two word processed pages of discussion).Consult the Note: DISCUSSION OF BANKING TERMS RELATIVE TO THE MILWAUKEE MACHINING CASE in Canvas for interpretation of bankers abbreviations in the bankers loan presentation package

DISCUSSION OF BANKING TERMS RELATIVE TO THE MILWAUKEE MACHINE CASE

Commitment Summary as of 06-03-09

• Facility 1-2 means line of credit and term loan to Milwaukee Machining, Inc.
• Facility 3 means mortgage loan to Milwaukee Investments, LLC
• Com = Commitment by the bank
• O/S = Balance of the Loan Outstanding
• Type = See legend in this section of the case
• Mat. = Maturity of the Loan
• Exp. = When the loan covered by the commitment expires and comes due
• Rate = P+1.00% means prime rate (which was 7.75% on April 3, 2006) plus 1%
• Rate = LIBOR + 300bp means the London Interbank Offered Rate (which was 4.82% on April 3, 2006) plus 300 basis points or +3%
• Fees = what the bank charges the client for doing the loan (a one-time charge)
• Pmt = I.O. means interest only
• Pmt = $15,207 means the monthly principal and interest payment to amortize the loan (debt service)
• Pmt = $15,190 means the monthly principal and interest payment to amortize the loan (debt service)

Collateral Analysis

• BFS = Borrowers Financial Statements
• Cap. = means the inventory value for purposes of collateral value is capped at $250,000.
• LTV = means Loan to Value of collateral

Collateral Analysis Template Milwaukee Machining, Inc.

(The Colleral C)

All balance sheet numbers as of 1/31/06

MMI:

Accounts receivable Total $___________ x 75% = $_______________

Inventory Raw Material $_____________

Finished Goods $_____________

Catalog Inventory $_____________

Total Eligible $_____________

CAP $_______________

Net Fixed Assets (appraisal) $_______________

Total Collateral MMI $_______________

Total Loan Exposure (MMI) $_______________

MI

Real - Estate appraisal (MI) Total Collateral MI $_______________

Total Loan Exposure (MI) $_______________

Conclusion on collateral coverage: Adequate___ Inadequate___

Debt Service Template

(The Capacity C)

(Analysis of Capacity to Cover Debt Service Requirements Global: Milwaukee Machining, Inc. (MMI) & Machining Investments, LLC (MI) together

Profitability:

EBITDA MMI 2005 $__________

EBITDA MM 2005 $__________

Total EBITDA 2005both companies $__________

Debt Service Requirements:

MMI New Loans

Term Loan (monthly payment of P & I) $____________ x 12 = Annual Pymt $___________

Line of Credit (at max.loan amt. outstanding $_________x 8.75% = Annual Pymt $ ___________

[Prime Rate was 7.75 in April 06. Interest is P+1.00%]

Total Debt Service for MMI $_________ __

MI New Loans

Mortgage Loan (monthly payment of P & I) $__________ x 12 = Annual Pymt $___________

Total Debt Service for MI $___________

Total Debt Service both companies $___________

Does both companies total profitability cover debt service? Yes_____ No_____