going over the minutes of the various Committee meetings. The Finance
Committee will have available to them the weekly loan sheets and past-due
reports. The credit files of customers whose loans or lines are under
review will also be available for the Finance Committee to inspect, and the
Chairman, Division Credit Policy Head and the Secretary of the Senior Loan
Committee will be present to answer any questions or furnish any information
that may be requested.

GENERAL LOAN POLICY STATEMENT

I.

II.

III.

IV.

V.

Consideration for loan applications from nondeposit customers should be in light of the prospects of obtaining an account with the amount of balances expected to be carried, also whether the account will be permanent and profitable. We make a number of installment loans at discount rates for nondeposit customers; however, these borrowers are good prospects for deposit accounts and other services of the bank and should be solicited.

Our first obligation is to our depositors to keep their funds safe and to make only good, sound loans.

Our next obligation is to our stockholders who charge us with the responsibility of making not only sound loans but profitable ones as well.

The interest rate that may be charged or the balance in an account, while both are desirable, should not influence us to make unsound loans.

While the above statements are a part of the foundation of our loan policy, there are also other important factors from the Bank's point of view to consider, such as:

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(a)

(b)

(c)

(d)

Ratio of loans to deposits and to capital accounts;

Diversification of loans by type: personal, commercial,
industrial, real estate, etc.;

Further diversification within each type or class;

Diversification as to maturities;

(e) Earnings from loans and cost of making and servicing.

There are a number of types of loans that may be good from a credit viewpoint
but may or may not fit into the Bank's lending policy at a given time. Pre-
ference should be given present customers. Since most of our deposits are
payable on demand, long-term loans should be considered only when the customer
relation would make it worthwhile. It is not our normal policy to make in-
ventory loans except when such inventory is stored under independent warehouse
arrangements. There are some exceptions approved from time to time, such as
floor planning certain products, the sale of which will be a source of retail
paper carrying discount interest rates for our Installment Loan Department.
There are other types of loans for which our policy will change with the supply
and demand of available money. You will be notified of policy changes as conditions
change. Some of these types, we handle all along in light of loan relationships,
balances maintained, fees, interest rates, sources of other business, etc. Line
increases and new relationships will be considered in light of money conditions

at the time.

VI.

Generally our trade area for personal loans is limited to the metropolitan
area of Atlanta, which is defined as a 50-mile radius of the bank.

Commercial

loans, those to our national account customers and those loans sent to us by
correspondent banks, may extend to a wider area.

VII.

VIII.

There are some ex

It is our policy to make loans direct with the borrower, to discount notes
for our customers, with full recourse, but not to purchase notes from
others even though the makers may be our customers.
ceptions to this rule that will permit the purchase of paper without re-
course, but such exceptions are to be approved by the Loan Committee.

Loans made to a given customer at more than one office create a duplication
of efforts and in some cases lead to trouble and eventual charge-offs.
Hereafter, all loans to one customer will be concentrated at the office at
which his principal business is transacted. If an existing customer of one
office requests extension of credit at another office the lending officer will
check immediately with the officer where the customer transacts his principal
business, and, if the manager concurs, the loan will be made and forwarded
to the office where the main relationship exists.

This does not apply to discounts where reliance is placed solely on the

endorser.

IX. Maturities should be placed on single-payment notes commensurate with agreed-upon terms of repayment, preferably a maximum of 90 days. Longer maturities should be used only with well-secured notes or unsecured notes of well-rated borrowers, with a clearly understood repayment agreement. Without prior Committee approval no loans will be handled on a demand basis unless properly secured. Demand maturities should be used only with well-secured notes or notes that the demand feature adds to the ease of handling. In the latter case there must be a plan of follow-up so that the loan comes to the attention of the handling officer at frequent intervals.

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X.

A list of customers who are delinquent in paying their demand interest will be circulated among the officers each month; for it is the responsibility of the handling officer to collect delinquent interest on his demand notes.

Alteration of a note may affect its negotiability.

Consequently alterations

should be avoided. If a change is made on a note before it is handled and accepted by the bank, all parties to the instrument (including endorsers or guarantors) must initial each change. Of course, after a note is accepted

The same

by the bank no change or alteration may be made on the instrument.
rule applies to any supporting documents in connection with the transaction.

XI. Basic credit factors to be considered in making personal loans:

XII.

(d) Personal Characteristics.

1. Number of dependents;

2. Stability of residence.

(e) Loan characteristics.

1.

Collateral and the stability of its value and saleability;

2. Maturities.

(f) Source of funds to repay the loan.

Summarizing the above, we should be satisfied as to the character and

stability of the applicant, the purpose for which the proposed borrower seeks the loan, and the earning ability to care for, without undue hardship, the applicant's cost of living and existing debts plus the loan being considered, and we should place more importance on the ability to repay than the current value of the collateral. (See also Information Required for Personal Loans

Loan Policy Supplement No. 1).

Federal Reserve Regulation B makes it unlawful to discriminate against any applicant for credit on the basis of race, color, religion, national origin, sex, marital status or age (provided that the applicant has the capacity to enter into a binding contract). It is the policy of the bank to adhere to all consumer regulations such as Regulation B, Regulation Z, Fair Credit

Reporting, etc.

Credit factors to be considered in evaluating a commercial loan application: (a) Character of management;

(b) Evaluation of the need for and future prospects of the type industry in our economy.

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