PFIA Flashcards
In what order are assets listed on a financial statement?
In order of liquidity
What are three options for verifying the value of real estate?
Valucheck, tax assessment, and comparable sales
What are three ways to verify the value of an automobile?
Recent purchase order (if new), NADA guide, and Kelly Blue Book
T/F: the bank should transfer the most conservative figures to the PFIA?
True
% used in place of unknown payment amount on a loan to determine if borrower can repay loan.
Payment Factor
Calculation of months of total debt coverage based on the level of current assets.
Current Assets / Monthly Payments
How many months of debt coverage by assets is preferred?
12 months
Indicates the level of a borrowers financial leverage.
Debt / Asset Ratio
What is considered a strong debt to asset ratio?
50% or less
What should most of the information for the PFIA come from?
Tax Return
A non cash expense to account for the decrease in value of assets due to age.
Depreciation
A non cash expense related to earlier cash expenditures that can be periodically deducted over time.
Amortization
A non cash expense to account for the use or consumption of mineral resources.
Depletion
Annualized debt payment figure.
Total Cash Required to Service Debts (TCR)
Remaining cash after all existing debt has been serviced.
Residual Income
Debt Servicing Ratio (DSR)
TCA / TCR
Residual Income
TCA - TCR
DSR required for RI of $90,000
1.5
DSR required for RI of $50,000 - 90,000
1.7
DSR required for RI of $30,000 - 50,000
2.0
DSR required for RI less than $30,000
2.5
PFIA income statement shows current ________ income.
Annualized
On a PFIA that does not show any housing or rent expense what amount should be included for CO residents?
$500
A customer bankruptcy older than _____ years old should not be taken into account.
7
For employment history, we like to see _______ months in current job or ______ in previous position.
6-12, 1 yr
For residency, if applicant has been at current address less than 1 yr what do we need?
Former address
What are three compensating factors on a weaker PFIA?
Excellent Credit
Strong Collateral Position
Long Term Banking Relationship
As a general guideline, aggregate unsecured credit with FirstBank should normally be limited to ________ of a borrowers “tangible” net worth.
10%
___________________ will not be a factor when underwriting unsecured lending credit up to ____________.
Net worth, $10,000
For a secured revolving loan what is the payment factor?
1%
For an unsecured revolving loan what is the payment factor?
3%
What payment factor do you place on a secured revolving loan being paid off in 10 years?
1%
What payment factor do you place on a secured revolving loan being paid off in 5 years?
2%
What payment factor do you place on a secured revolving loan being paid off in 3 years?
3%
On non-taxable income what must you times it by for the PFIA Income?
Gross up 25% (times by 1.25)
What is a great PFIA resource on the intranet?
Cash Flow Analysis
DO NOT use _________ as a mitigating factor.
LTV
Calculation for DSR.
Total Annual Income (TCA) / Total Annual Expenses (TCR)
Calculation for RI.
Total Annual Income (TCA) - Total Annual Expense (TCR)
Calculation for Percentage of Total Cash Available.
Total Revolving Debt / Total Annual Income
Calculation for Net Worth.
Assets - Liabilities
What payment factor do you use on student loans?
1%
What payment factor is used for installment loans (with no stated payment)?
2%
For cash required for loan, what amount do you use for existing debt?
Remaining balance (amount)
For cash required on new debts what amount do we use?
Full amount
What income MUST we use?
ONLY income stated on tax return.
For LTV what must you use for 1LOC’s and HECR’s?
Full limit not balance
_____________ equity is the portion of the equity that we would be willing to use as collateral for a loan.
Lendable
What is the formula for lendable equity?
(Value of asset x maximum LTV %) - total amount owed
What is problem FirstBank debt that we switch from revolving to installment. Does not qualify for consolidation.
Workout loan
