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#867307 - 12/06/07 12:28 AM Affiliate Transactions
jbs Offline
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Joined: Dec 2004
Posts: 24
Utah
Our policy (which we are revising) states: "Covered transactions will be material if book or fair market value, whichever is less, exceeds $10,000 (for a bank with total assets less than $750 million).

We are now over $750 million in assets, so the question is whether the $10,000 number changes. I have checked Reg W but so far have not found anything that addresses this. Is the above driven by reg or by some other source? Any ideas? Thanks.

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General Discussion
#867336 - 12/06/07 01:40 AM Re: Affiliate Transactions jbs
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
You should review the 10% and 20% caps on affiliate transactions to determine the appropriate amount for your bank.

Sec. 223.11 What is the maximum amount of covered transactions that a member bank may enter into with any single affiliate?

A member bank may not engage in a covered transaction with an affiliate (other than a financial subsidiary of the member bank) if the aggregate amount of the member bank’s covered transactions with such affiliate would exceed 10 percent of the capital stock and surplus of the member bank.

Sec. 223.12 What is the maximum amount of covered transactions that a member bank may enter into with all affiliates?

A member bank may not engage in a covered transaction with any affiliate if the aggregate amount of the member bank’s covered transactions with all affiliates would exceed 20 percent of the capital stock and surplus of the member bank.

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If the bank is OTS regulated, also look at the OTS special rules for thrifts under HOLA.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#868469 - 12/07/07 04:36 AM Re: Affiliate Transactions Kathleen O. Blanchard
Jokerman Offline
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Joined: Nov 2003
Posts: 12,846
It's my understanding that the figure that your bank considers material for an individual transaction is irrelevant as far as the reg is concerned. The reg is concered with a single transaction that exceeds 10% of capital or a total amount of transactions that exceed 20% of capital (as Kaybee cited) regardless of the amount of those individual transactions. I imagine this part of your policy is dictating what will be reported to appropriate personnel and/or documented - in my opinion, that is something that would need to be based on your assessment of the risk you have that you might come close to the 20% limit.

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