How NPV Helps in Choosing the Best Workout Option for a Distressed Loan

In this tale that’s been crafted for instructional use, a community banker is thrown into the world of workout. Lacking experience there, he seeks help from a special-situation specialist, and learns that determining the net present value of collateral is key to a loan workout win. 

In 10 years at a mid-sized community bank, Willie Malone worked his way up from underwriter to relationship manager. Over time, and with his employer reeling from a spike in criticized as…