1. Your bank has spent 9 years testing and refining its credit scoring model for car loan applications. As a result, your car loans outstanding have grown at the same rate as the overall economy, and the charge-offs/loans ratio has been consistently in the 0.70% to 0.80% range compared to an industry average of 1.00%. Now, your bank is planning a massive expansion of its car lending from Minnesota to the rest of the Upper Midwest, working with dealers for most major car brands. Credit analysis will use the same scoring model and cut-off scores for offering loans and setting rates that the bank has used in Minnesota. Loan growth rates are expected to triple. You think this strategy is likely to be a. good. Your bank has lots of experience with the model, and culturally and economically the Upper Midwest is similar to Minnesota. Charge-off rates may rise slightly because of slight differences between states, but significantly higher loan growth should more than offset that. b. bad. Traditional credit analysis by experienced loan officers has a much better track record for evaluating consumer loans like car loans, especially when moving to new markets. At a minimum, you should increase cut-off score levels until you have hired more loan officers. c. bad. The scoring model was developed in a normal-growth situation, and higher growth in new areas may cause your bank to get higher-than-normal numbers of loan applications from car buyers already rejected by other lenders. You should increase cut-off score levels to compensate for this. d. good. The scoring model was developed in a normal-growth situation, and higher growth in new areas may cause your bank to get higher-than-normal numbers of loan applications from car buyers already rejected by other lenders. Nevertheless, so long as good loans increase more than bad loans in absolute numbers, profits should increase; every good loan offsets one bad loan in terms of profits