|
Printable
Version
April 30, 2008
The Bank reserves the right not to extend credit to any member
that does not meet its underwriting criteria.
Prior to accepting a commitment for an advance or disbursing
an advance, credit and collateral analyses will be performed
to ensure compliance with Federal Housing Finance Board regulations
and advances guidelines, and to verify the borrowing institution's
financial integrity.
Borrowing capacity, as determined by the member's ability
to repay principal and interest, will be reviewed as outlined
in the Borrowing
Capacity section of this policy. At a minimum, the following
will be reviewed:
- capital adequacy;
- availability of qualified collateral;
- prospects for future earnings;
- trends in operating ratios;
- interest-rate risk;
- liquidity;
- slow-loan and nonperforming-asset ratios;
- adequacy of valuation reserves;
- rate of asset growth; and
- composition of assets.
Members with a ratio of tangible capital to total assets
below five percent may be required to supply additional information
at the time of application and on a quarterly or more frequent
basis to permit evaluation of their earnings performance.
This information may include:
- a business plan;
- a six-month forecast of cash flow;
- a six-month earnings projection;
- a detailed summary of outstanding commitments to be funded;
and
- a detailed summary of outstanding investment securities
and mortgages.
Members in delivery collateral status typically are required
to submit Supplement
A to Application for Advance to the Bank in writing at
least three business days prior to the expected commitment
date of the advance. However, advances that mature within
six months and that do not involve the disbursement of new
funds do not require the submission of Supplement A. In addition,
in situations where a member has an immediate need for liquidity,
and where an advance disbursement will be fully secured by
qualified collateral in delivery status, the Bank may allow
the member to submit Supplement A within three business days
after disbursement of the advance. (Please note that the Bank
considers transfer of an IDEAL Way advance to an overnight
or other regular advance a disbursement of new funds. This
is because the member's remaining IDEAL Way line of credit
with the Bank increases when an IDEAL Way advance is transferred.)
Supplement A provides essential credit underwriting information
to the Bank for these members.
|
