- 6 -
interest and principal will be paid over the term of the note,
and the purpose of the note is to buy a warehouse. The note is
secured by a mortgage. The note is signed on behalf of the
corporation by “R.L. McKale”, “President”. Petitioner and his
father guaranteed the note.
Testimony of Vice Chairman of Bank
William Sunderland is the vice chairman of the bank. He is
an officer of the bank who approved the bank’s participation in
the loan agreement and the note (together, the loans). He
testified, and we find, as follows:
The bank followed its ordinary practices in making the
loans. Among other things, it considered the assets, debts, and
liabilities of the corporation.
In evaluating the loan, the bank believed the corporation’s
financial statements to show a negative net worth of $80,072 and
the guarantors’ financial statements to show a positive net worth
of $5,534,455. The value of the mortgaged property had been
established by appraisal to be $1,240,000, which, when compared
with the amount of the loan, $1.2 million, established a loan-to-
value percentage of 96.7 percent. That percentage exceeded the
bank’s supervisory limit. The bank had a loan policy, and making
the loan deviated from that policy. The bank made the loan based
not only on the value of the collateral securing the loan but
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011