Exam 16: Lending Policies and Procedures: Managing Credit Risk

When a bank purchases a whole loan or a piece of a loan from another bank,they are purchasing what is known as a ___________________________.

A lender that makes a loan that violates its written loan policy would be violating which of the 6 Cs of lending?

A(n)______________ is the process of resolving a troubled loan so that a bank can recover its loaned funds.

According to the textbook,the largest category (by dollar volume)of loans extended by U.S.banks is:

____________________________ loans are ones that are secured by land,buildings,and other structures.These loans can be short term construction loans or longer term loans to finance the purchase of homes and apartments among others.

The process of resolving a troubled loan so that a lender can recover its funds is called:

Loans that examiners consider as having significant weaknesses or those represent a dangerous concentration of credit in one borrower or industry are called:

A lender's secondary source of repayment in case of a default is:

Real estate loans made by national banks in the U.S.cannot exceed:

Retail credit in banking refers to such loans as residential mortgages and installment loans to individuals.

Troubled loans normally are subject to more frequent reviews than sound loans.

A bank that primarily makes its loans to individuals,families,and small businesses is categorized as:

A method whereby a loan officer focuses on why a borrower's cash flows may change over time is known as:

Smaller banks tend to emphasize wholesale banking services.

Loans granted to businesses to cover such expenses as purchasing inventories,paying taxes,and meeting payrolls are known as:

If the economy slows down,a bank should review its outstanding loans more frequently.

Net cash flow from operations is a borrower's net income expressed in cash rather than on an accrual basis.

Standard Side Bank,a U.S.national bank,has $50 million in unimpaired capital and surpluses and $86 million in total time and savings deposits.Average revenue for the bank in the last three years is $12.5 million and a net interest income of $3.2 million.Pluto Inc.has applied for a loan of $9 million to the bank against which it is willing to provide $1 million worth of ten-year treasury securities.What is the maximum amount of loan the bank can make to Pluto?

The principal reason why banks are chartered by federal and state governments is to make loans to their customers.

The "A" in the CAMELS rating system stands for asset quality.