FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...
FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...
FDIC as Receiver for City Bank vs. Conrad D. Hanson and ...
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C<strong>as</strong>e 2:13-cv-00671 Document 1 Filed 04/15/13 Page 28 of 97<br />
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COMPLAINT - Page 28<br />
B's debt-to-worth ratio w<strong>as</strong> 5.8 to 1, which exceeded the Loan Policy's<br />
limit of 4 to 1. When Defendants approved the Borrower B (I)<br />
Modification, the Real Estate Bubble had burst about 26 months earlier,<br />
<strong>and</strong> the borrower had insufficient liquid <strong>as</strong>sets to repay the Borrower B (I)<br />
Modification.<br />
d. Failed to consider or knew of <strong>and</strong> disregarded Guarantor B's inability to<br />
repay the Borrower B (I) Loan. The Loan Memo showed that Guarantor B<br />
had a net worth of $1,727,514. However, $1,109,000 of Guarantor B's<br />
<strong>as</strong>sets w<strong>as</strong> illiquid equity in Borrower B <strong>and</strong> real estate holdings. The<br />
Loan Memo listed two different c<strong>as</strong>h amounts <strong>for</strong> Guarantor B—$679,514<br />
<strong>and</strong> $334,740. Even if Guarantor B had a c<strong>as</strong>h balance of $679,514, that<br />
amount plus Borrower B's c<strong>as</strong>h w<strong>as</strong> only 6.0 percent of the guarantor's<br />
liabilities plus <strong>City</strong> <strong>Bank</strong>'s loan commitments to Borrower B, including<br />
the Borrower B (I) Loan. When Defendants approved the Borrower B (I)<br />
Loan, the Real Estate Bubble w<strong>as</strong> bursting, <strong>and</strong> the guarantor had<br />
insufficient liquid <strong>as</strong>sets to repay the Borrower B (I) Loan.<br />
e. Failed to consider or knew of <strong>and</strong> disregarded Guarantor B's inability to<br />
repay the Borrower B (I) Modification, even though the January 9, 2008<br />
Loan Policy stressed the importance of liquidity in the composition of net<br />
worth. The Loan Memo <strong>for</strong> the Borrower B (I) Modification showed that<br />
Guarantor B had a net worth of $1,165,388. The Loan Memo did not<br />
include Guarantor B's equity in Borrower B <strong>as</strong> an <strong>as</strong>set, nor did the Loan<br />
Memo explain this omission. As in the Borrower B (I) Loan Memo, the<br />
Loan Memo <strong>for</strong> the modification listed two different c<strong>as</strong>h amounts <strong>for</strong><br />
Guarantor B—$724,388 <strong>and</strong> $87,253. Even if Guarantor B had a c<strong>as</strong>h<br />
balance of $724,388, that amount plus Borrower B's c<strong>as</strong>h w<strong>as</strong> only 7.8<br />
percent of the guarantor's liabilities plus <strong>City</strong> <strong>Bank</strong>'s loan commitments to<br />
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