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necessary to evaluate the prospective borrower's financial
condition. Where loans were to be secured by an interest in real
property, the application would include a description of the
collateral sufficient to permit the ordering of a property report
or appraisal. FNBP would generally obtain 3 years of financial
statements, interim financial statements, aging reports to
determine the current status of accounts receivable and payable,
and secured transaction reports to determine whether any liens
had been filed against the property of the client. Applicants
also typically submitted personal financial statements of
guarantors, operating projections, a business plan,
organizational documents, and certificates of good standing and
references. Information obtained in connection with a commercial
loan request was used to evaluate the creditworthiness of the
client and to identify other needs of the client that might be
met by the bank such as investment services, treasury management
services, and employee benefit services.
As a general rule, evaluation of a commercial loan
application required FNBP to obtain more information and to
expend more resources than was required in the case of a consumer
loan application. In a typical month, each of the nine
commercial loan officers at FNBP took between 2 and 10 commercial
loan requests. With respect to commercial loans, it was common
for FNBP and the prospective borrower to negotiate the loan
terms.
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