OCC 2004-46 
OCC BULLETIN 
Date:  October 5, 2004
Subject:   Part 32, Lending Limits                                                         
Description: Final Rule: Extension                                         
of the Lending Limits Pilot Program                                                                        
                                                         
TO:  Chief Executive Officers of All National Banks, Federal
     Branches and Agencies, Department and Division Heads, and
     All Examining Personnel


The attached final rule, published in the Federal Register on
August 19, 2004, amends 12 CFR part 32 by extending the lending
limits pilot program until June 11, 2007.  The program provides
special lending limits for 1-4 family residential real estate
loans and small business loans.  The final rule adopts the rule
as proposed on April 24, 2004, and expands the program to include
certain agricultural loans.
     
Under the expanded pilot program, national banks may make
residential real estate loans, small business loans, or small
farm loans to a single borrower in amounts beyond the combined
and special limits in 12 CFR 32.3(a) and (b).  A national bank
may make loans in the above three categories in an additional
amount up to the lesser of 10 percent of its capital and surplus
or the percentage of its capital and surplus in excess of 15
percent that a state bank is permitted to lend under the
applicable state lending limit for such loans.  The applicable
state lending limit is the one that applies to state banks in the
state in which the bank has its main office.  The bank may not
lend more than $10 million to a single borrower under each new
special limit.
     
The amount that a bank may lend under the program's special
limits is subject to an individual borrower cap and an aggregate
borrower cap.  Under the individual borrower cap, the total
outstanding amount of a bank's loans to one borrower under 12 CFR
32.3(a) and (b), together with loans made under the program,
cannot exceed 25 percent of the bank's capital and surplus.  The
aggregate cap provides that the total outstanding amount of any
loans or parts of loans made by a bank to all of its borrowers
under the special limits of the pilot program cannot exceed 100
percent of the bank's capital and surplus.

The final rule defines agricultural loans by referring to the
definition of "loans to small farms" in the instructions for
preparation of the Consolidated Report of Condition and Income
(call report).  The substantive definition of "loans to small
farms" in the call report is "loans secured by farmland" and
"loans to finance agricultural production and other loans to
farmers."  For reporting purposes, the instructions for schedule
RC-C, part II of the call report, provide that "loans to small
farms" should be included on that schedule only if they are loans
for original amounts of $500,000 or less.  This $500,000 limit is
not part of the substantive definition of "loans to small farms."
Therefore, it does not apply to or condition the lending
authority granted under the pilot program.   The individual,
aggregate, and $10 million single-borrower caps in 12 CFR 32.7
continue to apply.
The final rule became effective on August 19, 2004.  National
banks interested in applying for the pilot program may contact
their supervisory office.

For further information, contact Mitchell Plave, counsel,
Legislative and Regulatory Activities Division, (202) 874-5090;
Jonathan Fink, senior attorney, Bank Activities and Structure,
(202) 874-5300; or Thomas O'Dea, national bank examiner, Credit
Risk, (202) 874-5170.
  
Julie L. Williams
First Senior Deputy Comptroller and Chief Counsel

Attachment:  69 FR 51355
        [http://www.occ.treas.gov/fr/fedregister/69fr51355.pdf]