商業(yè)銀行管理BankManagmentFinancialServices7th課后題答案

1、CHAPTER 16LENDING POLICIES AND PROCEDURESGoal of This Chapter: The purpose of this chapter is to learn why sound lending policies are important to banks and other lenders and the public they serve and how to spot and deal with problem loans when they appear in an institutions portfolio. .Key Topics

2、in This Chapter· Types of Loans Banks Make· Factors Affecting the Mix of Loans Made· Regulation of Lending· Creating a Written Loan Policy· Steps in the Lending Process· Loan Review and Loan WorkoutsChapter OutlineI.IntroductionII.Types of LoansA. Types of Loans1.Real E

3、state Loans2.Financial Institutions Loans3.Agricultural Loans4.Commercial and Industrial Loans5.Loans to Individuals6.Miscellaneous Loans7.Lease Finance ReceivablesB.Factors Determining the Growth and Mix of Loans1.Characteristics of the Market Area2.Loan Participations3.Lender Size4.Experience and

4、Expertise of Management5.Institution's Loan Policy6. Expected Yield 7. Functional Cost AnalysisIII.Regulation of LendingA.Relevant Regulations1.The Lending Limit 2.Limitation on Real Estate Lending3. The Community Reinvestment Act4. Equal Credit Opportunity Act5.Truth-in-Lending Act6.Internation

5、al Lending Rules7.Examiner Loan Ratings8.CAMELS RatingB.Establishing A Written Loan PolicyIV.Steps in the Lending ProcessV.Credit Analysis: What Makes a Good Loan?A.Is the Borrower Credit Worthy?1.Character2.Capacity3.Cash4.Collateral5.Conditions6.ControlB.Can the Loan Agreement Be Properly Structur

6、ed and Documented?C.Can the Lender Perfect Its Claim Against the Borrower's Earnings and Any Assets That May Be Pledged as Collateral?1.Reasons for Taking Collateral2.Common Types of Loan Collaterala) Accounts Receivableb) Factoringc) Inventoryd) Real Propertye) Personal Propertyf) Personal Guar

7、antees3.Other Safety Devices to Protect a LoanVI.Sources of Information About Loan CustomersA.Credit BureausB.Publications of Financial InformationC.Information on Economic ConditionsVII.Parts of A Typical Loan AgreementA.The NoteB.Loan Commitment AgreementC.CollateralD.Covenants (Affirmative and Ne

8、gative)E.Borrower Guaranties or WarrantiesF.Events of DefaultVIII.Loan ReviewA.The Purpose of Loan ReviewB.Elements of a Good Loan ReviewIX.Handling Problem Loan SituationsA.Signs of a Developing Problem Loan SituationB.Steps in Maximizing the Recovery of Funds from a Problem Loan (the Loan Workout

9、Problem)X.Summary of the ChapterConcept Checks16-1.In what ways does the lending function affect the economy of its community or region?Bank credit is one of the most important sources of capital that fuels local economic growth and development. When banks make loans to support the development of ne

10、w businesses and to aid the growth of existing businesses, new jobs are created and there is a greater flow of income and spending throughout the local economy.16-2.What are the principal types of loans made by banks?Bank loans are usually classified by the purpose of the loans. The most common clas

11、sifications are real estate loans, commercial and industrial loans, loans to financial institutions, credit-card and other loans to individuals, and agricultural production loans Bank loans may also be classified by maturity - over one year and one year or less.16-3.What factors appear to influence

12、the growth and mix of loans held by a lending institution?The particular mix of any lending institution's loan portfolio is shaped by the characteristics of its market area, the expected yield and cost associated with each type of loan, bank size, the experience of management, and the written lo

13、an policy and regulations.16-4A lender's cost accounting system reveals that its losses on real estate loans average 0.45 percent of loan volume and its operating expenses from making these loans average 1.85 percent of loan volume. If the gross yield on real estate loans is currently 8.80 perce

14、nt, what is this lender's net yield on these loans? The bank's net yield on real estate loans must be:Net Yield on Real Estate Loans = 8.80% - 0.45% - 1.85% = 6.50% 16-5.Why is lending so closely regulated by state and federal authorities?Lending is closely regulated because it is the center

15、 of risk for most lending institutions. Lending institutions in the U.S. are limited in the loans they can make to a single borrower by the size of their capital and surplus. They also must limit their real estate loans based on the size of their total time and savings deposits or capital. Discrimin

16、ation against borrowers on the basis of their age, sex, religion, or national origin is prohibited by U.S. law. They also cannot discriminate against borrowers from certain neighborhoods in their service areas.16-6.What is the CAMELS rating and how is it used?The CAMELS rating is a system used by fe

17、deral bank examiners for evaluating the overall condition of a bank based upon the adequacy of its capital, the quality of its asset portfolio, its management quality, the adequacy of its earnings, its liquidity and its sensitivity to market risk.16-7.What should a good written loan policy contain?A

18、 good written bank loan policy should specify the goals of the loan portfolio and program, describe an ideal loan portfolio for the institution and indicate the types of loans they normally will refuse to make, specify who has the authority to approve loans of varying type and size, the documentatio

19、n requirements of different types of loans, and supply guidelines on loan pricing and collateralization for loan officers.16-8.What are the typical steps followed in receiving a loan request from a customer?A loan officer usually takes or receives such a request initially and passes it along to the

20、credit analysis division for technical review. Usually the recommendations of both the credit analyst and the loan officer are directed to a loan supervisor or loan committee for approval.16-9.What three major questions or issues must a lender consider in evaluating nearly all loan requests? The thr

21、ee key issues with every loan:1.is the borrower credit worthy?2.can the loan agreement be properly structured and documented?3.can the bank perfect its claim against the borrower's collateral?16-10.Explain the meaning of the following terms: character, capacity, cash, collateral, conditions, and

22、 control?a.Character - is the borrower specific about the purpose of a loan and has a serious intent to repay?b.Capacity - does the borrower have the legal authority to sign and commit to a binding loan agreement?c.Capital - does the borrower generate sufficient income or cash flow to properly servi

23、ce a loan?d.Collateral - does the borrower possess assets of sufficient quality and value to backstop a loan?e.Conditions - does the outlook for the economy and industry where a borrower is situated add strength to a loan?f.Control - does the proposed loan meet the bank's own quality standards a

24、nd the standards of bank examiners?16-11. Suppose a business borrower projects that it will experience net profits of $2.1 million compared to $2.7 million the preceding year and will record depreciation and other noncash expenses amounted of $0.7 million versus $0.6 million last year. What is this

25、firms projected cash flow for this year? Is the firms cash flow rising or falling? What are the implications for a lending institution thinking of loaning money to this firm? Suppose sales revenue rises by $.5 million, costs of goods sold decreases by $.3 million, while cash tax payments increase by

26、 $.1 million and noncash expenses decrease by $.2 million. What happens to the firms cash flow? What would the lenders likely reaction to these events?The firm's projected cash flow can be estimated by either of two methods discussed in the text:Cash Flow Estimate B = $2.1 million + $0.7 million

27、 = $2.8 million for the Current YearThe previous year the cash flows amounted to:Cash Flow Estimate B = $2.7 million + $0.6 million = $3.3 millionFor the Previous YearClearly the firm's cash flow is falling, which suggests that the lending institution needs to find out the reasons for this decli

28、ne before committing any of funds.Sales Revenue+$.5Costs of Goods Sold+$.3Cash Tax Payments-$.1Noncash Expenses-$.2Total +$.5 increase in cash flows from these changesThese changes should make the lender happier because it means that cash flows are rising again.16-12.What sources of information are

29、available today that loan officers and credit analysts can use in evaluating a customer loan application?Among the most widely used sources of information used in evaluating loans are financial statements supplied by the borrower and industry-wide performance ratios for comparison purposes supplied

30、by such organizations as Dun and Bradstreet and Risk Management Associates (RMA).16-13.What are the principal parts of a loan agreement? What is each part designed to do?The most important parts of loan agreements include a signed note which specifies the interest rate and the terms of the loan, a l

31、isting of covenants which specify what the borrower must and must not do, documents specifying loan collateral which protects the lenders interests, and a section describing what events or happenings will trigger default.16-14.What is loan review? How should a loan review be conducted?Loan review is

32、 a process of periodic investigation of outstanding loans on an institution's books to make sure each loan is paying out as planned, all necessary documentation is present, and the bank's loan officers are following the institution's loan policy. While lending institutions today use a va

33、riety of different loan review procedures, a few general procedures are followed by nearly all lending institutions. These include:1.Carrying out reviews of all types of loans on a periodic basis.2.Structuring the loan review process carefully to make sure the most important features of each loan ar

34、e checked.3.Reviewing the largest loans most frequently.4.Conducting more frequent reviews of troubled loans.5.Accelerating the loan review schedule if the economy slows down or if industries in which the bank has made a substantial portion of its loans develop significant problems.Loan review is no

35、t a luxury but a necessity for a sound lending program. It not only helps management spot problem loans more quickly but also acts as a continuing check on whether loan officers are adhering to a bank's loan policy. For this reason, as well as to promote objectivity in the loan review process, m

36、any of the largest institutions separate their loan review personnel from the loan department itself. Loan reviews also aid senior management and the bank's board of directors in assessing the overall exposure to risk and its possible need for more capital in the future.16-15.What are some warni

37、ng signs to management that a problem loan may be developing?Problem loans are often characterized by reduced communication between borrower and lender, delays in receiving financial reports, evidence of reevaluations of assets (such as inventory or pension-plan assets), declining stock prices, chan

38、ges in management, or the restructuring of other loans the borrower has taken out.16-16.What steps should a lender go through in trying to resolve a problem loan situation?The most important first step is to move quickly to contact the borrower, to ascertain if the borrower understands the nature of

39、 the loan problem, to explore for creative solutions to the problem, and to get the borrower to reach a decision on the best solution possible.Problems16-1.The lending function of depository institutions is highly regulated and this chapter gives some examples of the structure of these regulations f

40、or national banks. In this problem you are asked to apply those regulations to Tree Rose National Bank (TRNB). TRNB has the following sources of funds: $200 million in capital and surplus, $100 million in demand deposits, $800 million in time and savings deposits, and $200 million in subordinated de

41、bt.a.What is the maximum dollar amount of real estate loans that TRNB can grant?TRNB can grant ($800)*70% = $560 million in real estate loansb.What is the maximum dollar amount TRNB may lend to a single customer?TRNB may lend up to $200*15% = $30 million to a single customer.16-2.Inspiration Corpora

42、tion, seeking renewal of its $12 million credit line, reports the data in the following table (in millions of dollar) to Hot Springs National Banks loan department. Please calculate the firms cash flow as defined earlier in this chapter. What trends do you observe and what are their implications for

43、 the decision to renew or not renew the firms credit line? 20X120X220X320X4Next YearCosts of Goods Sold $5.1$5.5$5.7$6.0$6.4Selling and Admin Exp.$8.0$8.2$8.3$8.6$8.9Sales Revenue$7.9$8.4$8.8$9.5$9.9Depreciation $11.2$11.2$11.1$11.0$10.9Taxes Paid in Cash$4.4$4.6$4.9$4.1$3.6Cash Flow = Sales Re

44、venues Cost of Goods Sold Selling and Admin Taxes Paid in Cash + Non Cash Expenses20x1 $7.9 - $5.1 - $8.0 - $4.4 + $11.2 = $1.6 million20x2 $8.4 - $5.5 - $8.2 $4.6 + $11.2 = $1.3 million20x3$8.8 - $5.7 - $8.3 - $4.9 + $11.1 = $1.0 million20x4$9.5 - $6.0 - $8.6 - $4.1 + $11.0 = $1.8 millionNext$9.9 -

45、 $6.4 - $8.9 - $3.6 + $10.9 = $1.9 million YearWhile this firm had an initial decrease in cash flows, in the last year its cash flows have rebounded significantly, suggesting that the firm would have less trouble making required loan payments. The lender needs to be sure to check to see if the proje

46、ctions for next year seem reasonable. Borrowers are sometimes over optimistic about future opportunities. However, if the projections are reasonable, Hot Springs National Bank should consider renewing the loan.16-3.Rogers Manufacturing and Service Company holds a sizeable inventory of dryers and was

47、hing machines which it hopes to sell retail dealers over the next six months. These appliances have a total estimated market value currently of $18,357,422. The firm also reports accounts receivable currently amounting to $10,452,867. Under the guidelines for taking collateral discussed in this chap

48、ter, what is the minimum size loan or credit line Rogers is likely to receive from its principal lender? What is the maximum size loan or credit line Rogers is likely to receive?These figures suggest that the minimum size credit line available would be:Minimum-Size Credit Line Available = 0.30 x $18

49、,357,422 + 0. 40 x $10,452,876= $5,507,227 + $4,181,150= $9,688,377.Maximum-Size Credit Line Available = 0.80 x $18,357,422 + 0.90 x $10,452,876 = $14,685,938 + 9,407,588= $24,093,52616-4.The particular C of credit represented by each piece of information presented in this problem was as follows:a.

50、Collateralb. Controlc. Characterd. Cashe. Capacityf. Conditionsg. Characterh. Cashi. Conditionsj. Controlk. Capacityl. Collateral16-5.Butell Manufacturing has an outstanding $11 million loan with Citicenter Bank for the current year. As required in the loan agreement, Butell reports selected data it

51、ems to the bank each month. Based on the following information, is there any indication of a developing problem loan? About what dimensions of the firms performance should Citicenter Bank be concerned?Selected items reported to the bank by the company do indicate the possible development of a proble

52、m loan situation. For one thing, Butell's cash account has fallen sharply in the latest month after several months of a substantial uptrend and the firm's liquidity ratio of current assets to current liabilities has declined significantly in the last 3 months. Decreases in the firm's liq

53、uidity position may be signaling declining sales and/or difficulty in maintaining enough cash to meet near-term liabilities. Another possible cause for concern centers around Butell's capital structure as its ratio of equity capital relative to debt financing is falling, indicating that creditor

54、s (including Citicenter Bank) are providing a larger share of the firm's capitalization. Thus, each creditor is becoming less well secured. However, these changes in liquidity and capital structure may only reflect normal seasonal pressures and may not be real problems for the bank, especially b

55、ecause other aspects of Butell's recent performance-its stock price, earnings before interest and taxes, and ROA seem to be improving.Perhaps of greater moment is the decline of sales revenue below Butell's projections. As of the latest month sales revenue reached $290 million versus a proje

56、ction of $298 million. Citicenter Bank must determine the causes of this sales shortfall to see if the firm is encountering increasing resistance to sales of its product lines. However, even this trend may not be cause for alarm because sales may be so volatile in Butell's industry that few anal

57、ysts put any faith in sales projections. The bank's loan officer needs to review the customer's earlier sales projections and sales revenue to determine if there is a real cause for concern.Butell has indicated a recent switch in inventory and depreciation accounting methods. Citicenter's loan officer would do well to inq