The issue at hand for Mr. Gonzalez is whether or not to make the
loan requested. If he were to grant the loan, Mr. Gonzalez would
have to address the following issues:
1 Amount of the loan
2. Term for which the loan should be made
3. Profit margin of the transaction when considering that currently
MHIBC pays its
depositors an annual rate of interest of 5.50 percent, its FDIC
insurance premium on assessable deposits amounts to 0.037 percent
per annum, legally required reserves have been set at 3.00 percent,
and the prime rate is 8.00 percent
-
In terms of protection, MHIBC has the following options: take a
second mortgage on the properties; take a lien on the product and
assignment of profits from sales; pursue both of the alternatives
stated above; extend an unsecured loan, based on the excellent
relationship with Mr. Fulano and the bank’s desire to help its
valued depositors. -
What kind of information should the bank request Mr. Fulano to
include in the letter of credit application provided in Exhibit
1?
