Ga. Comp. R. & Regs. R. 80-1-5-.01 - Loans Generally, Interpretations and Rulings
(1) "Indirect" loans as used in Code Section
7-1-285 shall mean loans made for
the substantial benefit of a third party where repayment of the loan is
dependent on activities of the third party rather than solely dependent on the
resources of the borrower and subject to the provisions of Rule
80-1-5-.11.
(2) Loans extended to any Industrial
Development Authority domiciled in Georgia which are dependent upon revenues
obtained under an assigned lease contract naming the Authority as lessor shall
be considered as loans to the lessee in calculating legal loan
limitations.
(3) Loans by a bank to
any wholly-owned subsidiary of the bank, which subsidiary is located within an
approved office of the bank and which has agreed to abide by all laws, rules
and regulations applicable to the bank shall be exempt from the twenty-five
(25) percent maximum lending limit of the bank. In addition, to the extent
allowed by other applicable law and with the prior written approval of the
Department, this exemption from the twenty-five (25) percent maximum lending
limit may be extended to loans from a bank to a wholly owned subsidiary of an
affiliated bank.
(4) In determining
amounts loaned, all amounts guaranteed or insured by any instrumentality of the
United States government shall be deducted to the extent of the guaranty or
insurance coverage. Immediate and deferred participations on loans by an
instrumentality of the United States government shall also be excluded. Where
the source of repayment of a loan, i.e. lease payments, is guaranteed by an
instrumentality of the United States government and such guarantee is
assignable and has been assigned to the bank, such loan may be excluded to the
extent of the guarantee.
(5) In
determining whether or not a loan in excess of the fifteen (15) percent
limitation is secured by "good collateral and other ample security," the lack
of a perfected lien, inadequate insurance, and insufficient margins between
collateral value and the amount of the loan shall be prima facie evidence of
inadequate security to the debt.
(6) A borrower's savings accounts or
certificate of deposits in the lending bank will be regarded as collateral to a
loan when they are not subject to check or withdrawal, mature on or after the
loan which is secured, are under the sole control of the bank, and are properly
assigned. Where, according to the terms of the deposit contract, the deposit is
eligible for withdrawal before the secured loan matures, the bank must
establish internal procedures to prevent release of the security without the
lending bank's prior consent. If proper procedures are in place, such deposits
will be considered as collateral. Where deposit balances are properly taken as
collateral to a loan, the loan may be reduced to the extent of the deposit in
determining the amounts loaned for either secured or unsecured legal lending
limitations, as applicable.
(7)
Except as provided in this paragraph, exposures in the form of insufficient
funds checks held beyond the permissible return date and overdrafts shall be
considered "extensions of credit" solely for the purpose of determining
compliance with the legal limitation as it applies to the maker of the check or
owner of the overdraft. Such exposures shall also be subject to the
requirements for prior written approval and ample collateral where the total
indebtedness of the borrower exceeds fifteen (15) percent of the statutory
capital base. Such exposures will not be considered extensions of credit for
purposes of compliance with the above legal loan limitations and requirements,
provided that the exposure is inadvertent, which requires that:
(a) The exposure(s) does not exceed the
aggregate amount of $1,000 at any one time; and
(b) The account is not overdrawn or the
insufficient funds check held for more than five (5) business days.
(8) Wherever approval of the Board
of Directors or Loan Committee is required, such approval must be specific,
prior, written approval of each extension of credit, except that advances made
under a master note covering a specific purpose or project need not receive
specific approval where such approval was accorded the master note. Annual
approval of a line of credit may be used where interest rate, repayment terms,
and anticipated collateral are clearly identified and current credit
information is on file. Commodity, floor-plan and discount lines of credit
which are anticipated to exceed fifteen (15) percent of the statutory capital
base may be approved annually to be deemed appropriate by the Board of
Directors without each transaction receiving specific prior approval. For those
lines that are expressly authorized by statute or regulation to exceed
twenty-five (25) percent of the statutory capital base, the line must be
reviewed quarterly by the Board of Directors or Loan Committee when the line is
in fact in excess of twenty-five (25) percent of the statutory capital
base.
(9) In determining the
primary collateral basis upon which a loan is granted, that portion of the
collateral having the greatest market value shall be assumed to be the primary
collateral.
(10) Extensions of
credit to political subdivisions of the State of Georgia authorized to levy
taxes or backed by the taxing authority of another political subdivision shall
qualify for exemption from the twenty-five (25) percent loan limitation under
the provisions of O.C.G.A. §
7-1-285(c)(1)(B),
only where such extension of credit otherwise conforms with the provisions of
Georgia Constitution, Article 9, Section 5.
(11) Where the "statutory capital base" as
defined in O.C.G.A. §
7-1-4(35) is
reduced by operating losses, loan losses, or for other reasons approved by the
department, existing debt which was in conformity with the legal limitations at
the time it originated shall not be construed to be non-conforming with new
legal limitations resulting from the reduced statutory capital base.
(12) Pursuant to O.C.G.A. §
7-1-285(e), a loan
or extension of credit to a leasing company for the purpose of purchasing
equipment for lease shall be considered a loan to the lessee, provided that:
(a) The bank documents the basis for its
reliance on the lessee as the primary source of repayment before the loan is
extended to the leasing company;
(b) The loan is made without recourse to the
leasing company;
(c) The bank
receives a security interest in the equipment and, in the event of default, may
proceed directly against the equipment and the lessee for any deficiency
resulting from the sale of the equipment;
(d) The leasing company assigns all of its
rights under the lease to the bank;
(e) The lessee's lease payments are assigned
and paid to the bank directly by the lessee; and
(f) The lease terms are subject to the same
limitations that would apply to a bank acting as a lessor.
(13) The Department shall promulgate a form
which may be used to document compliance with the requirements for approval of
loans, obligations, and credit exposures in excess of 15 percent of the
statutory capital base by members of the board of directors or authorized
committee of the board of directors as set forth in O.C.G.A. §
7-1-285(a.1).
(14) In determining whether the common equity
tier 1 capital has increased or decreased by 5% or more for purposes of the
"statutory capital base" as defined in O.C.G.A. §
7-1-4(35), each
bank will utilize the dollar amount reported on the applicable Consolidated
Report of Condition and Income and recalculate its statutory capital base if
the dollar amount increases or decreases by 5% or more during the applicable
time period.
Notes
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