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#1333769 - 01/29/10 03:59 PM Reg O Limit Question
ktac MITCH Offline
Diamond Poster
ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
I know the Reg O limit for Insiders is 15% of "Unimpaired" Capital plus "Unimpaired" Surplus.
My questions is what is required to be Excluded as part of the unimpaired? Specifically for my bank -Goodwill-.

Our Capital consists of Stock / Surplus / Undivided Profits / Current Earnings / Unrealized Gain on Securities / Goodwill.
The goodwill came from the purchase of an existing bank by the newly formed bank holding company 10 years ago (we are a 1 bank holding compay)

We test the Goodwill for impairment every year (verified by CPA External Financial Audit) and our goodwill is NOT Impaired.

??Do you always exclude goodwill to calculate the 15% or since it is not impaired, is it included in the total to calculate the 15% ???????
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Lending Compliance
#1333859 - 01/29/10 04:36 PM Re: Reg O Limit Question ktac MITCH
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
Review the definition included in Reg O and refer to your bank's call report for the numbers for Tier 1 and Tier 2 capital:

Lending limit. The lending limit for a member bank is an amount equal to the limit of loans to a single borrower established by section 5200 of the Revised Statutes,\2\ 12 U.S.C. 84. This amount is 15 percent of the bank's unimpaired capital and unimpaired surplus in the case of loans that are not fully secured, and an additional 10 percent of the bank's unimpaired capital and unimpaired surplus in the case of loans that are fully secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the loan. The lending limit also includes any higher amounts that are permitted by section 5200 of the Revised Statutes for the types of obligations listed therein as exceptions to the limit. A member bank's unimpaired capital and unimpaired surplus equals:

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\2\ Where State law establishes a lending limit for a State member bank that is lower than the amount permitted in section 5200 of the Revised Statutes, the lending limit established by applicable State laws shall be the lending limit for the State member bank.

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(1) The bank's Tier 1 and Tier 2 capital included in the bank's risk-based capital under the capital guidelines of the appropriate Federal banking agency, based on the bank's most recent consolidated report of condition filed under 12 USC 1817(a)(3); and
(2) The balance of the bank's allowance for loan and lease losses not included in the bank's Tier 2 capital for purposes of the calculation of risk-based capital by the appropriate Federal banking agency, based on the bank's most recent consolidated report of condition filed under 12 U.S.C. 1817(a)(3)
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HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1333921 - 01/29/10 05:01 PM Re: Reg O Limit Question Kathleen O. Blanchard
ktac MITCH Offline
Diamond Poster
ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
Thanks Kathleen - I quit reading the definition too soon. (still making rookie mistakes after all these years) blush

keep reading the definition and you get to the end result of 'use your Call Report calc of Tier 1 + Tier2 + ALLL Reserve not already included in Tier 2'
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