FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...

Case 2:13-cv-00671 Document 1 Filed 04/15/13 Page 12 of 97
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a. the adequacy of the loan amount in relation to the applicant's needs and
repayment ability;
b. the purpose and maturity date of the loan;
c. credit and/or trade reports;
d. for businesses, the management's integrity, capacity, capability, depth,
and succession;
e. complete financial information, including the debt-to-worth ratio for
business borrowers, which was not to exceed 4 to 1 unless an exception
was "addressed in the loan comment memo"; and
f. for lines of credit, "historical financial information indicating sufficient
cash flow to service the requested debt."
43. The Loan Policy also required all loan applications to "be supported by all the
pertinent financial statements, budgets, credit reports, loan comments, etc., so that the request
c[ould] be properly analyzed."
44. For construction loans, the loan officer was required to complete a loan officer
approval analysis form ("Loan Officer Analysis"). A Loan Officer Analysis for a particular
project would contain information on the purchase price of the land, if applicable, and on the
hard and soft costs of the project. In addition, the Loan Officer Analysis would show the
expected sales price, the total loan amount, and the projected profit for the borrower.
45. The Loan Policy required City Bank "to have an appraisal prepared by a State
licensed or certified appraiser for ALL real estate related transaction" unless the "transaction
involve[d] an existing extension of credit, provided that: a. there has been no obvious and
material change in the market conditions . . . ; or b. there [wa]s no advancement of new monies
other than funds necessary to cover reasonable closing costs." The Loan Policy listed other
exceptions from the appraisal requirement, but the other exceptions are not relevant to this case.
46. The Loan Policy also required an appraisal compliance checklist for all loans
secured by real estate. The checklist was to be "completed by the approving loan officer and
COMPLAINT - Page 12
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