PART – 337
Standby Letters of Credit
- Standby letters of credit issued by a bank shall be combined with all other standby letters of credit and all loans for purposes of applying any legal limitation on loans of the bank (including limitations on loans to any one borrower, on loans to affiliates of the bank, or on aggregate loans)
- Exceptions
- Prior to or at the time of issuance, the issuing bank is paid an amount equal to the bank’s maximum liability under the letter of credit OR
- Prior to or at the time of issuance, the issuing bank has set aside sufficient funds in a segregated deposit account, clearly earmarked for that purpose, to cover the bank’s maximum liability under the letter of credit
- Each bank must maintain adequate control and subsidiary records of its standby letters of credit comparable to the records maintained in connection with the bank's direct loans so that at all times the bank’s potential liability thereunder and the bank’s compliance with 337 may be readily determined
- All SBLC must be adequately reflected on the bank’s published financial statements
- 337 makes Regulation O applicable (some things excluded, but are covered under Reg. O)
Brokered Deposits
- Brokered deposits – any deposit that is obtained, directly or indirectly, from or through the mediation or assistance of a deposit broker
- FDIC may reclassify a well capitalized bank as adequately capitalized and the bank would be subject to the provisions applicable to the lower capital category
- Bank is deemed to be within a given capital category when the bank has received notification from either (most recent):
- Call Report
- Report of Examination
- Written notice
- Deposit Broker – any person engaged in the business of placing deposits and an agent who establishes a deposit account to facilitate a business arrangement with a bank to use the proceeds of the account to fund a prearranged loan.
DEPOSIT BROKER INCLUDES
- Any bank that is not well capitalized, and any employee of any such bank, which engages, directly or indirectly, in the solicitation of deposits by offering rates of interest which are significantly higher than the prevailing rates of interest on deposits offered by other banks in the normal market area
Acceptance of Brokered Deposits
- Well capitalized bank may solicit and accept, renew or roll over any brokered deposit without restriction
- Adequately capitalized bank may not accept, renew or roll over any brokered deposit UNLESS it has applied for and been granted a waiver by the FDIC and may not pay more than 75 basis points above normal local or national market rates (120% of US Treas. obligations of similar maturity
- Undercapitalized bank may not accept, renew or roll over any brokered deposit and may not pay more than 75 basis points over normal local or national market rates
Frequency of Examinations
- FDIC is required to conduct a full-scope, on-site examination of every insured state non-member bank at least once during each 12-month period
- May be extended to 18-months for the following banks
- Total Assets of $250 million or less
- Well Capitalized
- Well Managed
- Composite rating of 1 or 2 at last examination (FDIC or State)
- Bank not currently subject to a formal enforcement proceeding
- No change of control in the preceding 12-month period
- FDIC has the authority to conduct examinations more frequently if deemed necessary
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