12 CFR 614.4359 - Attribution rules.

§ 614.4359 Attribution rules.

(a) For the purpose of applying the lending and leasing limit to the indebtedness of a borrower, loans to a related borrower shall be combined with loans outstanding to the borrower and attributed to the borrower when any one of the following three conditions exist:

(1)Liability.

(i) The borrower has primary or secondary liability on a loan made to the related borrower. The amount of such loan attributable to the borrower is limited to the amount of the borrower's liability.

(ii) This section does not require attribution of a guarantee taken out of an abundance of caution. To qualify for the abundance of caution exception to the requirements of this subpart, the institution must document in the loan file that the loan, when evaluated under the loan underwriting standards adopted pursuant to § 614.4150 of this part without considering the guarantee, would support the credit decision under the same basic terms and conditions.

(iii) For the banks for cooperatives and agricultural credit banks operating under title III authorities of the Act, look-through notes are exempt from the lending limit provisions provided they meet the criteria of § 614.4357.

(2)Financial interdependence. The operations of a borrower and related borrower are financially interdependent. Financial interdependence exists if the borrower is the primary source of repayment for a related borrower's loan, or if the operations of the borrower and the related borrower are commingled.

(i) The borrower shall be considered the primary source of repayment on the loan to the related borrower if the borrower is obligated to supply 50 percent or more of the related borrower's annual gross receipts, and reliance on the income from one another is such that, regardless of the solvency and liquidity of the borrower's operations, the debt service obligation of the related borrower could not be met if income flow from the borrower is interrupted or terminated. For the purpose of this paragraph, gross receipts include, but are not limited to, revenues, intercompany loans, dividends and capital contributions.

(ii) The assets or operations of the borrower and related borrower are considered to be commingled if they cannot be separated without materially impacting the economic survival of the individual operations and their ability to repay their loans.

(3)Control. The borrower directly or indirectly controls the related borrower. A borrower is deemed to control a related borrower if either paragraph (a)(3)(i) or (a)(3)(ii) of this section exist:

(i) The borrower, directly or acting through one or more other persons, owns 50 percent or more of the stock of the related borrower; or

(ii) The borrower, directly or acting through one or more other persons, owns or has the power to vote 25 percent or more of the voting stock of a related borrower, and meets at least one of the following three conditions:

(A) The borrower shares a common directorate or management with a related borrower. A common directorate is deemed to exist when a majority of the directors, trustees, or other persons performing similar functions of one borrower also serves the other borrower in a like capacity. A common management is deemed to exist if any employee of the borrower holds the position of chief executive officer, chief operating officer, chief financial officer, or an equivalent position in the related borrower's organization.

(B) The borrower controls in any manner the election of a majority of directors of a related borrower.

(C) The borrower exercises or has the power to exercise a controlling influence over management of a related borrower's operations through the provisions of management placement or marketing agreements, or providing services such as insurance carrier or bookkeeping.

(b) Each institution shall make provisions for appropriately designating loans to a related borrower that are combined with the borrower's loan and attributed to the borrower to ensure that loans to the borrower are within the lending and leasing limits.

(c)Attribution rules table. For the purposes of applying the lending and leasing limit to the indebtedness of a borrower, loans to a related borrower shall be combined with loans outstanding to the borrower and attributed to the borrower when any one of three attribution rules are met as outlined in Table 1.

Table 1

Attribution rule Criteria per § 614.4359 Attribute
(A) Liability Borrower has primary or secondary liability Yes.*
*to the extent of the borrower's liability Borrower's liability is taken out of an abundance of caution No.*
Look-through notes (BC only) No.
(B) Financial Interdependence Source of Repayment:
(Economic survival of the borrower's operation will materially impact economic survival of the related borrowers operation) Borrower is obligated to supply 50 percent or more of related borrower's annual gross receipts, and reliance on the income from one another is such that the debt service of the related borrower could not be met if income flow from the borrower is interrupted or terminated Yes.
Commingled Operations:
Assets or operations of the borrowers are commingled and cannot be separated without materially impacting the borrowers' repayment capacity Yes.
(C) Control The borrower owns 50 percent or more of the stock of the related borrower Yes.
(The borrower, directly or indirectly, controls the related borrower) The borrower owns or has the power to vote 25 percent or more of the voting stock of a related borrower, and
(1) Shares a common directorate or management with a related borrower, or
(2) Controls the election of a majority of directors of a related borrower, or
(3) Exercises a controlling influence over management of a related borrower's operations through the provisions of management placement or marketing agreements, or providing services such as insurance carrier or bookkeeping
Yes.
[ 58 FR 40321, July 28, 1993, as amended at 62 FR 51015, Sept. 30, 1997. Redesignated and amended at 64 FR 34517, June 28, 1999]

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.


United States Code
U.S. Code: Title 12 - BANKS AND BANKING

§ 2011 - Establishment, charters, titles, branches

§ 2013 - General corporate powers

§ 2014 - Farm Credit Bank capitalization

§ 2015 - Lending authority

§ 2017 - Eligibility

§ 2018 - Security; terms

§ 2019 - Purposes for extensions of credit

§ 2071 - Organization and charters

§ 2073 - General corporate powers

§ 2074 - Production credit association capitalization

§ 2075 - Short- and intermediate-term loans; participation; other financial assistance; terms; conditions; interest; security

§ 2091 - Organizations; articles; charters; powers of the Farm Credit Administration

§ 2093 - General corporate powers

§ 2094 - Federal land bank association capitalization

§ 2097 - Liens on stock

§ 2121 - Establishment; titles; branches

§ 2122 - Corporate existence; general corporate powers

§ 2124 - Stock of banks for cooperatives

§ 2128 - Loans, commitments, and technical and financial assistance

§ 2129 - Eligibility

§ 2131 - Loans

§ 2141 - Charter, powers, and operation

§ 2149 - Lending limits

§ 2183 - Dissolution; voluntary or involuntary liquidation; mergers; receiverships or conservators

§ 2184 - Communications with stockholders

§ 2201 - Notice of action on application

§ 2202 - Reconsideration of actions

§ 2202a - Restructuring distressed loans

§ 2202c - Review of restructuring denials

§ 2202d - Protection of borrowers who meet all loan obligations

§ 2202e - Waiver of mediation rights by borrowers

§ 2206 - Participation loans

§ 2206a - Authority of Farm Credit Banks and direct lender associations to participate in loans to similar entities for risk management purposes

§ 2207 - Young, beginning, and small farmers and ranchers

§ 2211 - Establishment

§ 2212 - Powers of Farm Credit Administration

§ 2213 - Regulation and examination

§ 2214 - State laws

§ 2219a - Right of first refusal

§ 2219b - Application of uninsured accounts

§ 2243 - Powers of Board

§ 2244 - Chairman; responsibilities; governing standards

§ 2252 - Powers and duties

§ 2279a - Power to merge

12 U.S. Code § 2279a–2 - Powers of merged banks

§ 2279b - Transfer of lending authority

12 U.S. Code § 2279c–1 - Merger of associations

§ 2279f - Merger of similar banks

12 U.S. Code § 2279f–1 - Merger of similar associations

§ 2279aa - Definitions

12 U.S. Code § 2279aa–5 - Certification of agricultural mortgage marketing facilities

U.S. Code: Title 42 - THE PUBLIC HEALTH AND WELFARE
Statutes at Large

Title 12 published on 09-Jun-2018 03:57

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 12 CFR Part 614 after this date.

  • 2016-11-07; vol. 81 # 215 - Monday, November 7, 2016
    1. 81 FR 78063 - Loans in Areas Having Special Flood Hazards—Private Flood Insurance
      GPO FDSys XML | Text
      DEPARTMENT OF THE TREASURY, FEDERAL RESERVE SYSTEM, FEDERAL DEPOSIT INSURANCE CORPORATION, NATIONAL CREDIT UNION ADMINISTRATION, FARM CREDIT ADMINISTRATION, Office of the Comptroller of the Currency
      Joint notice of proposed rulemaking.
      Comments must be received on or before January 6, 2017.
      12 CFR Part 22