Click to return to BOL home page
Banker Store Read A Reg BOL Insiders Career Connect Learning Connect Bankers Information Network


    Site Map

    Our Sponsors


Compliance Gurus
Operations Gurus
Security Gurus
Marketing Gurus
Technology Gurus
eBanking Gurus

Print Friendly! Email This Article! Discuss NOW!

Legal Lending Limit
by Mary Beth Guard, BOL Guru

Question: How do you determine a bank's legal lending limit?

Answer: The first step is to determine the applicable law. If the bank is a national bank, the applicable law is 12 USC 84. If the bank is state-chartered, state law will be applicable. Then, you simply follow the formula contained in the statute. For example, the basic lending limit for national banks is described as follows:

The total loans and extensions of credit by a national banking association to a person outstanding at one time and not fully secured, as determined in a manner consistent with paragraph (2) of this subsection, by collateral having a market value at least equal to the amount of the loan or extension of credit shall not exceed 15 per centum of the unimpaired capital and unimpaired surplus of the association.

There are many qualifiers, however. Depending upon the type of collateral, for example, a loan may not need to be counted toward the lending limit, or may yield an increased lending limit.

First published on 1/20/03

Home | Compliance | Lending | Operations | Security | Marketing | Technology | eBanking
BOL Archives    Privacy Policy    Important Disclaimer   Recommend This Site !   Contact Us

BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.