商业银行管理全套配套课件英文PPT教师手册习题习题答案 Chap016.ppt 25页

ChapterSixteenLendingPoliciesandProcedures:ManagingCreditRisk KeyTopicsTypesofLoansBanksandCompetingLendersMakeFactorsAffectingtheMixofLoansMadeRegulationofLendingCreatingaWrittenLoanPolicyStepsintheLendingProcessLoanReviewandLoanWorkouts IntroductionHowever,riskyornot,theprincipalreasonmanyfinancialfirmsareissuedchartersofincorporationbystateandnationalgovernmentsistomakeloansLendersareexpectedtosupplycreditforalllegitimatebusinessandconsumerfinancialneedsandtopricethatcreditreasonablyLoanssupportthegrowthofnewbusinessesandjobswithinthelender’smarketareaLoansfrequentlyconveyinformationtothemarketplaceaboutaborrower’screditqualityThelendingprocessbearscarefulmonitoringatalltimes TypesofLoansRealEstateLoansFinancialInstitutionLoansAgricultureLoansCommercialandIndustrialLoansLoanstoIndividualsMiscellaneousLoansLeaseFinancingReceivablesThelargestcategoryindollarvolumeisrealestateloans,followedbyloanstoindividuals,andcommercialandindustrial(C&I)loans TABLE16–1LoansOutstandingforAllFDIC-InsuredBanksasofDecember31,2010(consolidateddomesticandforeignoffices) TypesofLoans(continued)FactorsDeterminingtheGrowthandMixofLoansCharacteristicsofthemarketareaLendersizeWholesalelendersvs.retailcreditExperienceandexpertiseofmanagementLoanpolicyExpectedyieldofeachtypeofloanRegulationGeneralrule:Alendinginstitutionshouldmakethetypesofloansforwhichitisthemostefficientproducer RegulationofLendingThemix,quality,andyieldoftheloanportfolioareheavilyinfluencedbyregulationExamplesoflendingregulations:ThetotalvolumeofrealestateloansgrantedbyaU.S.nationalbankcannotexceedthatbank’scapitalandsurplusor70percentofitstotaltimeandsavingsdeposits,whicheverisgreaterAnunsecuredloantoasinglecustomernormallycannotexceed15percentofasinglenationalbank’sunimpairedcapitalandsurplusaccount(legallendinglimit)Anyloansmadearesubjecttoexaminationandreview RegulationofLending(continued)TheCommunityReinvestmentActof1977Selectedlenderstomustmake“anaffirmativeeffort”tomeetthecreditneedsofindividualsandbusinessesintheirtradeterritoriessothatnoareasofthelocalcommunityarediscriminatedagainstinseekingaccesstocreditTheEqualCreditOpportunityActof1974Noindividualcanbedeniedcreditbecauseofrace,sex,religiousaffiliation,age,orreceiptofpublicassistanceTheInternationalLendingandSupervisionActRequiresU.S.bankstomakepublicanycreditexposurestoasinglecountrythatexceed15percentoftheirprimarycapitalor0.75percentoftheirtotalassets,whicheverissmallerThislawalsoimposesrestrictionsonthefeeslendersmaychargeatroubledinternationalborrowertorestructurealoan RegulationofLending(continued)UniformFinancialInstitutionsRatingSystemEachbankingfirmisassignedanumericalratingbasedonthequalityofitsassetportfolioThefederalexaminermayassignoneoftheseratings:1=strongperformance2=satisfactoryperformance3=fairperformance4=marginalperformance5=unsatisfactoryperformance RegulationofLending(continued)AssetQualityCriticizedloansScheduledloansAdverselyclassifiedloansSubstandardloansDoubtfulloansLossloans RegulationofLending(continued)CAMELSRatingCapitaladequacyAssetqualityManagementqualityEarningsrecordLiquiditypositionSensitivitytomarketriskexposureAllsixdimensionsofperformancearecombinedintooneoverallnumericalrating,referredtoastheCAMELSratingDepositoryinstitutionswhoseoverallratingislowtendtobeexaminedmorefrequentlythanthehighest-ratedinstitutions RegulationofLending(continued)EstablishingaGoodWrittenLoanPolicyImportantinordertomeetregulatorystandardsWhatshouldawrittenloanpolicycontain?AgoalstatementfortheentireloanportfolioSpecificationoflendingauthorityofeachloanofficerandloancommitteeLinesofresponsibilityinmakingassignmentsandreportinginformationOperatingproceduresforsoliciting,evaluatingandmakingloandecisionsRequireddocumentationforallloans RegulationofLending(continued)EstablishingaGoodWrittenLoanPolicyLinesofauthorityformaintainingandreviewingcreditfilesGuidelinesfortaking,evaluating,andperfectingloancollateral.ProceduresforsettingloanratesandfeesandthetermsforrepaymentofloansAstatementofqualitystandardsapplicabletoallloansAstatementofthepreferredupperlimitfortotalloansoutstandingAdescriptionofthelendinginstitution’sprincipaltradeareaProceduresfordetectingandworkingoutproblemloansituations. StepsintheLendingProcessFindingProspectiveLoanCustomersEvaluatingaCustomer’sCharacterandSincerityofPurposeMakingSiteVisitsandEvaluatingaCustomer’sCreditRecordEvaluatingaProspectiveCustomer’sFinancialConditionAssessingPossibleLoanCollateralandSigningtheLoanAgreementMonitoringCompliancewiththeLoanAgreementandOtherCustomerServiceNeeds CreditAnalysis:WhatMakesaGoodLoan?IstheBorrowerCreditworthy?TheCsofCreditCharacterSpecificpurposeofloanandseriousintenttorepaytheloanCapacityLegalauthoritytosignbindingcontractCashAbilitytogenerateenoughcashtorepayloanCollateralAdequateassetstosupporttheloanConditionsEconomicconditionsfacedbyborrowerControlDoesloanmeetwrittenloanpolicyandhowwouldloanbeaffectedbychanginglawsandregulations CreditAnalysis:WhatMakesaGoodLoan?(continued)CantheLoanAgreementBeProperlyStructuredandDocumented?Thisrequiresdraftingaloanagreementthatmeetstheborrower’sneedforfundswithacomfortablerepaymentscheduleIfamajorborrowergetsintotroublebecauseofaninabilitytoservicealoan,thelendinginstitutionmayfinditselfintroubleProperaccommodationofacustomermayinvolvelendingmoreorlessmoneythanrequestedoveralongerorshorterperiod CreditAnalysis:WhatMakesaGoodLoan?(continued)CantheLenderPerfectItsClaimagainsttheBorrower’sEarningsandAnyAssetsThatMayBePledgedasCollateral?ReasonsforTakingCollateralIftheborrowercannotpay,thepledgeofcollateralgivesthelendertherighttoseizeandsellthoseassetsItgivesthelenderapsychologicaladvantageovertheborrowerTypesofCollateralAccountsReceivablesFactoringInventoryRealPropertyPersonalPropertyPersonalGuarantees EXHIBIT16–1SafetyZonesSurroundingFundsLoanedinOrdertoProtectaLender TABLE16–4SourcesofInformationFrequentlyUsedinLoanAnalysisandEvaluationbyLendersandLoanCommittees PartsofaTypicalLoanAgreementThePromissoryNoteLoanCommitmentAgreementCollateralCovenantsAffirmativeNegativeBorrowerGuarantiesorWarrantiesEventsofDefault LoanReviewCarryingoutreviewsofalltypesofloansonaperiodicbasisStructuringtheloanreviewprocessRecordofborrowerpaymentsQualityandconditionofcollateralCompletenessofloandocumentationEvaluationofborrower’sfinancialconditionAssessmentastowhethertheloanfitswiththelender’sloanpoliciesReviewingLargestLoansMostFrequentlyConductingMoreFrequentReviewsofTroubledLoansAcceleratingtheLoanReviewScheduleifEconomyorIndustryExperiencesProblems LoanWorkoutsLoanworkout–theprocessofrecoveringfundsfromaproblemloansituationWarningSignsofProblemLoansUnusualorunexpecteddelaysinreceivingfinancialstatementsAnysuddenchangesinaccountingmethodsRestructuringdebtoreliminatingdividendpaymentsorchangesincreditratingAdversechangesinthepriceofstockLossesinoneormoreyearsAdversechangesincapitalstructureDeviationsinactualsalesfromprojectionsUnexpectedorunexplainedchangesindeposits TABLE16–5WarningSignsofWeakLoansandPoorLendingPolicies LoanWorkouts(continued)Whatstepsshouldalendertakewhenaloanisintrouble?Donotforgetthegoal:MaximizefullrecoveryoffundsRapiddetectionandreportingofproblemsisessentialLoanworkoutshouldbeseparatefromlendingfunctionShouldconsultwithcustomerquicklyregardingpossibleoptionsEstimateresourcesavailabletocollectonloanConducttaxandlitigationsearchEvaluatequalityandcompetenceofmanagementConsiderallreasonablealternativesPreferredoption:Seekarevisedloanagreement QuickQuizWhyislendingsocloselyregulatedbystateandfederalauthorities?WhatistheCAMELSrating,andhowisitused?Whatthreemajorquestionsorissuesmustalenderconsiderinevaluatingnearlyallloanrequests?Explainthefollowingterms:character,capacity,cash,collateral,conditions,andcontrol.Whatsourcesofinformationareavailabletodaythatloanofficersandcreditanalystscanuseinevaluatingacustomerloanapplication?Whatisloanreview?