A1
Give 3 Examples of a High Risk Business
Entire List in Policy A1 - most common we see include: Contractors, Gas Stations/Convenience Stores, Restaurants, Tobacco Distribution, sub-prime lending
What are the AZ1-AZ4 House Limits for middle market borrowers?
$150MM, $100MM, $60MM, $30MM
Without a new or updated appraisal on M&E, what liquidation value triggers a policy exception?
>$1,000,000
CEG audits should be conducted on formula revolvers that are greater than what amount?
$2,000,000
What gas do plants absorb from the atmosphere?
Carbon Dioxide
True or False: High risk businesses follow a different approval level matrix for all requests.
False. Only new money requests to a high risk business follow a modified matrix. All other requests follow A3.
AZ 2 Borrower has aggregate debt of $55MM and is looking to reaffirm their $20MM RLOC for 2-years and renew their $10MM OO CREM for 5-years (no material changes). What level of approval does this require?
Department under straight reaff/renewal rule
What is policy’s guideline for the liquidation value (%) of M&E when using Netbook Value?
0-50%
Give 2 examples of ineligible receivables
Full list in policy - common ones include: Dated, Intercompany, prebills, foreign, contract, unbilled, government, deposits etc
What is the largest bird in the world?
Ostrich
At what aggregate debt level is it required by policy that C&I loans have audited statements?
Audited financial statements required when agg debt is >= $20MM
For a MM borrower, what is the weighted average house limit for a relationship with $25MM of AZ 3 rated loans and $25MM of AZ 4 rated loans?
$45MM
($30MM*50%)+($60MM*50%) = $45MM
What are the 4 tests when determining if a borrower is a high-risk borrower?
Purpose, Di Miniums, Materiality, CF leverage
A formula based LOC has an 80% advance rate on AR, what is the max liquidation rate that should be applied?
70%.
Liq rate should be 10-15% lower than advance rate to account for liquidation expenses.
What is the national flower of the United States?
Rose
What does MEPP stand for and when should they be cited?
Multiemployer Pension Plans should be cited when the plan is considered red zone a.k.a Critical or Critical and Declining
Name two of the attribution rules outlined in A6
Source of Repayment, Common Enterprise (affiliated borrowers + financial interdependence), direct benefit
To be considered HRB, what are the two cash flow leverage tests and what are their thresholds?
SD/EBITDA >3x; TD/EBITDA >4x
Name two situations in which a liquidation rate can be applied to inventory.
When determined by CEG (inventory eval), an appraisal (85% of NOLV), or at CAO discretion (up to 40%).
What is the capital of Canada?
Ottawa
What are the "5 P's of Credit" as outlined in A1?
People, Purpose, Payment, Protection, Perspective
To reaffirm a line of credit for 2-years requires at least what level of approval?
Group
(Individual approval can only reaffirm/renew for 1-year)
For non-purpose loans, you may have a leveraged designation if these two factors are tripped.
CLGD >$5MM when FR is D,E,F,G
AND a leverage threshold (CF or B/S) is tripped
Give 2 industries in which their business model may include "secret liens"
Contractors, Transportation Services & Carriers, Meat Packers, Food Wholesalers/retailers
In what year did the Titanic sink?
1912